While many retired clergy choose to enjoy their well-deserved season of rest, some seek ways to continue nurturing their spiritual calling.
While inflation may have hurt the grocery budget, it has advantages when it comes to paying your 2023 taxes. This is due to the IRS using the consumer price index to measure inflation and define tax brackets, a practice that began in 2017. Across the board there have been increases in deductions, but especially for those over 65.
The standard minimum deduction has risen for all taxpayers. See the chart below for details.1
Standard Minimum Deductions for 2023
An additional $900
Married people filing jointly
An additional $1,800
Single filers or head of household over age 65
An additional $1,850 (up $100 from 2022)
Married people over 65
An additional $1,500 (up $100 from 2022)
Tax brackets have been expanded which allows people to earn more money in 2023 and stay in a lower bracket.
The allowable contribution amount to tax-free retirement plans also increased. If over 65, IRA contributions in 2023 can be as much as $6,500 and if over age 50, $7,500. This is a $500 increase from last year. However, there are income limits for Roth IRAs. There are no income limits to traditional or other kind of IRAs.2
There is also a $2,000 increase in the allowed amount contributed to a 401k or 403b. This is the highest increase since the mid-1980s.3 Pre-tax contributions can now be as high as $22,500 and employee and employer combined contributions have increased $5,000 to a max amount of $66,000. If over 50 the annual catch-up amount increased $1,000 to a max of $7,500.4
The estate and gift exemptions are another area often under-utilized, to save on taxes. In 2023, the amount that can be given away has increased almost $900,000 and is now $12.92 million. Double this amount if married. The numbers may revert to $5 million in 2026 so now is the time to take advantage of this increase for these exemptions.
There are three tiers of gifting:
Gifting has several other perks. Giving money to others removes assets from both your estate and annual income while also removing the appreciation the monies would have accrued in your accounts. The money is also tax free to the recipient.
The downside to the tax exemption changes is that it will be harder to itemize deductions, tax payments, mortgage interest and charitable contributions in 2023. Be sure to consult your tax professional to be sure about the changes that apply to you.
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Translations of any materials into languages other than English are intended solely as a convenience to the non-English-reading public. We have attempted to provide an accurate translation of the original material in English, but due to the nuances in translating to a foreign language, slight differences may exist.
Las traducciones de cualquier material a idiomas que no sean el inglés son para la conveniencia de aquellos que no leen inglés. Hemos intentado proporcionar una traducción precisa del material original en inglés, pero debido a las diferencias de la traducción a un idioma extranjero, pueden existir ligeras diferencias.
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