One Way To Lower Your Tax Bill For 2016 Is To Accelerate Deductions Before December 31
Contributing to your favorite cause when it is a 501 (c) 3, is a terrific way to get another deduction. Did you know you can supercharge the tax benefits of your generosity by giving appreciated stock or property rather than cash? What’s more is if you have owned the asset for more than one year, you get a double tax benefit from the donation because you can deduct the property’s market value on the date of the gift and avoid paying capital gains tax on the built-up appreciation.
Keep in mind, you must back up any contribution with a receipt. And, it doesn’t matter anymore what the amount is, the receipt is what you need.
These tips only work if you itemize your deductions; claiming the standard tax deduction does not permit these benefits.
One strategy to consider is to focus on bunching your deductions. This means you work on lean and fat years. For example, in one year, you accumulate as many deductible expenses as possible to surpass the standard-deduction threshold.
During the opposite years, focus on skimping on what you spend with the idea of holding back until the following year so that you can make the most of those expenditures.