Bunch Your Itemized Deduction to Save Taxes

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Itemized-deductionsIf your itemized deductions are close to
the amount of your standard deduction, they may not save you much, if any, on
your taxes.  One strategy is to “bunch”
as many of the deductions as you can into one year in order to reduce that
year’s taxes, and then settle for the standard deduction the following year.

Here are the itemized deductions that
you may have enough control over to “time” them into one year rather than in
the other:

  • Medical
    and dental expenses.  Work with your
    providers to pay your medical expenses before December to deduct in 2013, or in
    January to deduct in 2014.
  • Mortgage
    interest can be moved by paying January’s mortgage payment in December.  This way you will effectively get 13 months
    of interest in one year and 11 the next year.
  • State
    income taxes.  Make your January 2014
    payment in December 2013 so you can deduct it this year.
  • Property
    taxes in El Paso
    are due at the end of January 2014. 
    Prepay them in December of 2013 so you can deduct them.
  • Charitable
    gifts.  I have one client who makes
    annual donations to his church and his favorite charities.  He made one in January of 2013 and will do
    next year’s late in December of 2013.
  • Sales
    tax on large purchases such as new vehicles. 
    Make your purchase in the year you are bunching your itemized