Are you someone who usually itemizes deductions on your tax return? Are you worried that this year, you’ll fall short of the amount where itemizing becomes an option?
A strategy known as “bunching” might pay off. As the end of the year approaches, consider the deductible expenses you know are coming. Is there any way to pay ahead, taking care of a 2017 payment in 2016? For example:
- You could prepay planned 2017 charitable contributions by the end of 2016, doubling your charitable deduction on this year’s tax return.
- You could pay off deductible medical expenses in a lump sum, rather than spreading out payments through the following year.
- You could pay an extra round of property taxes, essentially sending 1½ times the total in 2016 and only ½ in 2017.
By making those donations or payments early, you’ll increase your itemized deductions for the current year. More deductions can mean a lower tax liability. Taxation Solutions, Inc. can help you strategize how bunching might work for your specific circumstances. In and around Indianapolis, we’re trusted for skilled and knowledgeable tax help. Get in touch today to schedule your appointment with one of our tax resolution specialists!