How Can You Lower Your Tax Bill Next Year?

“Today, it takes more brains and effort to make out the income-tax form than it does to make the income.” — Alfred E. Neuman

A mistake or missed opportunity on your tax return is money you’ll never get back.

Although filing taxes can be a burdensome and painstaking process, it can also be a fantastic opportunity to put more money back in your pocket if executed strategically.

Tax reform known as the Tax Cuts and Jobs Act (TCJA) created broad-sweeping changes to our tax code. Perhaps most notably, the TCJA doubled the standard deduction, reducing the number of tax filers that could benefit from itemizing their deductions to roughly 10 percent of Americans.

This is important because those who itemized deductions in the past, but now fall below the standard deduction threshold ($30,000 for married-filing-jointly, $15,000 for single filers), found their previously-itemized deductions provided no tax benefit last year.

If the increased standard deduction now puts you on the cusp of itemizing your deductions, there are a few strategies that can put you over the hump and lower your tax bill:

The lumping and timing strategies above only help taxpayers who, by using them, can reach itemized deductions that exceed the standard deduction threshold — otherwise the standard deduction always applies. For those close to itemizing in any given year, deduction timing and lumping can be an appealing opportunity, and repeated systematically over time, can add significant tax savings over the long term.