Each year, Tom and Cindy Bates report itemized deductions of $20,000, including a $4,000 pledge payment to their church. Upon the advice of a friend, they do the following: in early January 2018, they pay their 2017 pledge; during 2018, they pay the 2018 pledge; and in late December 2018, they prepay their 2019 pledge.
a. Explain what the Bateses are trying to accomplish.
b. What will 1x? the tax saving if their marginal tax bracket is 24% for all three years? (Assume that the standard deduction amounts for 2018 and 2019 are the same.)
c. Write a letter to Tom and Cindy Bates (8212 Bridle Court, Reston, VA 20194) summarizing your analysis.