With the New Year approaching, now is the time to squeeze out some end of year tax savings. Save Up for Retirement- If you are a member of the clergy, you may have a 403(b) plan you have been contributing to throughout the year. If you have additional funds to use up before the end of the year, you may want to consider pushing more funds to your 403(b). Consult your employer and ask them about elective deferrals. Otherwise, you could consider contributing to a Traditional Individual Retirement Account (IRA). This is a self-funded retirement plan where you contribute pre-tax dollars by taxing a deduction on your tax return. When you take out from the plan, the distributions are taxable.
As Clergy, God may call you to move to different congregations in the course of your career. When you accept a call, and you move outside your current area, the first thing you should do is see if the move is tax deductible. Moving expenses are extremely important to a tax return. This is because a moving expense is considered an “above the line deduction”. This means that your expenses are directly subtracted from your income without the hassle and limitations of itemized deductions. In order to take your moving expenses, you must pass three tests. Your move takes place closely to the start of your new job. Your new workplace must be at least 50 miles farther from your old home than your
Under the most normal of circumstances, tax breaks are important to everyone. However, when you are a member of the Clergy, they can be much more significant. Unlike your everyday employee, members of the Clergy do not have Social Security and Medicare taxes withheld from their pay. Furthermore, a normal employee has their employer pay for half of their Social Security and Medicare taxes (Employee pays 7.65%, Employer pays 7.65%). When you are clergy, you must pay both the employer and the employee half (15.3%). This is known as self-employment tax. The reason Clergy tax deductions are so important is because not only does it reduce income tax, but also the self-employment tax calculati
