Tuesday, January 17, 2012

My tax strategy

It's tax time! I just got my husband's W2 form. So it's time to start gathering all the receipts and printouts and start working on those taxes!

To save on taxes, I lump expenses into every other year. For instance, in odd years, I make 13 mortgage payments; in even years, I make only 11. I pay my property taxes twice in odd years and not at all in even years. (I don't have the taxes escrowed with my mortgage payment.) I try to give more charitable donations in odd years.

Then, for the odd year's taxes (that would be this year, the 2011 taxes), I itemize my taxes. In even years, I take the standard deduction.

I do this because otherwise, I wouldn't have enough either year to a- I'm in the later stages of a 15-year mortgage, so I pay very little mortgage interest. And I don't have a lot of health or work expenses to deduct. This way, I save a bit more than I would if I just took the standard deduction both years.

For a more in-depth description of this, see this Frugal Follies post: Saving Money on Taxes.

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