REMINDER:
If you haven't filed your 2006 tax return (or
earlier returns), contact us now to lessen
penalties.
Get the most useful forms:
Tax Forms for Clergy
Mileage Rate:
2008 standard business mileage deduction for
paid church workers is 50.5 cents/mile.
2008 rate for
medical & moving miles is 19 cents, down from 20 cents for 2006. It remains 14 cents for charitable miles.
2007 $.485/mile
2006 $.445/mile
2005 (9/1 on)
$.485/mile
2005 $.405/mile
2004 $.375/mile
2003 $.360/mile
2002 $.365/mile
2001 $.345/mile
2000 $.325/mile
The Rich Pastor
(A parable) Don't Call Me
Tired of telemarketers calling when you're just sitting down to dinner (or
any other time, for that matter)?
Solution: Put your number on the National
Do Not Call Registry. You'll get rid of most of the annoying
calls. Calls from charities, political organizations, and phone
companies won't be affected, nor will companies with which you have an
existing business relationship. If a third-party telemarketer calls on
behalf of a charity, a consumer may ask not to receive any more calls
from, or on behalf of, that specific charity. If a third-party
telemarketer calls again on behalf of that charity, the telemarketer may
be subject to a fine of up to $11,000.
|
Take advantage of decades of experience in clergy taxes.
We offer:
Tax return preparation
Tax planning
Accelerated retirement planning
Church payroll and accounting
35 years of experience in representing clients before the IRS
Express 1099 and W2 Service:
Let us take the hassle out of filing your organization's 1099s and W2s this
season. We'll file them with the IRS and SSA and deliver your copies
to you, so you avoid costly errors. Download our Express 1099 order form in
PDF here. View/Download
Now
[If you don't have Adobe Acrobat Reader for viewing and printing PDFs, click
here to download]
Church Treasurer's Guide to New Federal
Tax Law:
Keep your church treasurer current. Discusses how income to
minister and church workers should be reported for maximum tax
savings. Download this free PDF report!
View/Download
Now
Useful:
Get a free tax return transcript
Great for loan and scholarship applications.
For 2006
Returns Only: Telephone Tax Refund This
is a one-time refund of Federal Excise Tax on long-distance (NOT
LOCAL) billings from March 1, 2003 through Jul 31, 2006. It
applies to individuals, businesses, and to churches and other
non-profits. Individuals who
don't need to file can also get the refund by filing a special form. Businesses and
churches should add up Federal Excise amounts paid during this period
and report the amount to CTFS to receive the refund. (Call for
further information before doing the calculations). Individuals
have the choice of adding up these amounts, or taking the standard
amount of $30 to $60 based on the number of
exemptions claimed on their tax return. For those claiming:
• one exemption, the
standard refund amount is: $30
• two exemptions, the standard refund amount
is: $40
• three exemptions, the standard refund
amount is: $50
• four exemptions or more, the standard
refund amount is: $60
|
| Check that
Quicken Report: You may be losing deductions
If you
track your finances in Quicken™, one of the most useful things is to
print out an end-of-year report summarizing all of your expenses for
tax deductions. Here's the pitfall: the report may leave out
some of your expenses. This is true if you create a report by
changing a memorized report. Say you opened a new credit card
account. Those expenses may not show up.
Here's what to do:
1. Open the report, click Customize.
2. Click the Accounts
tab, then All Accounts,
then Mark All.
(In earlier versions of Quicken, just Mark
All.)
3. Click Categories
tab, click Mark All.
Quickbooks™ presents similar problems.
|
|
Highlights — 2004 Tax Law Changes
|
Education Incentives
- The maximum Tuition and Fees
Deduction is $4,000 for those with Adjusted Gross
Income (AGI) up to $65,000 and $2,000 for those with an
AGI over $65,000 but not over $80,000. These AGI amounts
are doubled for married persons filing jointly.
- Distributions from Qualified Tuition
Plans (QTPs) maintained by private educational
institutions are excludible up to the amount of
qualified educational expenses. This tax break had been
limited to State-sponsored QTPs.
Tax Credits
- The Additional Child Tax Credit
is now refundable up to 15 percent of the amount by
which earned income exceeds $10,750. The rate had been
10 percent. Taxpayers with more than two qualifying
children may be eligible for a larger credit. Nontaxable
combat pay counts as earned income when figuring this
credit.
