Here are a few of the top picks from the Clergy Advantage tax advisors for the upcoming tax year. Find more details and critical information in the complete document located in your new SmartVault folder. If we’re not preparing your taxes this year, you can still locate the 2022 Tax Updates & Reminders in the link on this page or on our website’s Resources & Education page under “TAX.”
- For 2021 taxes, we need the exact amount of your 3rd IRS Economic Stimulus payment and any monthly IRS Child Tax Credit payments that you received for tax prep. Upload the IRS Letter 6475 and IRS Letter 6419 into your SmartVault folder with your tax documents.
- Ministers can now qualify for federal student loan forgiveness as of 2021 if specific criteria are met. See Thea’s short article in this Newsletter for more details.
- 403(b) Retirement Plans allow $20,500 salary reduction in 2022; $27,000 age 50 or more. Employer and employee combined contributions cannot exceed $61,000; $67,500 if age 50 or more. Ministers can receive tax-free housing allowance throughout retirement, even after leaving ministry, from the Clergy Advantage 403(b) Retirement Plan. Call us for more details.
Tax Savings Tips
- If you expect to buy or sell a principal residence, don’t forget that there are fantastic tax strategies that could save tens of thousands of dollars of tax! Talk to your Tax Advisor – a year or two in advance, if possible.
- If you’re over age 70½, you can donate from your IRA directly to charity as a “Qualified Charitable Distribution.” Depending on your Adjusted Gross Income, it might also reduce your Medicare B premiums (see Update #10 on page 2 of the Tax Updates & Reminders document). Ask your Advisor if this would save you tax!
- Learn more about your incredible retirement planning opportunities. The best retirement plan for most ministers is either a denominational retirement plan or the Clergy Advantage 403(b) Retirement Account.
- If you plan to contribute to an IRA or Roth IRA, a Clergy 403(b) Retirement Account is usually a better option. Ask us why.
- If you are an employed minister over age 59½, you should probably contribute $27,000 per year to a ministry retirement plan. We can help you find strategies that make this affordable and potentially save thousands of tax dollars.
- The Roth IRA is an excellent retirement option for some. Under the right conditions, the earnings are tax-free! Contributions are allowed even after age 70 for workers and may be withdrawn anytime without tax or penalty! Conversions to Roth IRA are allowed for everyone, regardless of age or income.
- you will have zero income tax in 2022, you should most likely convert money to Roth IRA – with no tax. Sometimes it can even be worth paying tax to convert to Roth IRA to reduce future tax.
- Is your income too high to allow Roth IRA contributions? Consider making a nondeductible contribution to a Traditional IRA, then promptly convert to Roth IRA. This only works in certain situations. Speak with your Tax Advisor.
“Always seek the advice of a qualified tax and/or financial advisor before implementing any tax or financial strategy. Individual planning is always best.“