Archives For Taxes

Tax Day Funny

Happy Tax Day! Credit brianjmatis

Happy Tax Day! Wait you remembered to file your taxes for 2012 right?! You have until tonight to file your taxes or file an extension for 2012. [Tax Deadlines for 2013]

At the second I write this, we’re waiting to hear back from our tax professional if we need to file an extension or if we’re in the clear. Update: We ended up filing an extension for the first time ever since we didn’t get our tax guy the papers till Friday.

In our defense we are still living in suitcases and boxes while we remodel our new place.

I thought I’d share some cool Tax Day Resources if you’re still getting crazy with your calculator and Turbo Tax.

Tax Day Free Stuff

Free Paper Shredding and Copying at Office Depot on Tax Day– Thanks Living on the Cheap for making us aware!

The Penny Pinchin’ Mom has a good list too for tax day deals too, along with list from Huffington Post.

Coupon for tax relief Arby’s Fries

Tax Day Resources

What Happens if I Don’t Pay My Taxes? 

What Happens if You Miss the Tax Deadline + How to File a Tax Extension

15 Ways to Spend a Tax Refund Traditional and Non-Traditional Ideas

Why Getting a Large Tax Refund is Bad

Oops! I Made a Mistake on My Tax Return, but I Already Filed. Now What? 

How are you feeling on Tax Day 2013? 

Each year we drop off items to Goodwill, The Salvation Army, or another charitable organization.

When they ask if you want a receipt? Sure, I’ll take it and count it off on my taxes! But, do you and do you do it correctly?

How to Get a Tax Deduction From Your Donation

I’m always learning something new about taxes. This year I learned from our tax guru, John Kristianson, about how to properly get your deduction from donations.

1) In order to quality, you’ll need to meet the minimum amount in order itemize your taxes.

2) Make sure you take a picture of the items you give. Seriously, I heard about a guy who was being audited and they were questioning if he really gave. He had pictures, so that ended the discussion with the IRS.

3) Get a receipt and number count for the items.

Example of receipt from Goodwill

4) Calculate how much the items are worth. What? Yep, and there are valuation guidelines. Here is the Donation Valuation Guide for Goodwill and The Salvation Army Valuation Guide.

5) Add them up and turn it into your tax professional or perhaps you do it yourself on Turbo Tax?

Giving to organizations like Goodwill and The Salvation Army most importantly help your immediate community and provide jobs for those re-entering the workforce.

The Goodwill of Southern California received 4 Stars from Charity Navigator! Less than 1% of non-profits receive this high of rating and 92% of their profits and contributions directly towards people and services.

Need to find a store? Goodwill Location Finder

What is the most unique item you’ve given or purchased at a Goodwill type store? 

Photo Credit: Retailmania

Tax refunds. Yep, we’re getting one this year. Of course, I would have rather that money spread throughout the course of the year, but we had a few unknown factors.

We had even saved up to pay taxes and we’ll get to allocate that money also. A double bonus!

So now comes the question: How do you spend a tax refund? There are many options, but here are a some traditional ideas + few ideas we’re brain storming.

How to Spend Your Tax Refund: Traditional

1. Giving-Let’s start with giving, since that is a high priority for many people. Some might call it a tithe or some a love drop. Whatever you call it–giving is a financial habit and character trait that will help you remember that money isn’t everything in life.

Continue Reading…

Social Security and ScriptureDid you know that a minister can opt out of Social Security under a unique provision in the Social Security code? This sounds like a dream come true and an option many in the U.S. would like to have with the current uncertainty in the program.

Young ministers have an important tax decision within their first two years of ministry. Should they opt out of social security (for ministerial income only)? This decision will have a huge impact on their earnings potential and financial future.

This question of whether clergy/minister/pastor should opt out of Social Security is a controversial issue and has possible moral and legal implications.

History of Opting Out of Social Security for Clergy

How did this exemption for clergy to opt out of SS begin? It was a series of smaller steps until the modern exemption system was now in place:

  • 1951 Non-profit workers were given the option of entering the Social Security system. This caused a debate over whether ministers were self employed or employes of the church/denomination.
  • 1955 Those ministers whose denominations classisifed them as self-employed were given the option of joining the Social Security system, providing they (not their church) paid the full self employment tax.
  • 1968 Ministers were required to enter the Social Security system providing a provision they could opt of based on religious principals in their first 2 years of ministry. This sets up the modern dilemma for young clergy members.

The Ethics of Ministers Opting Out of Social Security

When a young minister looks at this issue, the advice is varied and the ethics involved are not black and white. This is a controversial issue with both sides giving valid reasons for staying in the Social Security system or opting out.

Dave Ramsey looks at it from a financial and stewardship perspective. His main argument is that the individual, not the government can be a better steward of the money–and should thus opt out if Biblical grounds exist. His perspective does avoid the moral wording of the text that must be signed and doesn’t advise on the biblical principal on which ministers should opt out–at least not in print.

Russell Moore, Dean of Theology at Southern Baptist Seminary, gives an alternative point. He asks ministers to consider their beliefs about the public issues of insurance and if they really have a Biblical and moral conviction for this stance as a conscientious objector.

