Typically, if you are expected to be in a lower tax bracket in future years, it generally makes sense to defer income into later years and accelerate deductions (prepay property taxes and state income taxes, make charitable deductions, or sell loss-generating assets) into the current year. This strategy can help move a taxpayer into a lower tax bracket in the current year. It can also help the taxpayer avoid crossing the threshold at which they are subject to the net investment income tax or subject to losing all or part of certain deductions.
In addition, lowering your taxable income and accelerating expenses into the current year can make it easier to deduct expenses subject to the 2% of the adjusted gross income threshold. If you might have a chunk of money to donate but don’t know which charity they want to contribute it to, we might suggest giving the money to a donor-advised fund. The client can take the deduction in the current year while deciding which charities to parcel it out to over the next couple of years.