Lauren is single, age 60, and has an annual salary of $68,000. She paid off her mortgage in December 2015 but expects that her annual real estate taxes will continue to be approximately $5,800. Lauren contributes $2,500 each year to her favorite qualified charities but she has no other itemized deductions. For your answer, assume that the 2016 tax rates, exemption amount, and standard deduction are the same for 2017.
a. If Lauren contributes $2,500 to the charity each year, what will be her income tax liabilities for 2016 and 2017?
b. If Lauren contributes $5,000 to the charity in 2016 but makes no contribution in 2017, what will be her income tax liability for each year?
c. How should Lauren time of her charitable contributions so that she can minimize her total tax liability over the two years?