“If the ‘opt out’ provision were revoked, would you willingly go to prison rather than pay the tax? And, would your prison time be because you saw the choice as between Christianity and idolatry?”- R. Moore

Others view exists and can be found (read the comments in above mentioned articles) within certain Christian denominations and traditions. It is important to consider exempting from Social Security based on history, theology, and the tax law.—NOT on personal or political beliefs.

The wording of the modern tax form that clergy must sign has been refined in recent years and should be examined closely.

Sign on the Dotted Line: Opting Out of Social Security

The instructions for opting out of self employment are based only on religious views and not personal or political views on government or the Social Security system.

“This application must be based on your religious or conscientious opposition to the acceptance of any public insurance that makes payments for death, disability, old age, or retirement; or that makes payments for the cost of, or provides services for, medical care, including any insurance benefits established by the Social Security Act.”- form 4361 (2011)

The below is the excerpt from form 4361 (2011) that must be signed by the clergy member:

I certify that I am conscientiously opposed to, or because of my religious principles I am opposed to, the acceptance (for services I perform as a minister, member of a religious order not under a vow of poverty, or Christian Science practitioner) of any public insurance that makes payments in the event of death, disability, old age, or retirement; or that makes payments toward the cost of, or provides services for, medical care. (Public insurance includes insurance systems established by the Social Security Act.) I certify that as a duly ordained, commissioned, or licensed minister of a church or a member of a religious order not under a vow of poverty, I have informed the ordaining, commissioning, or licensing body of my church or order that I am conscientiously opposed to, or because of religious principles I am opposed to, the acceptance (for services I perform as a minister or as a member of a religious order) of any public insurance that makes payments in the event of death, disability, old age, or retirement; or that makes payments toward the cost of, or provides services for, medical care, including the benefits of any insurance system established by the Social Security Act. I certify that I have never filed Form 2031 to revoke a previous exemption from social security coverage on earnings as a minister, member of a religious order not under a vow of poverty, or Christian Science practitioner. I request to be exempted from paying self-employment tax on my earnings from services as a minister, member of a religious order not under a vow of poverty, or Christian Science practitioner, under section 1402(e) of the Internal Revenue Code. I understand that the exemption, if granted, will apply only to these earnings. Under penalties of perjury, I declare that I have examined this application and to the best of my knowledge and belief, it is true and correct.

After reading this form, I suggest praying and consulting several ministers and a tax professional who works with clergy about their view of signing form 4361 before signing.

*Note that your exemption must be approved by the IRS before the April 15th deadline and you must inform your ordaining body that you object of receiving public insurance. The minister  also only has 2 years in which to sign the form and opt out.

If you do sign and opt out of Social Security, realize your need to prepare accordingly since you won’t have access to SS retirement, SS disability, FEMA, Pell Grants, etc from the government.

Have you struggled with this issue of opting out as a clergy member? What are your thoughts about ministers opting out of Social Security? 

Odometer

How much do you drive for business? Credit PittCaleb.

Lately I’ve been driving a ton to meet coaching clients and later this month I’ll be attending WordcampLA, which will add more business related miles to our 97′ Civic.

I don’t know what I’ve been thinking, but I haven’t captured a single mile to deduct for self employment taxes. It’s time to log those miles and remind all my self-employed readers to do the same.

Why Deduct Miles?

In short, it’s smart business practice to log and take the mileage deduction for each mile you drive for self-employment business purposes. [If you have a boss your employeer may reimburse mileage directly–check with your benefits or HR department to get the details.]

If you are operating a personal vehicle for business purposes the IRS gives you tax break at the end of the year. That’s great since small business is America. For 2012 the deduction is $0.55 per mile, so check with the IRS as this rate changes yearly.

Those milage deductions add up and help to offset the high cost of gas, insurance, tags, registration, plus all the wear and tear your vehicle is enduring with each grueling mile. You won’t end up ‘making money‘, but it will help offset the costs of vehicle operation.

How to Log Your Mileage for Business

Don’t log the miles on the back of a Starbucks napkin you found lying in the floorboard–that’s not going to fly with your accountant or in the event of an audit. Purchase a mileage log or just print out a standard form like the one below.

 Mileage and Taxes

Make sure you’re following the rules set forth by the IRS. If you have a home office, the miles start counting once you leave your driveway to meet a client. Those who have an office can’t count miles commuting to the office.

Also, you can’t take mileage and depreciation on the same vehicle. Tolls and parking can also be included under certain guidelines. For specific rules and questions consult the IRS or your CPA.

Apps to Log Miles

I’m sure some of you will write in the comments, “There’s an app for that.” So let’s just state that numerous paid and free apps exists for the i-Phone and Android. If you have one you use and recommend, let us know in the comments.

Start Logging Those Business Miles

Small business owners, freelancers, contractors, whatever you call yourself–we all need a break from the higher taxes we pay. Track and take advantage of the mileage you already drive to make your business happen.

How do you track miles for self-employment? Any wisdom you want to share?