Year-End Tax Planning Tip: Don’t Lose the Benefit of Itemized Deductions
If your itemized deductions end up being just under (or just over ) the standard deduction, you can double up on itemized deductions every other year and claim the standard deductions in the intervening years. For 2017, the standard deduction is $12,700 for joint filers ($6,350 for singles). For example, if you file jointly and your property taxes (your only itemized deduction) run about $9,000 a year, you will end up claiming the standard deduction each year. Instead, you could pay two years of property taxes in 2017, getting the benefit of the $18,000 itemized deductions that year. In 2018, you would have no itemized deductions (since you paid your 2018 property taxes in 2017) and would claim the standard deduction. By bunching your itemized deductions in 2017, you will get $30,700 of deductions over the two-year period, instead of the $25,400 (ignoring the inflation adjustment to the standard deduction) you would deduct if you just claimed the standard deduction each year. Deductions that can often be shifted from year to year include certain property taxes, the final estimated state income tax payment, early state taxes, and charitable contributions.
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Davis & Hodgdon Associates CPAs has been assisting individuals and business owners with tax consulting and strategizing for more than 25 years. Please call us at (802) 878-1963 (Williston) or (802) 775-7132 (Rutland) if you have any questions or if you would like to set up a strategy meeting to discuss your unique tax planning needs prior to December 31.
From left to right: Matt Cleare, CPA, CGMA and Jeff Biesadecki, CPA