Everyone likes to save as much as they can on their taxes every year. Of course, this is a noble goal and everyone should be doing exactly that. Likewise, everyone likes to keep his or her tax return as easy and simple as possible, which is also a smart move. That’s why many people use the accounting and tax planning services we offer at GROCO. There are many different tax situations and no two people’s tax return are exactly alike. In other words, there are many different ways to arrive at the same goal, which is to make tax filing as easy as possible and save as much money as you can.
Patience Is a Virtue
It is said that “the early bird gets the worm,” but this phrase is also quoted often: “good things come to those who wait.” When it comes to your taxes, which one of these common words-of-wisdom applies to you is really a matter of your personal situation. However, if you enjoy practicing patience and you want to keep your tax return simple – at least every other year – then here is a creative tax plan that could be for you.
How It Works
If you make charitable donations you can pay the next year’s donations before the current year ends and add them to your deductions. You can also prepay the next year’s state and local taxes in advance. When you add up those two deductions with all of your other deductions, you could come up with a much more valuable list of itemized deductions.
Every Other Year
But wait, wouldn’t that mean my itemized deductions would be miniscule the following year? The answer is yes. However, the next year you could just take the Standard Deduction, which would most likely end up being much higher than what you would get if you went with your itemized deductions. By rotating every two years between the Standard deduction and your itemized deductions you could save more on your taxes each year. As an added bonus, you would only have to figure out your itemized deductions every other year. That means that every other year your filing process would also be made easier because you would just select the Standard deduction.
Itemize or Not?
The key is how many itemized deductions you have. If, by combining your deductions over a two-year period greatly increases the value of your itemized deductions, when compared to the Standard Deduction, then this method could be very helpful.
We Can Help You Decide
Of course, this plan is not for everyone and even for those who employ it, their tax situation could change enough from year-to-year that it might not always be beneficial. However, if you live by the words of Benjamin Franklin and believe that “he that can have patience can have what he will,” then maybe this two-year tax plan is perfect for you. Not sure how your taxes stand up to this idea? Don’t worry. GROCO has you covered. We can look at your individual tax situation and see what best fits you. Click here to contact us online or call us at 1-877-CPA-2006.
The post A Creative Plan to Help Lighten Your Tax Load first appeared on Advisors to the Ultra-Affluent – Groco.
