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Tax Planning for The Clergy

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The clergy usually have a hard time when it comes to tax planning. There are ways in which the ministers can be able to maximize great tax savings which is in the travel allowance, house allowance and other ministry expenses. The churches however, were known as tax exempt entities though this has changed. The clergy have to make an estimate so as to be able to pay their taxes like other organizations. In this article are ways by which the clergy can be able to prioritize cash saving tax plan. These are as discussed below.

First, you need an accountable plan. When you have a well laid out plan that states everything you can be able to have some tax exemption in some areas. This is because if they are taxed on every area it might end up being too costly and they need these fund to run the ministry. These areas include mileage, meals, and the lodging they spend in while in ministry. These also ensure that all the ministers are able to receive the tax free reimbursements for the jobs that they carry out. Find out more tips about church pastors income tax or check out how do clergy file taxes.

Secondly, you need to know how to calculate your housing allowance. If you set an amount that is higher than the reasonable rate the deficit will be subject to taxation. All the cost that are related to the house can also be included in like insurance and upkeep. The more cash that you can be able to set for the housing allowance may help you avoid paying the taxes. However, there are some rule that are to be followed. You cannot set an amount that is higher that the rental market value. You can also not set an amount that is higher than your salary.

Lastly, you need to set some money for the retirement planning. This can help in reducing the taxes that are allocated to you. However, it is wise for the ministers to have a side hustle and not rely fully on the church. You can ask for advice from an accountant and they will guide you on how to go about it. It is important so as to ensure that they also have a retirement plan that is a security for them at their old age. They also get to enjoy the plan after years of ministry and service. These is a proper tax plan for the clergy. You can read more on this here: https://www.huffpost.com/entry/church-electioneering-and_b_3267250.