Over the Thanksgiving Holiday’s several family members were surprised to find out that there are still tax law changes – well clarifications, that are going on at this time…
It is possible that there will be changes/clarifications occurring right up and through this first “New” Tax season…
Now is reminder time for taxes — but given the above — we have more of a butter knife than a tax scalpel for our surgical tax techniques — No matter …. Let’s go!
Clumping Property Tax
A joint family will receive a $24k – yes … Twenty Four Thousand Dollar STANDARD deduction – add on to this that the new limited – state and local sales tax (SALT) deduction (read property tax) of $10k annually, planning is needed to maximize deductions.
The easiest and most common way to POSSIBLY maximize deductions is to clump your property taxes as well as other elective expenses. As you can easily tell, clumping your SALT deductions will get you to $20k so we are still not there…
Mortgages interest up to $1million in loan value prior to 2018 and $750k after is still deductible.
Bad Deduction Planning
All of this fancy acceleration and delayed of tax deductible expenses is to avoid the following –
Every year coming up with just under the standard deduction! I.e. $23k of deductions annually is likely not as tax efficient as possible…
A better solution would look like this:
Skip years = Standard/no itemization/simple tax return
According to this AARP report earlier in 2018 the approximate 30% of tax payers who formerly itemized will drop to about 10% –
Bottom Line do not feel bad if you do not itemize, BUT you may still be able to itemize every other year, under an appropriate standard deduction tax max strategy.
Reach out with questions before year’s end – We can help you calculate what the best strategy may be!
Have a Great “Standard Deduction Maximization” Day!
John A. Kvale CFA, CFP