We’re trying the “bunch your property taxes” thing

[HEY– TUESDAY IS VOTE DAY IN THE US!  MAKE SURE YOU VOTE!!!!  LOCAL ELECTIONS ARE IMPORTANT!   Also:

Ditto all the racist xenophobic mailers that have been going out.  We cannot let hate win just because we weren’t paying attention to state and local elections!

… END SOAPBOX.  VOTE.  ]

This is our first tax year without Wells Fargo paying our mortgage taxes out of escrow.

Our property taxes are 8K/year.  We have a choice of paying half before November and half in June, or paying in full in November.  That means it is possible for us to pay half in one year and 1.5 times the next, followed by half the next year and so on.  Alternatively we could pay 1x each year.

Given our regular charitable giving and other taxes, we’re right up against the standard deduction if we pay 1x each year.  So it makes more sense for us to try to bunch it into every other year.

So, this year I wrote out a check for half the property taxes and we’ll be taking the standard deduction.  We’ll put off our holiday charitable giving to January rather than December.  Next year we’ll itemize.

We’ll see how this ends up working out this year, and next year too.  Hopefully we didn’t make a mistake (especially given upcoming changes to the tax code)!  If a tax plan that limits the property tax deduction to 10K really does pass, then I will send out the second property tax check before December 31st and our annual charitable giving then too.  I put a note in our google calendar to double check on things sometime in December.

Do you itemize your taxes?  Do you play any fun games with timing for tax purposes?

Advertisements

37 Responses to “We’re trying the “bunch your property taxes” thing”

  1. Leigh Says:

    We can’t bunch our property taxes – we don’t even get the bill for 2018 until early in 2018. I think they will go over $4k next year. We did bunch two years of charitable donations into 2016 and we will do the same in 2018, though our plan is to do an estimate for 2018 income at the beginning of the year and then an estimate for 2019 income at the end of the year.

    • nicoleandmaggie Says:

      We never did get around to doing a donor-advised fund… I guess if we did one this year, we’d be able to take the tax break on the property taxes as well. Maybe I should talk to DH about it, especially if we’re going to keep doing all these random donations to the public schools– though I’m guessing the $25 here and there would be too much of a hassle to run through the donor advised fund even if we pick one that allows such small donations.

      • Leigh Says:

        Ours (at Schwab) and Fidelity both allow $50 minimum donations. I actually find it less hassle to donate with the DAF, especially once you’ve donated to the place once as then you can just click the “donate again” button.

      • nicoleandmaggie Says:

        I don’t know if our school district allows electronic donations though…

      • Leigh Says:

        Is it not a 501(c)3 or whatever charities are? If not, a DAF is a moot point for that purpose. I think Schwab just mails a check for some charities?

      • nicoleandmaggie Says:

        That’s good to know about a check. Public schools count for charitable donation purposes. Still, for most of our donations, the request comes out on Tuesday or Wednesday and they need the money by Friday.

      • Leigh Says:

        That does seem too quick to use a DAF: “If Schwab Charitable has already granted to a charity and it remains IRS-approved, a personalized grant letter and check will generally be mailed to the charity within three to five business days.”

        One of the weddings we went to this year did a charity registry so we included the grant letters from our DAF with our wedding card. It definitely took a few days for the grant letters to be generated, though I can’t recall how many.

  2. omdg Says:

    Man, good on you for figuring this out. We still need to do our charitable giving this year. I’m excited about paying our taxes next year because I’ve been able to contribute to a 403B FINALLY, and have reduced our taxable income, and have a bunch of work travel to itemize. I’m curious to see how that affects our final bill!

  3. Katherine Says:

    We will be itemizing in 2017 for the first and probably last (in the foreseeable future) time, because of astronomical medical spending this year. Our property taxes are on the order of $2K, with the first half due in September and the second half due in March. It hadn’t occurred to me to try to bunch them this year, but maybe I should. Thanks for this post!

    • nicoleandmaggie Says:

      Ugh, that is the worst reason to “get” to itemize. Definitely check out the link from stackingpennies re: AMT, though with only 2K that probably isn’t going to be a problem.

      • Katherine Says:

        I looked at that link. Fortunately(?) our total income this year is probably going to be just under the AMT exemption for married filing jointly, so we don’t have to worry about that!

    • Leigh Says:

      I’m sorry that medical costs are why you can itemize this year, but I would totally look into prepaying some of your property taxes if you can cash flow it! Also, those are some sweet low property taxes!

  4. Leah Says:

    No itemizing but no surprise there (I don’t own anything big and have no debts). I deduct the $250 teacher amount when that’s available.

    The fun game I play, tax wise, is increasing my 403(b) contribution and seeing how it impacts my paycheck. It’s not a dollar for dollar thing. I’m up to $300 a paycheck in my 403(b). Perhaps someday I’ll get to maxing out, but going slowly helps me not realize how much I’m putting forth. I’m trying to put every raise I get into the 403(b).

  5. Linda Says:

    Yes, I itemize my taxes. I have a large mortgage that’s only one year old, so the interest I’ve been paying is rather significant. I keep thinking I’ll be able to do some principal-only payments, but I’ve had other large expenses to whcih I’ve needed to divert savings and extra income from having a succession of housemates. Like the $8,000 in medical expenses I’ve had to pay out of pocket so far this year. And the $5,500 I had to pay to install adequate drainage around the house to keep water out of the crawl space this winter. I’m grateful that I could free up that much cash to cover these unplanned for expenses, but I’m starting to get really, really cranky and anxious about any more popping up. Oh, and my heat has been out for a few days, so I’m hoping that’s not going to cost a lot to fix. *sigh* I really want some good news soon.

