Bunching Deductions

Bunching Deductions refers to a tax strategy that involves grouping multiple deductible expenses into a single tax year to exceed the standard deduction threshold.

By timing expenses such as medical bills, charitable contributions, or mortgage interest payments strategically, taxpayers can maximize their itemized deductions in a given year, thus potentially lowering their overall taxable income for that year. For example, if a taxpayer normally gives $5,000 to charity each year, they might choose to give $10,000 in one year while skipping the next. This tactic can lead to significant tax savings when the total deductions surpass the standard deduction limit.