What You Need to Know for this Tax Season

12/27/2016

We are approaching one of the most dreaded seasons in our Nation. Not a season of winter, or drought, but the dreaded tax season. Every year about this time people begin to gather receipts and other supporting documentation needed in preparation of their annual tax returns. This is especially true for Ordained and Licensed Ministers.

We need every legal advantage available, including knowledge of which others might be unaware if we are to obtain the largest refund possible. In today’s blog I wanted to make the reader aware of information that may be overlooked by others, or may seem insignificant.

Standard Deduction vs Itemization

Every year tax payers struggle with, “Do I have enough to itemize?” Sometimes it may not benefit to itemize, and other times it may. As tax payers we need to know which is best and how to get the most from each.

The Standard Deduction Amount for this year’s return is $12,600, plus an additional $1,250 for the spouse age 65 or older. Singles get $6,300, or $7,850 is the tax payer is at least 65. Head of Households come in at $9,300 plus an additional $1,550 once they reach 65.

Some tax payers may not have enough to itemize this year, however, the Internal Revenue Service allows for some deductions to be delayed until next year’s return. In this scenario the tax payer could claim Standard Deduction for this year, as he or she looked ahead at itemizing on the next return. It also works in reverse. If your itemized deductions top the Standard Deduction, you could shift some write-offs to 2016 and claim the Standard Deduction for 2017.

It is all about legally working within the system to get you the largest possible refund.

One thing that can greatly reduce the tax liability by increasing the Itemized Deduction amount is gifts to be considered as a “gift” for federal gift tax purposes. If you want to get it in for this year’s return make sure that the donee deposits your personal check by December 31st. It is not sufficient that the donation is received by the donee by this date, but it Must Be Deposited by the 31st. Then the money will count as a 2016 gift for federal gift tax purposes. For those who wish to donate via certified check, the amount is deductible if it is in the possession of the donee by December 31st, regardless of whether or not it is deposited by year-end. If you are giving securities, endorse them over to the donee and deliver them by year-end if you want the gift to count for 2016. The IRS allows a $14,000-per-donee gift tax exclusion for this year. If you do not take advantage of it this year, the unused amount is gone forever.

Any charitable donations are considered in the same manner. Make sure they are in on time to be deposited by the organization by year-end.

Standard Mileage Rates for 2017 for Businesses and Churches

The Internal Revenue Service last week announced the standard business mileage rate for 2017. If your church uses an accountable reimbursement plan—and reimburses ministers and staff for any miles they drive on behalf of the church using their personal vehicles—the rate offers a simple, effective way to make proper calculations.

The 2017 rates are down slightly from 2016 for business-, medical-, and moving-related miles driven. The rate for miles driven by volunteers on behalf of charitable organizations—which is set by Congress, not the IRS—remains fixed at 14 cents per mile. Make certain to review the various changes now, in case your church’s approach requires any adjustments for the next year.

Remember, if your church reimburses its ministers and staff below the IRS-approved standard business mileage rate, then those ministers and staff may be able to deduct the difference on their taxes. Conversely, if your church reimburses above the rate, then the difference must be counted as taxable income.

Is Your Tax Preparer Being Scammed?

The Internal Revenue Service has issued warnings that scammers are targeting tax preparers with bogus e-mails. The e-mails ask the preparer to update their IRS e-services account.

The scammers are attempting to gain access to preparer’s usernames and passwords, which can result in them obtaining personal information from filed returns.

Always remember that the IRS does not send out e-mails for this purpose. Warn your preparer to not click on any links. The scammers may also use the telephone, so hang up on any calls that ask for such an update.

In Closing

The above mentioned tidbits are vital information for this year’s filers. At Chitwood and Chitwood we extend every effort to provide you with the necessary information to make your job as easy as possible.

While other preparers may not be as knowledgeable as they should on tax preparation for Ministers, we invite you to allow us to do your taxes. Last year we completed more than 31,000 and drastically lowered the tax liability for each. We can do the same for you.

Call us NOW at 800-344-0076 and allow us to do what we do for thousands – protecting your hard earned money. Our 78 years of expertise is why you need us in your corner this year. Don’t delay. Make that call!

Remember, for Chitwood and Chitwood it is “A Ministry – Not A Job”