Clergy Tax Facts

Year end tax strategies

Here's a quick checklist of tax savings strategies to consider and apply before the end of December:

1. Make Charitable Contributions and Donations:

Generally, for individuals, contributions to tax-exempt charitable organizations are limited to 50 percent of the taxpayer's adjusted gross income for the tax year. Those unused items cluttering closets can be donated to a qualified charity or non-profit organization and deducted as charitable contributions. Document your donations by saving receipts, cancelled checks and any letters or correspondence from the charity.

To claim a charitable contribution for 2009, you need to deliver or mail checks on or by December 31st; postmarks must be on or before December 31st. Checks placed in the offering on the first Sunday in 2010 will not qualify for a charitable contribution deduction in 2009 even if the check is predated to 2009 or was actually written in 2009. However, checks that are written, mailed and postmarked in 2009 will be deductible even if they are not received by the church until 2010.

2. Pay state and local income taxes now:

That way you can deduct them for 2009. Any payments made on a credit card or by check dated before the end of 2009 are eligible.

3. Review your housing allowance designation and expense.

If your YTD expense is equal or greater than your designated amount, your housing allowance may need to be amended before the next pay period. Housing allowance can be amended at any point during the year. However it can not be changed retroactive.

4. Add to your retirement accounts, 403b and IRAs.

The deductible amount for a contribution to a traditional IRA is up to $5,000 per person, and up to $6,000 per person age 50 or older. 403b contribution must be made by December 31st. There's even more time to add to the value of your IRAs, right up to the April 15, 2010 deadline.

403(b) Plan Dollar and Percentage Limits
Rule	2006	2007	2008	2009	2010
Limit on employee contributions	$15,000	$15,500	$15,500	* $15,500	* $15,500
"Catch-Up" contributions for participants 50 or over	$5,000 additional	$5,000 additional	$5,000 additional	* $5,000 additional	* $5,000 additional

 

5. Check the Amount of Your Medical Deductions for 2009:

Taxpayers can check to see if they have enough medical deductions to itemize (over 7.5 percent of adjusted gross income) this year. It's not too late to schedule additional dentist or eye doctor appointments. However, it may make sense to "bunch" medical deductions into one year, and plan ahead for 2009.

6. Know What Medical Deductions Are Allowed:

There are numerous medical costs that are deductible including lasik eye surgery, doctor-prescribed weight loss programs, and capital expenses for ramps, railings, etc. installed in a home to accommodate disabilities. Don't overlook mileage to and from the doctors, hospitals, and the pharmacy.

7. Sell "loser" stocks.

Perhaps you have experienced a stock market slide and its effect on your portfolio. There's still time to sell stocks or mutual funds and take the losses to offset your income.