Bunch Your Deductions and Get a Bigger Bang for Your Buck
Certain expenses can only be deducted as itemized deductions on your personal tax return if they exceed a threshold percentage of your AGI. For medical expenses, this is 10% if you’re under 65, 7.5% if you’re over 65. If you’ve got some expensive but non-urgent medical procedures planned, consider bumping them into next year if you don’t have enough expenses this year to qualify. Or if you already had medical expenses this year, see if you can schedule the procedures this year to get to that 10% of AGI threshold.
You can use the same approach with miscellaneous itemized deductions, which include tax planning and preparation as well as legal fees related to income or estate planning. These expenses only need to exceed 2% of AGI to be deductible. This category also includes unreimbursed employee expenses, such as travel, professional dues and licenses, as well as broker fees. If you anticipate a big change in your income between this year and next year, you may get the most benefit by taking the deduction in the year with the smallest income. Call our office so we can help you determine the best timing for your situation.