Can't itemize? Try bunching your deductions

Eighth in a series

Tax Tip

Your Money

March 21, 2004|By Lorene Yue

If you find yourself perpetually short of itemized deductions, you may want to consider bunching some of them every other year.

Taxpayers younger than 65 who are not blind and not claimed as a dependent on someone else's return should take the standard deduction if the total of their itemized deductions for things such as mortgage interest, unreimbursed job expenses and charitable donations is equal to or less than:

$4,750 for single filers or married couples filing separate returns.

$9,500 for married couples filing a joint return.

$7,000 for individuals filing as head of household.

Say you are a married couple filing a joint return, and this year your deductions tally up to $9,400, putting you $101 short this year of being able to take advantage of itemized deductions. Tax experts suggest combing through your various deductions to find areas where you can push items to another year.

Some payments won't lend themselves to bunching, such as mortgage interest or property taxes. Others will.

"If you have charities that you routinely give to, give a donation in January and in December every other year," said Mark Luscombe, who works for CCH Inc., a provider of tax information in Riverwoods, Ill. "That way you can get full advantage of it in a year."

If within the $9,400 itemized total was $500 of charitable contributions, consider holding off this year and then giving $1,000 in 2005. That way, you'll have $9,900 in deductions for the 2005 tax year, assuming everything else remains the same, including the standard deduction amount, and you'll be able to take advantage of itemizing your deductions.

Next week: Checking broker statements.

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