ge payment to their church). On the advice of a friend, they do the following: In early January 2021, they pay their pledge for 2020; during 2021, they pay their pledge for 2021; and in late December 2021, they prepay their pledge for 2022. a. What are the Bateses trying to accomplish? . Feedback In most cases, the choice between using the standard deduction and itemizing deductions from AGI is a simple matter-pick whichever yields the larger tax benefit. However, taxes might be saved by alternating between the two options by tax planning. b. What would the Bates' total itemized deductions be if all
Each year, Tom and Cindy Bates (married filing jointly) normally have itemized deductions of $22,000 (which includes an annual $4,000 pledge payment to their church). On the advice of a friend, they do the following: In early January 2021, they pay their pledge for 2020; during 2021, they pay their pledge for 2021; and in late December 2021, they prepay their pledge for 2022.
a. What are the Bateses trying to accomplish?
In most cases, the choice between using the standard deduction and itemizing deductions from AGI is a simple matter-pick whichever yields the larger tax benefit. However, taxes might be saved by alternating between the two options by tax planning.
b. What would the Bates' total itemized deductions be if all three church pledge payments were made in 2021? Assume that the itemized deductions of $22,000 already included one year of the church pledge payments.
$fill in the blank cda5d1fea00dfb8_1
What will be the Bates' tax savings if their marginal tax bracket is 24% for all three years?
(Assume that the standard deduction amounts for 2021 and 2022 are the same.)
By concentrating their charitable contributions, their tax savings becomes $fill in the blank cda5d1fea00dfb8_2
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