If you’ve spent the past several years trying to itemize your deductions, only to fall slightly short, you might benefit from a strategy known as deduction bunching. By carefully planning when certain deductible expenses will fall, you can have more deductions when tax season rolls around, which will save you money for the tax year.
Deduction bunching is most often used with the following types of expenses:
- Medical expenses
- Charitable donations
- Property tax payments
How does it work? Let’s say you donate a set amount to charity each year. If you put aside a little extra every month, you may be able to make an additional charitable donation in December, rather than waiting until the new year—which means extra deductions for the current year’s taxes. In the case of deductible medical expenses, meanwhile, you may be given the choice between a lump-sum payment or an installment plan. Opting to pay all at once might seem difficult—but it will allow you to deduct the maximum amount from your taxable income that year.
Pro Tax Resolution is San Antonio’s best source for reliable and skilled tax help. If you’re interested in learning more about deduction bunching and other tax planning strategies, we’ll be happy to schedule a consultation with you. We can’t wait to help you make the most of the upcoming tax season!