Retirement Plans / Individual Retirement Arrangements
- The elective deferral limit for
401(k), 403(b) and most 457 plan participants rose to
$13,000 ($16,000 for 403(b) participants for whom the
15-year rule applies). For SIMPLE plans, the limit rose
to $9,000.
- The catch-up contribution limit
for persons age 50 or older rose to $3,000 for 401(k),
403(b) and 457 plans and to $1,500 for SIMPLE plans.
- The $10,000 phase-out range for IRA
deductions for those covered by a pension plan
begins at income of $45,000 ($65,000 if married filing
jointly or a qualifying widow(er)). It still begins at
zero for married persons filing separately.
Extension of Expiring Provisions
These provisions were left unchanged
through 2005:
- Deduction for Educator Expenses
(maximum $250)
- Qualified Electric Vehicle Credit and
Clean-fuel Vehicle Deduction
- Archer Medical Savings Accounts
- DC First-time Homebuyer Credit
- Allowance of nonrefundable personal
credits against the alternative minimum tax
Miscellaneous Items
- When itemizing, taxpayers have the
choice of deducting state and local income or sales
taxes. An optional state sales tax table may be used
in lieu of receipts for sales taxes paid. Sales taxes
paid on a motor vehicle may be added to the table
result, but only up to the amount paid at the general
sales tax rate. Sales taxes on a boat, plane, home, or
home building materials may be added if taxed at the
general sales tax rate. [The
full story]
- For most non-cash charitable
contributions after June 3, 2004, taxpayers must
satisfy these reporting requirements, based on the value
of the deduction:
- More than $5,000 – obtain a
qualified appraisal and attach Form 8283
- More than $500,000 (if art, $20,000
or more) – attach a copy of the appraisal
- An “above-the-line” deduction is
available for contributions to Health Savings
Accounts made by April 15, 2005. The deduction is
limited to the annual deductible on the qualifying high
deductible health plan, but not more than $2,600
($5,150, if family coverage). These limits are $500
higher if the taxpayer is age 55 or older ($500 each if
both spouses are 55 or older). A person cannot
contribute to an HSA starting the first month he or she
is enrolled in Medicare.
- Taxpayers may not exclude any gain on
the sale of a principal residence if they sold
the property after Oct. 22, 2004, and had acquired it in
a like-kind exchange during the five-year period ending
on date of the sale.
- The standard mileage rate for
business purposes rose to 37½ cents per mile for 2004
(40.5 cents per mile for 2005). For medical or moving
purposes, it rose to 14 cents per mile.
- Business taxpayers may take a Section
179 expense deduction for up to $102,000 of
qualifying equipment purchases, with this limit reduced
by the amount that the total cost of section 179
property placed in service during the year exceeds
$410,000. The limit for certain sport utility and other
vehicles that are not subject to the passenger auto
limits and were placed in service after Oct. 22, 2004,
is $25,000.
Inflation Adjustments for 2004
The filing requirements, personal exemption,
standard deduction and maximum Earned Income Tax Credit
amounts are among the inflation-adjusted items.
- The 2004 gross income filing
requirements are:
Single — $7,950
Head of household — $10,250
Married filing jointly — $15,900
Married filing separately — $3,100
Qualifying widow(er) — $12,800
Different amounts apply if the taxpayer or
spouse is age 65 or older, or if the taxpayer can be claimed
as a dependent on someone else's return. There are also other
specific situations that require the filing of a return, such
as when the net earnings from self-employment are $400
or more.
- The personal exemption amount for
2004 is $3,100 — $50 more than last year. Higher income
taxpayers may have to reduce the personal exemption amount
they claim if their adjusted gross income exceeds:
Single — $142,700
Head of household — $178,350
Married filing jointly or Qualifying widow(er) —
$214,050
Married filing separately — $107,025
These taxpayers use a worksheet in the tax
package to figure their deduction for exemptions.
- The standard deduction amounts for
2004 are:
Single or Married Filing Separately —
$4,850
Head of household — $7,150
Married filing jointly or Qualifying widow(er) —
$9,700
Different amounts apply if the taxpayer or
spouse is blind or is age 65 or older, or if the taxpayer can
be claimed as a dependent on someone else's return.
