- This year I will be more organized. I will make a tax file for the year. I will put important data in it during the year. I hate the stress of getting all my tax stuff together and crunching numbers, but every year it happens that way.
- Make one for 2010 as well, even though it’s after the fact and slam in all those tax documents that you get in the mail during January and early February. During 2011, file all tax related paperwork, e.g. receipts for vehicle registration fees, property tax payments, charitable contributions, etc. in your 2011 tax file. When getting ready to complete your clergy tax organizer you will be amazed that all you have to do is simply grab the file and begin the process.
- I’m not going to procrastinate. I’m going to get my taxes filed before April 15. No extensions for me this time.
- At least you’re now making your resolutions in January, that’s progress. Even if you default on your resolution, make sure you at least have your taxes paid by April 15. There’s no extension on paying, only an extension on filing and those penalties can be expensive.
- Music has always been my hobby. But I have a feeling that this year I’m going to put out a new product and make some money at it. I hate paperwork, but I resolve to keep my receipts.
- I do hope you’ve already kept receipts from prior years for any major purchases like equipment and musical instruments because you can take depreciation deductions for those if you use them in the creation of your product. If you don’t have the receipts, you should still take the deduction. Use pictures, appraisals, or comps to serve as back up.
- Set up a file marked “Music Receipts” to make it easy. Don’t forget to clean out your wallet and glove box every once in awhile to find those receipts then file them away. One other thing, to keep down the cost at tax time, organize those receipts by type of expense and total each category, e.g. supplies, telephone, outside services, etc.
- I resolve to understand the tax system for my ministry, so I can actually reduce my tax liability.
- It would be smart to have a Clergy Financial Resources on your team to be involved with tax planning and to help educate you. Once you are in the ministry, things change; tax law become much more complex. But it also opens up a new arena for strategizing to minimize the hit. It’s important to keep a good set of records.
- To actually make my estimated tax payments this year.
- That’s always a tough one for anyone in the ministry. The IRS and the state (if you live in one with an income tax) expect you to write quarterly checks to prepay your tax liability. Yeah, well sometimes that’s not so easy to do, not when you’re trying to pay your monthly bills. And certainly not during a recession. With self-employment tax added to the regular income tax, the bill can even be much larger. We suggest that you open a savings account and set aside a percentage every month to meet the tax bill. Once you get behind, it’s tough to keep up, it snowballs.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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