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.

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