Question

What is the rationale for trying bunch your itemized deductions in one year and then try...

What is the rationale for trying bunch your itemized deductions in one year and then try to minimize them in the following year?

Homework Answers

Answer #1

1 Most important rationale behind this strategy is there are certain iteized deductions the benefit of which is available only when they exceeds a certain threshold like medical or employement related expense. This, it may be advantageous to either delay or prepay them collectively for more than one period in order to get maximum benefit.

2 . Another reason is sometimes your income may be more due to some extraordinary reasons like extraneous amount of bonus received or any other reason, in that case a person may fall in a higher tax rate slab thus, in order to prevent such kindof situation , it would be better to bunch your itemized deductions in one year and then try to minimize them in the following year.

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