Question

eBook X Betonmentse sono portals Post Atte x Calculator o cha Rias x + Problem 3-43 (LO. 9) Each year, Tom and Cindy Bates (married filing jointly) normally have itemized deductions of $22,000 (which includes an annual $4,000 pledge payment to their church). On the advice of a friend, they do the following: In early January 2020, they pay their pledge for 2019; during 2020, they pay their pledge for 2020; and in late December 2020, they prepay their pledge for 2021. a. What are the Bateses trying to accomplish? To have their itemized deductions exceed the standard deduction Feedback b. What would the Bates' total itemized deductions be if all three church pledge payments were made in 2020? Assume that the itemize deductions of $22,000 already included one year of the church pledge payments. $ 30,000 ✓ What will be the Bates' tax saving if their marginal tax bracket is 24% for all three years? (Assume that the standard deduction amounts for 2020 and 2021 are the same.) 7,200 X By concentrating their charitable contributions, their tax savings becomes s Feedback c. Complete a letter to Tom and Cindy Bates (8212 Bridle Court, Reston, VA 20194) summarizing your analysis. Maloney, Young, Nellen, & Persellin, CPAS

Answer 1

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of charitable 1) Ang By concentrating the Payment of three Years Contributions (2019 2020 and 2021) into One year, this will allow the Bates to itemized their deductions from AGI (Adjusted Gross Income) in 2020. Otherwise, their ther itemized deductions (normally $ 22,000 No benefit, as they do not Exceed the standard deductions $ 24,400 for 2018 And $ 24,800 for 2020 Married filing Jointly] are As per + the additional 2) Ang Preasuming the $ $22,000 of Normal Itemized deductions Already One year ok church Pledge Payments Palyment_Of_$8,000 $4,000 for 2019 and $4,000__for_2021) Yield Ptemized Deductions $ 22,000 + $ 8,000 And Yield Itemized Doductions$30,000 This Exceed the standard Deduction that would have claimed by the amount of times Itemized Deductions Standard Deduction $ 30,000 $ 24,800 claimed Amount $ 5,200 Therefore the tax Saving by concentrating the charitable contribution becomes = claimed Amount X Marginal Tax Rate been $ 5.200 X 24% Tax Savings. = $1,248

= $5.200_X 24% ta Tax Savings . = $4,248 The Same tax that would have been Paid will result for 2019 and for 2021 as the standard deduction is claimed for each of these Years . And Hence, By concentrating the concentrating the Charitable contribution thelr Tan $ 1,248 Savings becomes 3) Ans Letter of Tom and Cindy Bates is shown follows Fill in the Blanks Answers 3 а a Cash Basis л a year be During Single year . Maker Will be able to itemize your deduction While wring the standard deductions. Will_mean that you will have total itemi gede deductions of $30,000 O Consolidating these contributions in 2020 { $5,200 X 24%) will be $ 1.248