DEDUCTION CLUSTERING
01.Core Concepts
• A tax planning strategy in which itemized deductions are clustered (or bunched) together in one year, makin g them higher than the standard deduction, while the standard deduction is taken the following year. • Creates a higher amount of deductions overall • A taxpayer can control the timing (within certain limitations) of: • Payment of state and local income or property taxes • Payment of mortgage interest • Medical expenses • Charitable donations