Because I have written many articles in these pages about lowering one’s taxes, I am often asked this reasonable question: “I have only one job and an uncomplicated financial situation. Can’t I do my taxes myself using good old Turbo-Tax?”
Yes, you can, but even those with simple returns can save money by using a tax strategy called “bunching.” Imagine a single young woman who works as a nurse and earns $55,000 a year. She does not own a house and therefore cannot claim a deduction for a mortgage. Should she itemize her deductions or claim the “standard deduction”?
A little background: There are two kinds of tax deductions: “above the line” and “below the line.” This line has a name; it is called “adjusted gross income.” The deductions above the AGI are allowed so long as you paid them. The most common of these is putting money in pensions and IRAs.