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 Feedback 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 already included one year of the church pledge payments. $ 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 2019 and 2020 are the same.) By concentrating their charitable contributions, their tax savings becomes C. Complete a letter to Tom and Cindy Bates (8212 Bridle Court, Reston, VA 20194) summarizing your analysis. Maloney, Raabe, Young, Nellen, & Hoffman, CPAS 5191 Natorp Boulevard Mason, OH 45040 November 22, 2019 Mr. and Mrs. Tom Bates 8212 Bridle Court Reston, VA 20194 Dear Mr. and Mrs. Bates: In response to your inquiry regarding the Federal income tax consequences of consolidating your charitable contributions for 2018, 2019, and 2020 into a single year (2019), here is a brief summary of the outcomes: As individual taxpayers are presumed to be on the cash , 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 combining all three payments in 2019, you will be able to itemize your deductions in that year, while using the standard deduction in 2018 and 2020. These $8,000 of additional contributions in 2019 (the $4,000 payments for 2018 and 2020) will mean that you will have total itemized deductions of $ Your tax savings by consolidating these contributions in 2019 will be $ If I can be of further assistance to you in this matter, please do not hesitate to contact me. Sincerely, Heywood R. Floyd Partner