This has been such a comprehensive discussion! As someone who works with several clergy members on their taxes, I wanted to emphasize a few key points that could really help your friend: 1. **Get the church classification right from the start** - Have your friend sit down with the church treasurer/board and clarify whether they'll be issuing W-2 or 1099-NEC. This decision affects everything from withholdings to retirement options to business deductions. 2. **Housing allowance timing is critical** - The church board MUST designate the housing allowance amount in writing before January 1st of the tax year. I've seen too many clergy members lose out on this exclusion because it wasn't properly designated in advance. 3. **Self-employment tax planning** - Regardless of W-2 vs 1099 status, your friend will owe the full 15.3% SE tax. I always recommend setting aside at least 25-30% of gross ministry income for taxes, especially in the first year when there's no withholding history to guide estimates. 4. **Documentation is everything** - Keep detailed records of ALL ministry-related expenses (mileage, books, continuing education, vestments, etc.) and housing expenses if taking the housing allowance. The IRS scrutinizes clergy returns more than most. Your friend should also consider connecting with other clergy in their denomination for practical advice - every situation is slightly different, but learning from others' experiences can prevent costly mistakes. The dual tax status is confusing, but with proper planning it can actually be managed quite effectively!

Your friend is lucky to have someone helping navigate this! As a former church treasurer who dealt with clergy taxes for years, I wanted to add a few practical tips that might help: **Start with the basics first** - Before getting overwhelmed with all the complex rules, have your friend request a meeting with the church's finance committee or treasurer to establish clear expectations. Many small churches honestly don't know the proper procedures either, so this conversation benefits everyone. **Consider hybrid documentation** - For housing allowance records, I always recommend clergy members take photos of major purchases (furniture, appliances, home repairs) and store them in a dedicated folder on their phone. It's much easier than keeping paper receipts, and you'll have timestamps. Also, create a simple monthly spreadsheet with categories like utilities, maintenance, mortgage interest, etc. **Quarterly payment strategy** - Since your friend is new to ministry, they won't have prior year taxes to base estimated payments on. I suggest calculating 30% of net monthly income after housing allowance exclusion, then making quarterly payments based on that. It's better to overpay slightly in the first year than face underpayment penalties. One last thing - many clergy members don't realize they can deduct half of their self-employment tax as an adjustment to income on their tax return. It's not itemized, so they get this benefit even if taking the standard deduction. The learning curve is steep at first, but once your friend gets systems in place, clergy tax management becomes much more manageable!

This is such valuable information! I'm in a similar situation at 29 with a Roth 401k through my employer. Reading through this thread has been incredibly enlightening - I had no idea about the prorating rule difference between Roth 401k and Roth IRA withdrawals. One thing I'm curious about: when you do the rollover, how do you track the contribution basis vs. earnings for tax purposes? Do the financial institutions provide clear documentation, or do you need to maintain your own records? I'm worried about accidentally withdrawing earnings thinking they're contributions and getting hit with unexpected taxes and penalties. Also, for anyone considering this strategy, I'd recommend double-checking with your current 401k provider about any rollover fees or restrictions. Some plans have waiting periods or processing fees that could affect your timeline.

This thread has been incredibly helpful! As someone who's been contributing to a Roth 401k for the past 4 years without fully understanding the withdrawal differences, I feel like I finally have a clear picture. One additional consideration I wanted to mention: if you're planning to do this rollover, timing can matter for tax purposes. I learned from my financial advisor that it's often best to complete rollovers early in the tax year so you have the full year to track any subsequent withdrawals properly. Also, for anyone worried about the complexity of tracking contributions vs. earnings after a rollover - most major brokerages (Schwab, Fidelity, Vanguard) have really good online tools that clearly show your contribution basis. They make it pretty foolproof to see what you can withdraw without penalties. The peace of mind knowing I can access my contributions in a true emergency while still keeping everything growing for retirement has been worth the rollover process. Just make sure you understand all the rules before making any moves!

