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We prepare most type of tax returns:

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S Corporation.

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Amended.

Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

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Client Testimonials

I used Gary’s services to file my 2012 income tax return. This was my first year having an accountant do my return, as I have always done it myself using TurboTax. However, this year I had cancelled debt from my old primary residence which I was forced to convert to a rental property after relocating out of state.

While it didn’t cost me anything to do the short sale, the income tax consequence from the cancelled debt, roughly $50,000 in my case, was enough to move me from the 15% tax bracket to the 25% tax bracket.  Needless to say, I was concerned about that.

Finances were already tight and my husband and I are expecting our first child this fall. So the possibility of owing income tax was stressing me out. However, Gary was great at relieving my fears.

He is extremely knowledgeable, answered all my questions and was very thorough. I knew I was in good hands. He kept in constant contact with me throughout the process, keeping me updated on the progress of my return and letting me know what paperwork he needed to complete my filing.

In my mind, best case scenario would have been to not owe any taxes. Second best would be to only owe a little. Well, you can imagine my surprise and delight when Gary told me I was actually due a refund of a little over $2,700.00!

To top it all off, I found Gary’s fee for service to be fair, competitive and affordable; especially given the complexity of this type of return. I am so glad I did not try and go it alone this year. I am extremely pleased with Gary’s service and would recommend him highly to anyone, in fact I already have. If you have cancelled debt from a short sale or foreclosure, don’t freak out. Take a deep breath and call or email Gary. I am grateful I did.

Angie Falke of Holiday, FL

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Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

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CPA Accountant | What are itemized deductions? | How to exceed the standard deduction every other year on Schedule A for Form 1040

CPA accountant discusses Schedule A and itemized deductions for Form 1040

Ask your CPA accountant about other personal tax strategies. They add up. (910) 399-2705.

CPA accountants field lots of calls about itemized deductions on Schedule A.  Our firm always fills out Schedule A to itemize when preparing Form 1040, even when it’s clear the client won’t exceed the standard deduction. Why? If the client doesn’t benefit from itemized deductions every year, we look to see if they can exceed the standard deduction every other year. I call this technique Schedule A bunching. I helped developed it when I was tax editor for an online annual CFP publication. Check it out.

What are Itemized Deductions on Schedule A?

Schedule A is a mixed bag of preferential deductions for Form 1040. It’s a typical IRS form with multiple sections. Each section has limitations, special rules, and loopholes. If your total itemized deductions exceed the standard deduction, you use the higher figure on page 2 of Form 1040. Here’s an earlier post on Schedule A and itemized deductions.

“If you can’t use Schedule A itemized deductions every year, maybe you can use it every other year through this tax strategy.”
– Gary Bode, CPA accountant

Using Itemized Deductions on Schedule A and Form 1040 every other year:

Let’s look at just three sections of Schedule A –

  • Medical expenses.
  • Tax you paid.
  • Gifts to charity.

Assume your itemized deductions generally run about $5000 a year, so you use the higher standard deduction of $5,400.

The bunching strategy for itemized deductions on Schedule A

Try to bunch medical expenses into every other year.

  • Medical Expenses:
    • If you buy glasses every year, consider buying them on January 1st and December 31st of the current tax year.
    • Try to schedule elective medical expenses every other year.
  • Real estate taxes are general due in early January of the following year.
    • Consider paying them on January 1st and December 31st.
  • Bunch your charitable deductions into every other year.

Simple example

  • In the year you don’t bunch, your itemized deductions drop to $3,000. No worries, you still get the $5400 standard deduction on Form 1040.
  • In every other year you bunch, and itemized deductions are now $7,000 (average of $5,000 + $2,000 bunched expenses).
  • Now your itemized deductions on Schedule A exceed the standard deduction by $1,600 ($7000 – $5400).
  • Let’s say your aggregate marginal tax rate is 25%.
  • So you save $400 in taxes every other year.

CPA accountants use a variety of tax strategies to optimize your tax burden. This post is just one example.

If you don’t have a CPA accountant consider calling us at (910) 399-2705. We’re nationwide through our virtual office.

 

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