Recommendations for Year-End Tax Preparation

The leaves are falling, the temperatures are dropping and the holidays are just around the corner. This means that the year is quickly winding down which also means it’s time to start thinking about 2012 taxes. Early tax preparation is the key to a seamless and stress-free tax season. Clergymen can especially benefit from early tax preparation as their taxes often need to be approved by a tax professional to ensure that they are accurate.

According to a blog post on clergytaxnet.com, there are several tax-related things that clergymen need to consider and possibly apply before the end of the year.  Here are a few suggestions.

Charitable Donations and Contributions

The end of the year is a great time to go through your garage and closets to see if you have any unused items that you would like to donate to the less fortunate. These items can be donated to quality charities and non-profit organizations and deducted as charitable contributions. Generally speaking, contributions to tax-exempt charitable organizations are limited to 50 percent of a taxpayer’s adjusted gross income for the year. Remember that donations that consist of previously used clothing or household items must be in good condition to be considered as a deduction. Also, if donations exceed $500 an IRS Form 8283 may need to be filled out or an appraisal required.

Pay Income Tax for Ministers Now

It’s a good idea to pay income taxes now so that you can deduct them for the year. Any payments made on a credit card or via check dated before the end of the year are eligible.

Review Housing Allowance Situation

If a minister’s year-to-date expenses are equal or greater than the designated amount, their housing allowance may need to be amended before the next pay period. It can be amended at any time during the tax year but it can’t be retroactively changed.

Contribute to Retirement Accounts

Deductible amounts for traditional IRA contributions are up to $5000 per person and up to $6000 per person over 50 years of age. Consider making your end of the year contributions now.

By getting 2012 tax preparation taken care of early you can ensure a much more seamless tax season once the new year approaches. Minister taxes can be complicated, so take the time now to sort through the suggestions above, identify any questions you may have and get in touch with your tax professional.

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