Has anyone tried just using a PO Box in a tax-free state? My buddy does this for his online business and hasn't had any issues. He just registered an LLC in Montana and uses that address for everything.

Be very careful with this approach. I've seen several businesses get into trouble trying to use remote addresses purely for tax savings without proper substance behind them. The key factors tax authorities look for are: 1. **Actual business activity** at the address (not just mail forwarding) 2. **Proportional allocation** based on where services are actually used 3. **Legitimate business purpose** beyond tax savings Since you mentioned having employees in low-tax states, you're in better shape than someone just using a PO Box. However, you still need to ensure the allocation makes business sense. If 80% of your team is in Washington but you're routing 100% of SaaS purchases through Oregon, that's going to look suspicious. My recommendation: Work with a multi-state tax specialist to develop a defensible allocation methodology. Document everything - employee locations, actual software usage patterns, business operations at each location. The small upfront cost of proper planning is much less than the penalties and back taxes you'd face if caught doing this incorrectly. Also remember that nexus rules are complex and constantly evolving. What works today might not work tomorrow, so regular reviews with a tax professional are essential.

I'm confused about the timing. Can I still make a backdoor Roth contribution for 2024 right now in August 2024, or do I have to wait until Jan 2025 to do it?

Great question! Yes, backdoor Roth IRAs are definitely still allowed for 2024. At your income level of $168k, you're correct that you're above the direct Roth IRA contribution limits ($153k-$168k phaseout range for 2024), so the backdoor method is your best option. Since you mentioned you don't have existing traditional IRA balances, you're in a perfect position - no pro-rata rule complications to worry about! The process is straightforward: contribute $7,000 (2024 limit) to a non-deductible traditional IRA, then convert it to a Roth IRA shortly after. For tax reporting, you'll need Form 8606 to report the non-deductible contribution and the conversion. The conversion itself isn't taxable since you're converting after-tax dollars. Just make sure to keep good records of the contribution date and conversion date. One tip: consider doing this early in the year so any small gains between contribution and conversion are minimal. The strategy has been around for years and Congress hasn't moved to eliminate it despite various tax reform discussions.

I've been through a similar situation with high W2 income and rental losses. Unfortunately, at your income level ($670K), you're well beyond the phase-out range for rental loss deductions. The passive activity loss rules are pretty strict here. However, since you work in property management, you might want to explore whether any of your rental activities could qualify for different treatment. For example, if you're providing substantial services beyond typical landlord duties (like regular maintenance, landscaping, or other hands-on management), you might be able to argue that some portion isn't purely passive rental activity. Also consider: 1. Make sure you're maximizing current-year deductions by properly categorizing repairs vs. improvements 2. Look into cost segregation for future years to accelerate depreciation 3. Keep detailed records of all your time and activities related to the property The losses aren't "lost" - they'll carry forward and can offset future rental income or be fully deducted when you sell. Given your income level, you'll likely benefit more from these losses in the future anyway. You might want to consult with a CPA who specializes in real estate taxation to explore any nuances specific to your property management background.

I'm in a very similar situation and have been researching this extensively. At your income level, you're unfortunately past the point where any rental loss deductions are allowed against ordinary income. The $100K-$150K phase-out range means you get zero deduction at $670K. However, don't overlook some potential current-year tax savings while those losses carry forward: 1. **Expense categorization review** - Make sure repairs aren't being capitalized as improvements. Things like fixing existing systems, painting, minor plumbing repairs can be fully deductible repairs rather than depreciable improvements. 2. **Section 199A deduction** - If you have any rental income (even from other properties), the QBI deduction might apply to offset some of your high W2 income. 3. **Professional development expenses** - Since you work in property management, any courses, certifications, or professional development related to real estate might be deductible as employee business expenses if you itemize (though this is limited post-TCJA). The silver lining is that with your income level, those suspended losses will likely be worth more to you in future years when you can use them. At your current tax bracket, a $30K loss could save you around $11K+ in taxes when you eventually sell or have rental profits to offset. Keep meticulous records of everything - the IRS loves to challenge rental loss carryforwards if documentation is poor.