- The Earned Income Tax Credit
amounts for 2004 are:
|
Qualifying child
|
Income Under*
|
Maximum Credit
|
Income for Maximum
Credit
|
|
One
|
$30,338
|
$2,604
|
$7,650 —
14,049*
|
|
Two or more
|
$34,458
|
$4,300
|
$10,750 —
14,049*
|
|
None
|
$11,490
|
$390
|
$5,100 — 6,399*
|
|
(*These amounts are
$1,000 higher for married persons filing joint
returns.)
|
The maximum amount of investment income a
person may have and still be eligible for the Earned Income
Tax Credit increased to $2,650.
|
|
New
Sales Tax Deduction Choice
The American Jobs Creation Act of 2004 gives taxpayers the option to
claim state and local sales taxes instead of state and local income
taxes when they itemize deductions. This option is available for the 2004
and 2005 returns only.
IRS Publication
600, Optional State Sales Tax Tables, helps taxpayers determine their
sales tax deduction amount in lieu of saving their receipts throughout the
year. Taxpayers use their income level and number of exemptions to find the
sales tax amount for their state. The table instructions explain how to add
an amount for local sales taxes if appropriate.
Taxpayers also may add to the table amount any sales taxes paid on:
-
A motor vehicle, but only up to the amount of tax paid at the general
sales tax rate; and
-
An aircraft, boat, home (including mobile or prefabricated), or home
building materials, if the tax rate is the same as the general sales
tax rate.
For example, the State of Washington has a motor vehicle sales tax of 0.3
percent in addition to the state and local sales tax. A Washington state
resident who purchased a new car could add the tax paid at the general sales
tax rate to the table amount, but not the 0.3 percent motor vehicle sales
tax paid.
Taxpayers will claim the deduction on line 5 of Schedule A, checking a
box to indicate whether the amount represents sales tax or income tax.
While this deduction will mainly benefit taxpayers with a state or local
sales tax but no income tax — in Alaska, Florida, Nevada, South Dakota,
Texas, Washington and Wyoming — it may give a larger deduction to any
taxpayer who paid more in sales taxes than income taxes. For example, you
may have bought a new car, boosting your sales tax total, or claimed tax
credits, lowering your state income tax.
Tax
Archives:
Tax
Law Lowered Rates Starting in 2003
The Jobs and Growth Tax Relief Reconciliation Act, which President Bush
signed on May 28, 2003, extends the 10 percent rate to cover the first
$7,000 of taxable income for single persons, $14,000 for married couples. It
also lowers the tax rates above 15 percent to 25, 28, 33 and 35 percent.
This is a drop of two percentage points for each rate except the top one,
which went down 3.6 points.
The new law also raises the standard deduction for married couples to
$9,500 and extends their 15 percent tax rate to $56,800 of taxable income.
(The amounts for single taxpayers are half those for married couples.) The
changes reduce the “marriage penalty” – the difference between the tax
couples pay and the amount they would have paid as two single persons.
Over-the-Counter Drugs To Be Covered by
Health Care Flexible Spending Accounts
Over-the-counter drugs can now be paid for with pre-tax dollars through
health care flexible spending accounts. Reimbursements for nonprescription
drugs by an employer health plan are excluded from income. Thus,
reimbursements by health flexible spending arrangements (FSAs) and other
employer health plans for the cost of over-the-counter drugs available
without prescription are not subject to tax if properly substantiated by the
employee.
Drugs are increasingly becoming available over-the-counter without
prescription. Many health plans no longer cover the cost of these drugs as
over-the-counter. While an over-the-counter drug is less expensive than the
prescription drug, the cost to many consumers increases because the price
paid by the consumer for the over-the-counter drug is greater than the
co-payment by the consumer when the drug was covered by insurance. This is
especially an issue for individuals who remedy chronic health problems by
regularly taking an over-the-counter medicine.
Revenue Ruling 2003-102 explains that the statutory exclusion for
reimbursements of employee health expenses is broader than the itemized
deduction for medical expenses (which does not apply to nonprescription
drugs). Thus, the guidance clarifies that employer reimbursements of
employee health expenses that are nonprescription drugs, including
reimbursements through health FSAs and Health Reimbursement Arrangements (HRAs),
are excluded from income like other employer reimbursements of employee
health expenses. This will result in savings to consumers with access to
employer plans who may purchase nonprescription drugs.
However, for purposes of the itemized medical expenses deduction, the
cost of such over-the-counter drugs continues to be non-deductible. In
addition, the cost of dietary supplements that are merely beneficial to the
employee's health are not excluded from income.
|