As we race towards the end of the year our office is scrambling with year-end tax projections for clients. Tax Planning used to be easier, but with the recent tax act capping State and Local Tax (SALT) deductions at $10,000 for taxpayers itemizing deductions, planning has taken on new challenges. With the SALT deductions limited to $10,000, coupled with the increase in standard deductions, many taxpayers who previously could itemize deductions no longer will. This can lead to scenarios where people make charitable donations, pay property taxes and mortgage interest and receive no tax benefit from these expenditures. For example, if you are a married couple (standard deduction of $24,400) and you pay mortgage interest of $10,000, property tax and state income taxes of at least $10,000, and have $4,000 of donations, you still won’t itemize. None of these deductions will help you as their total does not exceed the standard deduction of $24,400 that you already get for free. So what can you do? Are you bound to waste all these deductions? Maybe not… Bunching is a strategy. Crowding payments from several years into one can help put you over the limit in the target year and get some benefit. This won’t work on SALT deductions because of the cap, but you may be able to squeeze a 13th mortgage payment in one year if you time it perfectly. Donations can be manipulated as well by timing your payments, or if you need to go big to get any benefit consider using a Donor Advised Fund to stuff multiple year’s donations into one tax deductible bucket. Another strategy that people who are receiving distributions from retirement plans can use is to have your IRA plan make payments directly to a qualified charity. This effectively gives you a 100% deduction for the charitable donation by lowering your income, and if it results in you lowering your income AND using the standard deduction, it’s like getting a double benefit! If you are still following the attempts by California and other states to undo the SALT cap, forget it. The IRS effectively shut down the end run attempts of last year (as predicted here) and although the Democrat controlled House of Representatives are currently working on a bill to increase the SALT cap, it will be dead on arrival in the Republican Senate. The proverbial lump of coal in the stockings of those of us living in the highest tax states.