Mid-Year Tax Tips For Federal Employees: Part 2

For part two of our mid-year tax planning series, we’re going to review one of the most reliable tactics for reducing taxes: which is bunching. This strategy is the process of accelerating deductible expenses, such as real estate taxes and charitable contributions into a given year so that you can itemize your deductions.

This strategy has become even more helpful since the passing of the 2017 Tax Cuts and Jobs Act, which raised the standard deduction for taxpayers. This higher deduction — $12,950 for single filers and $25,900 for those married filing jointly in 2022 — allows more taxpayers to take the standard deduction rather than itemizing each year.

However, before federal employees take the standard deduction, it may be worth reviewing whether a bunching strategy would chip more off their tax bill. Continue reading...