Should I pay property taxes early to stay in the 15% tax bracket?

[MollyMMM]

Hi all!

I've done my best to keep our family's taxable income close to $75,000 for the past few years to keep from having additional dollars taxed at the 25% tax bracket (such a large jump from 15% to 25%!)  I'm going to go a few thousand over this year and since our property tax bill is due in two installments in November and February, I just thought that maybe I should pay some of our property taxes early to increase our itemized deductions.  Does this sound like a good idea?  Is it confusing to the IRS for property taxes to go from $6000 in 2015 to $9000 in 2016 then down to $3000 in 2017?  I'm having a baby next year so our income will be lower and we'll get an extra child tax credit so I think I'm not screwing us over for 2017 taxes too much.  Thoughts?  Anything I'm missing?

Thanks!
Molly

[Daisy]

Sounds like a good idea to me. Same could be done with other itemized deductions such as charitable giving. Double up one year and take a huge deduction, then take the standard deduction the following year.

Somewhere in these forums I created a topic on this called "Standard Deduction Games" or some thing like tbat.

[Rubic]

Somewhere in these forums I created a topic on this called "Standard Deduction Games" or some thing like tbat.

Protip, Google:

    "standard deduction games  site:forum.mrmoneymustache.com"

Voilą!

http://forum.mrmoneymustache.com/ask-a-mustachian/standard-deduction-games/

[wenchsenior]

Sounds like a good idea to me. Same could be done with other itemized deductions such as charitable giving. Double up one year and take a huge deduction, then take the standard deduction the following year.

Somewhere in these forums I created a topic on this called "Standard Deduction Games" or some thing like tbat.

It is impossible for us to get over the SD unless we double up property tax payments, donations, etc., in alternating years...so I started doing it a long time ago. It's a great system, though sometimes I get really aggravated when I'm having a cleaning frenzy and I can't ditch the closet full of boxes of books, clothes, etc until Jan 1st LOL.

[MollyMMM]

Thanks so much for the input everyone!  I'm glad to have found this out before the end of the year!

[RedwoodDreams]

Yes, I try to do this every December, and if I can swing it, pay January's mortgage payment in December as well.

[COlady]

You can also pay any state tax you may have due in April, before 12/31 since state tax is deductible on Schedule A.

[caracarn]

I've never been a big fan of limiting income to avoid moving a tax bracket.  The only income taxed at that level is the increased income, not the entire level below it.  I'm assuming you understand that, but it is always interesting to me when I hear or read comments such as yours that say you try to keep your income at a certain level to avoid going to another bracket.

Certainly  figuring out how to increase deductions is a great idea in any year, but your tax on income is not going to change.

[protostache]

I've never been a big fan of limiting income to avoid moving a tax bracket.  The only income taxed at that level is the increased income, not the entire level below it.  I'm assuming you understand that, but it is always interesting to me when I hear or read comments such as yours that say you try to keep your income at a certain level to avoid going to another bracket.

Certainly  figuring out how to increase deductions is a great idea in any year, but your tax on income is not going to change.

The only time it makes sense to limit AGI is when you're trying to optimize for Obamacare subsidies or stay within the 15% bracket for capital gains tax purposes, both of which are post-accumulation problems.

[arebelspy]

I've never been a big fan of limiting income to avoid moving a tax bracket.  The only income taxed at that level is the increased income, not the entire level below it.  I'm assuming you understand that, but it is always interesting to me when I hear or read comments such as yours that say you try to keep your income at a certain level to avoid going to another bracket.

Certainly  figuring out how to increase deductions is a great idea in any year, but your tax on income is not going to change.

+1 (and +1 to proto's addition).  And I'll add one more: grouping like this can make sense to bump you above the standard deduction when you wouldn't otherwise.  That doesn't have to do with the bracket, but just another reason why you might do activities like this.  :)