Each year, Tom and Cindy Bates (married filing jointly) report itemized deductions of $20,000 (which includes an annual $4,000 pledge payment to their church). Upon the advice of a friend, they do the following: In early January 2019, they pay their 2018 pledge; during 2019, they pay the 2019 pledge; and in late December 2019, they prepay their 2020 pledge. a. What are the Bateses trying to accomplish? To have their itemized deductions exceed the standard deduction . b. What would the Bates' total itemized deductions be if all three church pledge payments were made in 2019? Assume that the itemized deductions of $20,000 alre

By focused the payment of three years of helpful contributions (2016, 2017 and 2018) into one year, this will permit the Bates to itemize their deduction from AGI in 2017, or else their itemized deductions (normally $10,000) are of no benefit, as they do not exceed the customary deduction ($12,600 for 2016 and $12,700 for 2017).

Part B)

Conceited the $10,000 of usual itemized deductions previously include one year of church pledge payments, the extra payment of $8,000 ($4,000 for 2016 as well as $4,000 for 2018) yields itemized deductions $18.000 ($10,000 + $8,000) for 2017. This exceeds the standard deduction that would have been claimed by the amount of $5,300 ($18,000 - $12,700). Therefore the tax savings by focused the charitable contributions become $1,325 ($5300 × 25%). The equal tax that would have been paid will result for 2016 and 2018 as the customary deduction is claim for each of these years.

Part C)

Letter to Tom and Cindy Bates is shown as follows:-

January 29. 2014

Mr. and Mrs. Tom Bates 8212 Bridle Court

Reston, VA 20194

In answer to your inquiry concerning the federal income tax cost of consolidating your charitable donations for 2016. 2017 and 2018 into a single year (2017), here is a brief outline of the outcomes:

As personality taxpayers are implicit to be on a cash basis, all cash expenditures during a year will be evaluated in determining deductibility. In this case, combining the three $4,000 contributions into a single year makes sense from an income tax perspective.
By combine all the three payments in 2017, you will be able to itemize your deductions in that year, while using the standard deduction amount in 2016 and 2018.
These 88,000 of extra contributions in 2017 (the $4,000 payments for 2016 and 2018) will mean that you will have total itemized deductions of $18,000 (which exceeds the 2017 married filing jointly standard deduction times your marginal tax rate of 25%).
Your tax savings by consolidate these contributions in 2017 will be $1,325 ($5,300.25%) .