As members of the church, we have an obligation to pay taxes according to the law. However, we should learn to be wise stewards so that, even though we pay all the taxes we legally owe, we minimize our tax burden.
Tax planning is important because it will help you save money on your largest annual expense – taxes.
The seven steps to calculating your income taxes are the following:
Start with your gross income from all sources (minus your exclusions).
Subtract adjustments to total income; the result is your adjusted gross income.
Subtract your standard deduction or itemize your deductions and subtract that amount.
Subtract your exemptions; the result is your taxable income.
Refer to the IRS tax table and calculate your tentative tax.
Subtract your credits; the result is your total tax owed.
Subtract any taxes already paid. This leaves either the amount of your balance due or the amount of your refund.
The four strategies that minimize your tax payments are the following:
Maximize your deductions.
Maximize capital gains income.
Earn tax-exempt income.
Defer taxes to the future or eliminate future taxes.
The following five ideas can be helpful as you work toward better organization andpreparation of your taxes:
Be organized with your record keeping.
Keep copies of the previous year's tax returns.
Keep good records for itemizing deductions.
Spend time in December calculating potential investment gains and losses.
Make charitable contributions (e.g., tithes and offerings) with appreciated financial assets or other assets.
