Your Year-End Tax Checklist

The December holiday season is a very busy time for most people, especially clergy. Even so, it is important to start thinking ahead to the 2022 tax season and beyond. Here is a financial checklist of year-end tasks, some changes for the 2022 tax season, and strategic planning tasks for 2023.

  • Prepare to make your 4th quarter estimated tax payment by Jan. 17, 2023. 
  • If making quarterly estimated payments is difficult to manage, consider instead having “extra withholding” taken on your paycheck in 2023. A new W-4 will be required to complete.
  • Get your 2023 housing amount designated in writing by your church before Jan. 1, 2023.
  • If you have a FLEX medical or dependent care savings plan, use it or lose it! HSA owners can make an optional tax-deductible after-tax contribution to your account by 4/15/2023. Limits apply.
  • Make your 2022 cash contributions by 12/31/22. Qualified charitable donations are deductible only on the Sch A this year. The above-the-line deduction for charitable donations for taxpayers who take the standard deduction in 2022 is no longer available.  
  • If you own appreciated stock, consider transferring it directly to the church or non-profit. Itemizers will get the charitable tax deduction and avoid capital gains tax. Suggest this to your parishioners, too!
  • Set up your 2023 payroll pre-tax or Roth retirement plan contributions with your church or employer. It’s a great way to save for retirement, and it lowers your taxable income in 2023.
  • Remember to take Required Minimum Distributions from retirement accounts if you began RMDs at age 70 1/2, or are now 72 and older. Distributions from church-sponsored retirement plans may be tax sheltered using actual housing costs for most retired ministers, so remember to tally up your actual housing expenses. You can exclude the lesser of the FRV of your home, actual housing costs, or the amount of the distribution.
  • If you are age 70 1/2 or older, consider making a tax-free Qualified Charitable Distribution to your favorite charity using your RMD by Dec 31. Special rules apply!
  • Contribute to a Traditional or Roth IRA. You have until April 15, 2023 to make a 2022 contribution. Contribution limits are connected to AGI, so it may be advisable to wait for your 2022 return to be completed to be sure you are eligible. 
  • Considering making an IRA to Roth Conversion? There are advantages and disadvantages. Roth conversions must be completed by Dec 31.
  • The 2022 business mileage rate is $.585/mile Jan-June and $.625 July-Dec. If you had unreimbursed business mileage, a written mileage log with dates will be necessary to compute the appropriate deduction for 2022. 
  • Several tax credits will revert to 2019 levels. The Child Tax Credit reverts back to $2000/child in 2022, and the maximum Child and Dependent Care Credit returns to $2100.
  • There are new rules for the Clean Vehicle Credit. For more information, see https://www.irs.gov/businesses/irc-30d-new-qualified-plug-in-electric-drive-motor-vehicle-credit
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