Bunch Deductions
If you bunch deductions, you can benefit from itemizing in one year and use your standard deduction in the next one. “It’s an old strategy that has greater meaning now,” says Thomas Alvare, senior lead advisor of JFS Wealth Advisors, in Doylestown, Pa.
Basically, if you offer $15,000 a year to charity, you can donate $30,000 in one year and itemize. Therefore, you will skip donations and take the standard deduction the next year.
Bunching deductions is also a great technique because it pulls your taxable income to a level that reduces the tax rate on capital gains.
2 thoughts on “7 Clever Tax Strategies Every Retiree Should Know”
I’m 72 1/2 I cant retire because of credit card debt I hav good credit but 33k in credit card total What do you suggest? I have never been late on my payments
I have concerns with the advice given.
1) According to IRS Publication 590B, you must be 70 1/2 to make such a contribution, not 70. Also, the limit is $100,000 not 4100,000, as your article suggests.
2) The advice to rollover to a Roth as soon as possible may cost tax money. Had one done it in 2017 the rates would have been higher than they will be in 2018. The issue of one’s personal marginal tax rate is not even mentioned. If one is in a 25% marginal tax bracket this year because of unusually high income, but expects to be in a 15% marginal tax bracket next year, your advice to do it as soon as possible will cost the tax payer money.