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 2010, 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 2010 even if the check is predated to 2010 or was actually written in 2010. However, checks that are written, mailed and postmarked in 2010 will be deductible even if they are not received by the church until 2011. 2. Pay state and local income taxes now: That way you can deduct them for 2010. Any payments made on a credit card or by check dated before the end of 2010 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 15th deadline. 5. Check the Amount of Your Medical Deductions for 2010: 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 2010. 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. Source: Clergy Financial Resources https://www.clergyfinancial.com Clergy Financial Resources is a national accounting and finance organization serving churches and clergy since 1980. They have an unparalleled tax expertise on the complex issues associated with clergy tax law, clergy taxes, clergy compensation and church payroll. Clergy Financial Resources is a valuable resource for clergy, churches and denominations.
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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