Are you #itemized in 2018?

Question

How many BPers were able to make money moves in 2018, and stay itemized with the new tax laws and higher standard deductions going into effect?

What were your big moves of 2018 which made sure it would happen?

Lance Lvovsky · Answer

There are plenty of opportunities to continue itemizing depending on your specific facts and circumstances. One such strategy is the bunching of charitable contributions. Depending on what state you live in and the total of your other itemized deduction, bunching of property taxes can help too. For example, a couple living in FL that has $10,000/year of mortgage interest, property taxes of $5,000/year, and gives $9,000/year to charity. That total is $24,000 - same as standard deduction.

By bunching charitable contributions with property taxes, every other year, the couple would deduct $10,000 in property taxes (which is also the cap) and $18,000 in charitable contributions. As such, every other year this couple would itemize $38,000 in deduction. At a 30% effective tax rate, they will save $4,200 every 2 years.

Eamonn McElroy · Answer

@Aaron Hunt

It should be noted as well that some taxpayers will take the standard deduction for federal but continue to itemize for state.

This is state specific.  Some states are decoupled from what you do on the federal and allow you to make the choice based on what is most advantageous.  California and Mississippi immediately come to mind.  My state, Georgia, is linked to what happens on the federal (i.e. if you take the standard deduction on the federal, you must take the Georgia standard deduction on the Georgia return, and vice versa).

@Lance Lvovsky provided excellent advice regarding "bunching" deductions every other year.  The only thing I would add is to ask your CPA about a Charitable Remainder Trust (CRT) if you feel you may benefit from bunching.