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25% Guaranteed Return? I'll take that thank you.

December 22nd, 2017 at 09:41 am

As you may know, there is a new tax law in the U.S. starting next year. Being a wage whore (errr I mean slave) there isn't usually much I can do to affect my taxes (other than using IRAs etc...). But it looks like this year there is a way to save serious money. But to do it you have to live in the right locale (looks like I do), and have free cash to do this (again I do), and have the right tax situation (again yes!).

It goes like this. If you currently itemize deductions but will fall below the new standard deduction going forward , if you pay next years taxes now you can pay fewer taxes based on your current marginal tax rate (25% for me), and next year you will not lose any tax deduction since you will take a standard deduction. Only problem is you need the cash to do this, and live somewhere that you can prepay (not everywhere allows this).

According to a newspaper article this can be done where I live. I have free cash, and I work very close to the tax office. Sooooooo... Tuesday morning I plan on going there and seeing if I can make it so.

Prepay for less than a year and save about $1000 on taxes?? Where do I sign up???

4 Responses to “25% Guaranteed Return? I'll take that thank you.”

  1. creditcardfree Says:

    Nice! I assume this is a one time thing because of the changes. We no longer own a home, thus not practical to itemize any longer.

  2. AnotherReader Says:

    In California, you can prepay your second 2017-18 property installment to get the 2017 deduction. As long as you are not subject to AMT, you will get a nice deduction this year. Next year, you are limited to $10,000 in SALT/property tax deductions, so if your SALT/property taxes are over $10,000, or it does not make sense to itemize under the new rules, you are likely better off paying this year.

  3. Amber Says:

    Honestly I'm so confused with this new tax bill, I'm really going to have to read up on it.

  4. rob62521 Says:

    Glad this is working out for you. I'm a little confused about the tax bill and what I've read, I don't think we will save too much because of it, but better than paying more taxes.

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