Dec 25, 2017
5:11:49am
5:11:49am
OK - there were a few comments that it was a bit confusing, I want to give it a second try (young adult kids are still asleep - waiting for them to wake up):
As a general rule, your itemized deductions are income taxes, property taxes, mortgage interest and charitable donations. This year the standard deduction is $12,700 and next year it is $24,000.
* Beginning example: If your itemized deductions are $25,000 per year, over a two year period you will reduce your taxable income by $50,000, or 2 X $25 = $50.
* If $10,000 of that is donations (e.g., Tithing, Fast Offering, Missionary), and you prepay $10,000 this year, it will change the above to $35,000 this year and $15,000 next year (same $50,000).
* However, because the standard deduction is $24,000, you can deduct the $35,000 this year, but you still get $24,000 next year (because you are below the $24K standard deduction). $35,000 plus $24,000 is $59,000. You have just reduced your taxable income by an extra $9,000 by prepaying.
* This also works if your expected total next year is below $24K and you itemize this year. By prepaying tithing, the lower you can get it next year below $24K, the more taxes you save.
* The simple formula is if you itemize and your mortgage interest expense is below $14K, you have an opportunity, and the lower your interest is below $14K, the more opportunity you have. However, if you are in a low property tax and state income tax state, the opportunity could be even larger for you.
The key to the formula is increasing this year's deductions and getting below $24,000 next year so that you get the "free money" of the standard deduction - you get $24K every year no matter what.
More important - if you can't afford to do it this year, start planning and preparing to pay double tithing in the future, because this is a repeat thing. I will be paying two years of tithing this year, then again in 2019, 2021, 2023 until something changes. You too could start in any future year and repeat the pattern to regular tax savings - 2018, 2020, etc.
As a general rule, your itemized deductions are income taxes, property taxes, mortgage interest and charitable donations. This year the standard deduction is $12,700 and next year it is $24,000.
* Beginning example: If your itemized deductions are $25,000 per year, over a two year period you will reduce your taxable income by $50,000, or 2 X $25 = $50.
* If $10,000 of that is donations (e.g., Tithing, Fast Offering, Missionary), and you prepay $10,000 this year, it will change the above to $35,000 this year and $15,000 next year (same $50,000).
* However, because the standard deduction is $24,000, you can deduct the $35,000 this year, but you still get $24,000 next year (because you are below the $24K standard deduction). $35,000 plus $24,000 is $59,000. You have just reduced your taxable income by an extra $9,000 by prepaying.
* This also works if your expected total next year is below $24K and you itemize this year. By prepaying tithing, the lower you can get it next year below $24K, the more taxes you save.
* The simple formula is if you itemize and your mortgage interest expense is below $14K, you have an opportunity, and the lower your interest is below $14K, the more opportunity you have. However, if you are in a low property tax and state income tax state, the opportunity could be even larger for you.
The key to the formula is increasing this year's deductions and getting below $24,000 next year so that you get the "free money" of the standard deduction - you get $24K every year no matter what.
More important - if you can't afford to do it this year, start planning and preparing to pay double tithing in the future, because this is a repeat thing. I will be paying two years of tithing this year, then again in 2019, 2021, 2023 until something changes. You too could start in any future year and repeat the pattern to regular tax savings - 2018, 2020, etc.
Originally posted on Dec 25, 2017 at 5:11:49am
Message modified by Acorn on Dec 25, 2017 at 5:13:29am
Message modified by Acorn on Dec 25, 2017 at 5:14:44am
Message modified by Acorn on Dec 25, 2017 at 5:15:53am
Message modified by Acorn on Dec 25, 2017 at 5:16:47am
Message modified by Acorn on Dec 25, 2017 at 5:17:55am
Message modified by Acorn on Dec 25, 2017 at 5:19:48am
Message modified by Acorn on Dec 25, 2017 at 5:25:40am
Message modified by Acorn on Dec 25, 2017 at 5:59:04am
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Reporting back on paying 2017 double tithing (17+18). Holy Schmoly!! (Acorn, Feb 21, 2018 at 5:53pm)
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