Your wealth
A bunch of deductions

Paying certain expenses a few days earlier or later could help you trim your income-tax bill.

Tax planners often recommend "bunching" or "grouping" expenses from two years into one calendar year to make the most of deductions. The strategy goes like this: Say your deductions in a typical year don’t total more than the standard deduction, so you don’t itemize. By adjusting your timing, though, you can push your totals above the standard-deduction amount, itemize them, and pay less income tax. For example, if you paid your 2000 property taxes in January 2001, pay your 2001 property taxes in December 2001. Do similarly with gifts to charity, mortgage interest payments, and other deductible expenses. The more deductible expenses you can group into one year, the lower your tax bill goes. When you do this kind of planning, you probably will itemize deductions every other year, taking the standard deduction in between.

You can use a similar strategy for miscellaneous and medical expenses to push them above the percentage-of-adjusted-gross-income thresholds that will allow you to deduct them. (Don’t think you’ll have enough medical expenses to exceed the threshold? Did you know prescription medicines, dental expenses, lasik eye surgery, contact lenses and glasses, medical insurance premiums, and acupuncture are just a few expenses that qualify? See IRS Publication 502 for the full list.)

These strategies don’t make sense for every taxpayer and could even have negative consequences, so make sure to talk it over with your tax consultant before you make any moves.

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