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Author: sjfans Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Can I carry over char. donations? Date: 4/20/2004 7:32 PM
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For the first time since we bought our house, I believe we won't be able to itemize deductions for the 2004 tax year. We refinanced in the middle of last year and the new interest rate is so low that we'll be a couple of thousand short of beating the standard deduction.

We usually have considerable charitable contributions during the year but probably not enough to put us over the standard deduction.

Can I make charitable contributions this year but wait to deduct them until next tax year?

Thanks,
sjfans
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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 71542 of 121219
Subject: Re: Can I carry over char. donations? Date: 4/20/2004 7:37 PM
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No. In general, charitable contributions can be itemized only in the year in which they have been made.

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 71543 of 121219
Subject: Re: Can I carry over char. donations? Date: 4/20/2004 8:10 PM
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Can I make charitable contributions this year but wait to deduct them until next tax year?

I agree with Mark - no you can't. But you can double up on your contributions in one year. For example, make your 2005 contributions in December of 2004. Then you can deduct them in the year they are paid. That might get you enough deductions to itemize in 2004. In 2005, you'd use the standard deduction again.

--Peter

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Author: sjfans Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 71549 of 121219
Subject: Re: Can I carry over char. donations? Date: 4/20/2004 11:08 PM
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I agree with Mark - no you can't. But you can double up on your contributions in one year. For example, make your 2005 contributions in December of 2004. Then you can deduct them in the year they are paid. That might get you enough deductions to itemize in 2004. In 2005, you'd use the standard deduction again.

Thanks, both of you. That's pretty much what I figured but I thought I'd ask.

Unfortunately a lot of my donations are in the form of Goodwill donations so "timing" them means extra stuff sitting around my house in the meantime. But, as you said, I can donate as much as possible this year and "double up" my other monetary contributions to lump them into the same tax year, perhaps alternating a year itemizing with a year at the standard deduction.

There are a couple of other things I can play with - no harm in making the January mortgage payment a few days early to put 13 interest payments in one year, right?

Thanks again,
sjfans

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Author: foo1bar Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 71550 of 121219
Subject: Re: Can I carry over char. donations? Date: 4/21/2004 1:34 AM
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There are a couple of other things I can play with - no harm in making the January mortgage payment a few days early to put 13 interest payments in one year, right?

Yep, and don't forget real estate taxes - another thing you can pay a few months early for the deduction in one year vs. another.

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Author: Jeanwa Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 71554 of 121219
Subject: Re: Can I carry over char. donations? Date: 4/21/2004 9:38 AM
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>>>>>>>>There are a couple of other things I can play with - no harm in making the January mortgage payment a few days early to put 13 interest payments in one year, right?

>>>>>Yep, and don't forget real estate taxes - another thing you can pay a few months early for the deduction in one year vs. another.

Hmmmmm, the "extra" payment shouldn't have interest, it should go totally to principle!! The interest in on the balance owed...in fact an extra payment would lower the interest payable for the next month.

Jean


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Author: sjfans Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 71556 of 121219
Subject: Re: Can I carry over char. donations? Date: 4/21/2004 9:57 AM
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Hmmmmm, the "extra" payment shouldn't have interest, it should go totally to principle!! The interest in on the balance owed...in fact an extra payment would lower the interest payable for the next month.

Jean


It's not an extra payment. It's the regular payment, just a little earlier. If my payment is due the first of each month, I can pay the Jan 1 payment on Dec 31 so I would have 13 regular payments (and therefor 13 interest payments) in this tax year.

Of course, unless I do the same thing next year, I'll only have 11 payments to include. But it's very easy to do this 11,13,11,13 alternation to maximize or reduce the deduction I can take.

I'm sure some people carry it farther than that, but if I had enough spare cash to pay several months of the mortgage early I'd invest it elsewhere...

sjfans

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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 71557 of 121219
Subject: Re: Can I carry over char. donations? Date: 4/21/2004 9:57 AM
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(Jean):"... the "extra" payment shouldn't have interest, it should go totally to principle!! The interest in on the balance owed...in fact an extra payment would lower the interest payable for the next month."
_____________________
No, I think there would be both interest and principal in that last payment.

Normal situation: borrower/taxpayer has paid 12 payments, each on the 1st-2nd of the month. (Couldn't get to the bank on New Year's Day). The last payment was made on Dec. 1st.

If he now makes the payment due the following Jan. 1st, on Dec 30th, let's say, he is making a regularly scheduled payment of interest and principal, and that will be a 13th payment. If the lender carefully accounts for the interest and principal due on each payment, the 13th payment will be almost the full amount of interest due on Jan. 1st.

And the 1098 the borrower receives SHOULD reflect the interest included in all 13 payments.

And you're right. It will lower the amount of interest included in future payments.

But you can't do it two years in a row.

Bill





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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 71558 of 121219
Subject: Re: Can I carry over char. donations? Date: 4/21/2004 10:05 AM
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I'm sure some people carry it farther than that, but if I had enough spare cash to pay several months of the mortgage early I'd invest it elsewhere...

...which is wise, because you couldn't use payments 14...n to a tax advantage.

The reason you can deduct the interest from that 13th payment is that your January payment covers December's interest. Thus, since the interest accrued and was paid in December you can deduct it. Anything beyond that would be a prepayment of interest, which has to wait until it accrues.

Same thing goes for property taxes.

Phil

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Author: Jeanwa Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 71562 of 121219
Subject: Re: Can I carry over char. donations? Date: 4/21/2004 2:10 PM
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>>>>>>.No, I think there would be both interest and principal in that last payment.

But you can't do it two years in a row.

____________________

I stand corrected! Twice!!

Jean

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