Bunching Deductions.

In plain English

Bunching deductions is a timing strategy. Instead of spreading deductible costs like charitable gifts or medical bills evenly across years, you concentrate them into a single year. The goal is to push your itemized deductions above the standard deduction in that one year, so itemizing actually pays off, then take the plain standard deduction in the off years. Charitable giving is the most common thing people bunch, often by funding a couple of years of donations at once or routing them through a donor-advised fund.

01Why it matters

Many people donate every year but never itemize because their yearly total falls just short of the standard deduction, so the gifts save them nothing. Bunching can turn those wasted deductions into real tax savings.

02The math, step by step

Say you normally give $6,000 to charity each year, and your other itemized deductions are small, so you fall short of the standard deduction every year and take it instead. If you bunch by giving $12,000 in one year (two years of gifts) and $0 the next, the heavy year may push you over the standard deduction so you itemize and benefit, then you take the standard deduction in the empty year. A donor-advised fund lets you do this while still sending the charities a steady amount each year.

03What this is NOT

04Receipts

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