John Bullis: How to bunch itemized deductions

The new tax law changed the Standard Deduction for all taxpayers.

In 2019, single individuals can claim Standard Deduction of $12,200. Married couples who file a joint return can claim $24,400 and Head of Household filers are allowed $18,350.

Also, an additional amount for being age 65 or being blind for tax purposes can be claimed as an additional Standard Deduction. Single individuals claim an additional $1,650 in 2019. Married couples can claim an additional $1,300 for each of them who’s age 65 (or is blind).

Why Congress decided to make the additional amounts more for single, unmarried folks more than the additional amounts for married couples isn’t clear, but that’s the new tax law.

Some taxpayers will now benefit from “bunching” the Itemized Deductions every other year. They would claim the Standard deduction in years 1, 3, 5 etc. But they would claim Itemized deductions in the other years of 2, 4, 6 etc. if Itemized deductions are more than that year’s Standard deduction.

If you elect to pay property taxes by quarter, then the payments due January and March might be paid in the preceding December. That would mean one year you would pay two quarters of property taxes and in the other year you pay six quarters of property tax. That’s “bunching” itemized deductions for property taxes, expecting to claim the Standard deduction in the years you only pay two quarters of property taxes.

Unfortunately, the itemized deduction for taxes (property, sales tax, government services tax of vehicle licenses) is limited to $10,000. So, you might look to see when you’ll equal or exceed $10,000 of taxes for itemized deductions

Also, you could increase charitable contributions (cash and non cash) in the year you hope or plan to use Itemized deductions. You might do more charitable deductions in December for the year of possible Itemized deductions and less charitable contributions in January through March of the following year you plan to do the Standard deduction. The new tax law allows 60 percent of charitable cash donations to public charities. Just let the charity or church know what you plan to do.

Some medical expenses are possible to elect to do in the year of Itemized deductions. But you don’t want to put your health at risk by postponing vision or dental expenses and/or annual examinations. Some surgeries that aren’t life threatening might be done in the year of Itemized deductions. Maybe your medical expenses can be “bunched” to some degree so they might be more than 10 perecnt of your Adjusted Gross Income in 2019.

Did you hear “The third day of a diet is the easiest. By that time you are off of it.”

John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.