The Tax Cut and Jobs Act of 2017 (TCJA) created a new framework for families and individuals to consider when it comes to tax deductions. Prior to the tax reform law, several common itemized deductions could be combined with no limit (or very high limits), resulting in a greater deduction than the standard deduction.
Now that the standard deduction has almost doubled to $24,000 for those married filing jointly, a large portion of taxpayers is no longer able to itemize.
However, if these expenses represent a consistent pattern year-to year, some families may be able to increase their deductions by stacking them and itemizing in alternating years.
You can deduct a combination of property and either state and local income taxes or sales taxes paid up to $10,000 each year. By shifting the timing of taxes paid, you could lump together two years and use them as deductions in the year you itemize.
You can also consider funding two-years of charitable contributions to your favorite charities every other year instead of making one annual contribution.
For more information about deduction stacking, contact us today.