  6. SP Says:

    As you saw, this generally triggers the AMT for our situation. And, due to SALT and mortgage interest, itemizing always makes sense for us under current tax law. Bunching would only help if we had a high or low income years shifting our tax brackets.

  7. Debbie M Says:

    I itemize; it started when I bought a house. I thought eventually I’d have so much equity that I’d stop itemizing, but donations + property taxes ($4.7K this year) add up.

    I’ve just recently started trying to bunch my taxes and donations, but screwed up last year. I did not enjoy calculating how much that cost me, ugh. I can pay all my taxes either before or after 12/31, so that part’s pretty easy. Some of my donations are annual, but most can be bunched.

    It feels like cheating. Also, surely someone who donates 20% of their smallish income in one year will look suspicious and be begging for an audit. So we’ll see.

  8. Cloud Says:

    We always itemize- we live in a high income tax state and have a big mortgage. Of course, this may change if the Republican tax plan passes! We have never tried to do any bunching of either property tax or charity contributions, mostly because we don’t like to spend time figuring that sort of stuff out. I suspect we could reduce our tax bill if we were more aggressive about things like this and other potential deductions, but it has never felt worth the hassle to me. In general, I’m happy to pay my share, because what we make now is so much more than what I grew up on I just feel lucky. (That said, I am feeling a little less sanguine about having my taxes go up, as I suspect they will, so that people who inherit multimillion dollar estates can do so tax free.)

    • nicoleandmaggie Says:

      Did you see that they’re not changing the step-up basis, meaning that if grandpappy bought stocks back in 1930, the heirs can sell them without the earnings ever having been taxed?

      • Cloud Says:

        Yes. It is disgusting. I will never forgive these folks for turning me into a tax-hating prepper (I now own iodine tablets….)

      • nicoleandmaggie Says:

        I also own iodine tables. I don’t need them as much as you do, but one of my colleagues said it is possible that if North Korea shoots and misses and the bomb explodes in the atmosphere, we could end up in a situation here in which iodine tablets would be useful.

      • nicoleandmaggie Says:

        Hm… you know, maybe I should switch all of our ROTH retirement savings to traditional until we can trust government again. It may not be optimal for us from a taxes sense (since good people in the future are going to have to repay the hole the current Republicans will create, just like with Reagan), but perhaps better from a public service sense.

      • SP Says:

        One of the many reasons I’m considering putting more into tax deferred accounts is to avoid giving this administration more of my tax dollars than I have to. In past years, my tax bill seemed high but I felt like I was contributing my share.

        This tax bill is terrible with all of the tax breaks for the super wealthy, but (from reading reddit, etc.) it seems like plenty of folks are not too upset because “the standard deduction is doubling!” and “I should get a $1k tax cut!”. Alone, that might be fine, but not if it is tangled up in tax breaks for the super rich.

  9. Jenny Says:

    I bunch my property taxes and charitable giving. Even with mortgage interest I’m still under the standard deduction if I don’t. I pay my taxes twice one year and not the next. It allowed me to get an extra $400 last year so I was pretty happy.

  10. nicoleandmaggie Says:

    Googling where to vote will pop up information about where to vote! https://www.google.com/search?q=where+to+vote&ie=utf-8&oe=utf-8

    Remind your friends to vote/ask if they’ve voted! State and local elections are important!!!!

  11. nicoleandmaggie Says:

    The only one of my graduate students in office hours this morning who got hir requested absentee ballot and was able to vote was the conservative Republican with the “white” name. This troubles me. Is our local post-office seeing Hispanic last names and college apartments addresses and losing the ballots?

  12. Katherine Says:

    I voted in municipal elections this morning! It was easy to find out where to vote, but very difficult to find out who/what was going to be on the ballot. My local election official has none of that information on their website, and my town is too small for vote411 or ballotpedia to have information on us.

    • nicoleandmaggie Says:

      Yay!!!!!

      Indivisible has been doing a really great job for us in terms of what is going to be on the ballot and explaining the issues. Our local dems had copies of the ballots themselves. This is the first year that I’ve had no problem finding what’s going to be on the ballot and the first year I’ve been able to find an explanation (much less a non-partisan explanation!) of the things on the ballot.

      That sucks that you can’t find easily info on what’s going to be voted on beforehand. I guess in that situation you’d have to call? But who would you call? The local election official’s office?

  13. Revanche @ A Gai Shan Life Says:

    For the first time, and because of this administration, I looked at ways to be more tax efficient to make sure I won’t be giving them more than I really have to but I forgot to float this option. Then, too, the messiness of this year’s tax bills is eating up my time. Even with three separate tax bills in hand, I still don’t have enough of our tax information to run the numbers yet because they’ve billed us incorrectly for the home we don’t own anymore and haven’t billed us the right amount for the home we do own. That’s something I have to get in order tomorrow.

  14. Whether you will owe the AMT in 2017 and why we should keep it | Stacking Pennies Says:

    […] in year 2014 (one time significant income).  It is also something that we run into if we try to bunch our property taxes, so we are moderately close most years, it […]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: