Taxes, Fishing and God
We are heading toward the end of January 2018 and all across America W-2’s will be making their way to the doorsteps and mailboxes of all working Americans. Yup it is tax time. For me, this is the time I am collecting all my tax documents and gonna head over to my Tax-Attorney. Yes you heard that correctly. PastorFi has a Tax-guy. There are three reasons I have a Tax-guy. Firstly, he does a fantastic job! Secondly, the gentleman is a personal friend. And finally, he offers his services to file for me, for free.
I suppose to some degree everyone feels like their own taxes are “hard” or “complicated." If you are a pastor or religious worker who is reading this, you understand when I say: “Mine are complicated!” As a Pastor working for a church organization I get a W-2. “Well PastorFi, most Americans get a W-2, nothing complicated there.” However as a religious worker I am considered self-employed. “What?? Does that means you pay both sides of the Social Security coin; all 15%?”. PastorFi: "Sadly Yes. There is however an upside. Pastors get this thing called parsonage which helps out.” “A person’s age? What?” Not a person’s age, PARSONAGE. Parsonage allows me to deduct from my taxable income any and all costs I incur to provide a home for me and my family. These costs include but are not limited to, mortgage interest (yes I get to deduct this twice), furniture, curtaining, cleaning supplies, utilities. “Even your utilities? Man PastorFi you are lucky!” “Why yes, yes I am!” Throw in a bunch of trades on my brokerage account; short and long term Capital Gains and Losses, and an IRA to Roth IRA conversion, yes my taxes get messy. "Wait a minute PastorFi; Did you not tell me the other day you had maxed out both yours and your wife’s Roth IRA’s? How can you add more to a Roth? And my follow up question:- since neither you nor your wife are 59.5 years old, are you not incurring that 10% penalty since you are taking money out of an IRA?” Yes we did max out both Roth IRA's in 2017. Since I am over 50 years old, I am able to contribute an extra $1K (catch-up amount) to mine. And as my wife is under the age of 50; in 2017 we contributed $5,500 to her Roth and $6,500 to mine. As a married couple filling jointly our taxable annual gross income (AGI) left me some wiggle-room within the 15% tax bracket [since our taxable AGI is around $70K and the MFJ is $75,900 to remain in the 15% tax bracket, I had about $5K I could convert (I know technically the amount is $5,899.99)]. To learn more about this Back-Door-Roth-Conversion I suggest reading MadFientist! I also recommend two Podcast episode from ChooseFi:-
a) Episode 017
b) Episode 043R
Scripture
tells me that I ought to pay taxes. At
least that is my take of the oft quoted passage:
“Render unto Caesar the things that are Caesar’s. Render to
God the things that are God’s.” (Matthew 22:21). Personally I have no problem with paying
taxes. In essence I appreciate dialing
9-11 and have Police, Ambulance or Fire Company show up at my door! I appreciate and support libraries. I love our Interstate highways and I am ever
so grateful for sewer systems. In short
I like having infrastructure and I am ok paying my portion of it. That said I have no intention of paying more
than I am legally required. If there are
legal and legitimate ways I can reduce my tax bill, you better believe I will
be taking advantage of those ways. While
my particular HR does not allow me to take advantage of the
Mega-Back-Door-Roth, it is well worth learning about. Again from the
MadFientist: MegaBackDoorRoth
And from the ChooseFi Podcast: Episode 043R
And Physician on Fire: Step by Step Backdoor
In retirement I hope to pay less taxes; much less. I have paid taxes in the US for nearly 30
years now. I have paid my fair
share. An interesting read is the book by Corey M. Snow
and David McKnight entitled: The Power of Zero provides one with a
step by step roadmap on how to get to the 0% tax bracket, effectively
eliminating tax rate risk from your retirement picture.
It
is also well worth your time to check out this article by Go-Curry-Cracker
entitled: Never Pay Taxes Again.
Seems even
Jesus paid his taxes. His tax money
came from the mouth of a fish. (Matthew 17:24-27) He could pull miraculous stuff off like
that. I have caught many fish; never
have I found tax money in their mouths.
Wait did someone mention fishing?
“Yeah PastorFi, it was Peter. He
said: I am going fishing. And the lads
with him said: “We are coming too!” (John 21:3)”
I think
I would have liked this Peter dude. He
thinks like me.
Comments
Post a Comment