Tax Savings Tips
Richard Hammar, attorney and CPA, writes the Minister Tax Guide which may be found at www.guidestone.org/LearningCenter/Ministry/MinistersTaxGuide. From the guide, here are Hammar’s most often missed tax savings tips.
- Many ministers miss the best tax break, the housing allowance or fail to take full advantage of it. See pages 18-21 and the list of items to include on page 19.
- Ministers who live in a parsonage may still ask for a housing allowance for the items the minister pays such as renter’s insurance, some or all of the utilities, internet service to the home, furnishings, etc.
- For housing, have a “safety net” wording: “This housing allowance is in effect for 2015 and all future years until changed.”
- Having an accountable reimbursement plan for business expenses. Ministers may not have an accountable plan from salary reduction. Ministers who have a non-accountable plan will pay much more in taxes due to the reductions of the business expenses on Schedule A and due to the Deason rule. Page 39.
- Non-reimbursed business expenses. Claim on Schedule A (Deason Rule applies here) and don’t forget to subtract them as you calculate schedule SE. Subtract 100% of the eligible expenses on the form SE. (Deason Rule does not apply on Form SE).
- Most ministers will have some self-employment income – weddings, funerals, revivals, etc. Report this income on Schedule C and be sure to report the expenses associated with these activities.
- IRS Form 1040. Many fail to include half of the Self Employment Tax in line 27
- Credits are more beneficial than deductions. Be sure to check the credits in lines 48-54 to see if you qualify.
- Retirement Savers Credit up to $2000 – Check to see if you qualify for the credit – form 8880. Hammar says that this is the most neglected tax credit of all.
- Having benefits such as group term life insurance, disability insurance, dental or vision insurance or a group health insurance plan help reduce taxes.
- When you do retire, you may receive all or part of your benefit from GuideStone as a tax free housing allowance.
- If you ask the church to withhold, check your W-4. No need to give the government an interest free loan.