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Year-end tax breaks - 6 year-end strategies

Discussion in 'The OT' started by Nick, Dec 27, 2005.

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  1. Nick

    Nick Retired, part-time PITA DBSTalk Club

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    The...
    Be charitable, get shopping...6 money-saving ideas to minimize your 2005 tax liability, and more

    November 21, 2005: 3:23 PM EST
    By Judy Feldman, MONEY Magazine

    NEW YORK (MONEY Magazine) - These six money savers expire Dec. 31. Use 'em or lose 'em.

    1. Be charitable

    You can make deductible gifts to charity right up to the last minute. But do it right.

    If you mail a check, it need only be postmarked by Dec. 31, even if the charity opens its mail in 2006. If you donate by credit card, the charge must show up on your statement as having occurred in 2005, but you can pay it off in 2006.

    If you're considering donating your car, keep in mind that starting with your 2005 return, your deduction will probably be limited to what the charity nets from selling it (rather than the frequently more generous fair market value)...

    More at... Money.com

    Yahoo's Guide to Giving
     
  2. Nick

    Nick Retired, part-time PITA DBSTalk Club

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    The...
    ...according to Forbes.com

    Charity / Private Support
    1. United Way / $3.88 bil
    2. Salvation Army / $1.55 bil
    3. Feed the Children / $888 mil
    4. American Cancer Society / $868 mil
    5. Gifts in Kind International / $822 mil
    6. AmeriCares / $801 mil
    7. YMCAs in the United States / $773 mil
    8. American National Red Cross / $585 mil
    9. Catholic Charities USA / $581 mil
    10. America's Second Harvest / $542 mil
     
  3. Bogy

    Bogy Hall Of Fame

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    As a public service to my loyal flock here, in the interest of keeping your tax bill low, if you contact me privately you will be provided with the name and address of my Church. :D :angel:
     
  4. DonLandis

    DonLandis Hall Of Fame

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    Max out your IRA's. You have until 4-15 or when you file to do it so no rush.

    Buy something for your business and expense it. Don't have a business? Fool! :D
     
  5. Bogy

    Bogy Hall Of Fame

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    I realized today I had $200 left in my professional expense account. Ten minutes I gave the treasurer expenses of $201.75 for reimursement. I told her I would absorb the extra $1.75 out of my own pocket. :)
     
  6. DonLandis

    DonLandis Hall Of Fame

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    Smart move, Bogy! A business mentor I had years ago gave me this advice- Keep every receipt, everyone of them. Then you can sort them out in an emergency. For non receiptable expenses, keep a log book as a lifestyle habit. That bit of advice helped me in several tax audits. Funny how those two habits will demoralize an over aggressive IRS agent. :)
     
  7. Bogy

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    I try to set up as much of my salary package into accounts where the church pays directly, or reimburses me, as possible. That money never has to be reported to the IRS, and what they don't have to see, doesn't confuse them. Much simpler than claiming deductions for business expenses when it comes time to fill out the forms. Some churches are very willing to work with me on this, realizing that building a salary package that has as much non-taxable money in it as possible makes it a more generous package. Other churches don't see the value in doing something that doesn't benefit them directly, and don't think it's fair for the pastor to have the benifit of "loopholes" they don't get. Those are churches that generally have a high turnover rate in pastors, because it reflects an attitude that goes beyond the pastor's salary. Anyway, if you attend church, and especially if you are in a position in your church that influences your pastor's salary, take a look at how it is set up. Some pastors might not have realized there are better ways to set things up, some might be afraid to suggest changes, just accepting what is offered (somehow in many churches its easier to talk about how often you change your underwear than the pastor's salary, unless it is to complain he or she makes to much), and lay people often just don't think about it, and like I said, some churches have people in the positions that make those decisions who don't see a need to give the pastor a break. Be good stewards. :)
     
  8. DonLandis

    DonLandis Hall Of Fame

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    "Loophole"

    The definition of this is a legal tax break that the other guy gets. A term generally used by those people who spend their time complaining about the tax code rather than learning and understanding how to apply it to their life. But Bogy, I believe that technically, when you receive a cash advance, you are required to fill out a 2106 to account for a P/L in your job related expenses vs. reimbursements and advances. If you claim travel and are reimbursed for car expenses, you must do that too. In most cases you will have more expenses than an employer reimburses so it is to your advantage to fill out that 2106.

    People complain about the tax code complexities but with today's Tax prep software, I find it is a breeze for personal 1040. However, my business 1120S takes me 3-4 days to do. In the Congressional debates on the Tax reform, I believe that it pertains only to personal income tax. While most people want this, I believe that in the end, the government will work ways that results in a winfall of tax revenue surplus when they simplify the code. People who favor the tax code simplification actually believe it will be better. I believe that the systems suggested will result in a greatly increased bite from everyone's paycheck and if not there, from everyone's bottom line as in the case of a national sales tax.
     
  9. Geronimo

    Geronimo Native American Potentate DBSTalk Gold Club

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    maybe I am reading the reverend's post incorrectly but I believe that he is saying that the church pays directly or reimburses him not that he gets any kind of advance.
     
  10. Bogy

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    Correct. I like it best when I give the bill directly to the church treasurer and they send in the payment. I never see the money, there is no check made out to me, I have nothing to declare. Nice and simple. Next best is when I incur expenses and submit the bills for reimbursement. Along with my own records the treasurer keeps a copy of the bills so that there is never any question that the reimbursement is legitimate. In the case of my business travel, I give the treasurer a list of the job related trips I have taken and the mileage for those trips. I have kept track of the actual mileage on the odometer, and I probably still should, but I generally come up with the mileage to certain places like hospitals and when I go there I submit a "standard" mileage amount for that trip. That way if I take a detour for a non-business activity, the church is not paying for that. My salary package states that I will be reimbursed the going IRS approved rate, so when their rate changes, so does my reimbursement. I know other pastors who have a set rate lower than the IRS max, and considering how much driving most pastors do, it hurts. (like it does for everyone else.) The 48.5 cents a mile the IRS approved from Sept. 1 to Dec. 31 really added up fast. After the first it goes back down to only 44.5 cents a mile.
     
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