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3 big tax planning takeaways from Sen. Elizabeth Warren’s 2018 return

In a move towards transparency, Presidential candidate Sen. Elizabeth Warren released her tax returns to the public this week. In response, CNBC.com sat down with MWE tax partner Lance Christensen to get insight into her return from a tax planning standpoint, and to share general advice for tax payers.

 

Stack up on charitable giving

“She lost on a big state tax deduction,” said Lance Christensen, CPA and partner at Margolin Winer & Evens. “But the concept of bunching is important with respect to charitable contributions.”

“Bunching” charitable donations is the practice of lumping in several years’ worth of giving into one year so that you can itemize on your tax return. The following year, you might take the standard deduction instead.

It’s not clear whether the Warren household bunched their giving to beat the hurdle, but it’s a viable strategy for charitably inclined taxpayers.

Save aggressively for retirement

Warren made a total of $55,000 in retirement plan contributions in 2018, according to the tax return.

That amount is the total maximum contribution self-employed individuals were able to put away into a SEP IRA or a solo 401(k) in 2018 (it’s $56,000 for 2019).

This retirement plan contribution is tax deductible for self-employed individuals, and it allows savers to sock away cash and have it grow on a tax-deferred basis.

“Anyone who is self-employed should be taking advantage of the ability to take a deduction for contributing to a retirement plan or at least look closely at it as a strategy to defer taxes,” said Christensen. Read More>>


Watch: Will Big Tax Changes Mean Smaller Refunds?

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