SUMMER ACTIVITIES THAT CAN IMPACT YOUR TAXES
For many, summer is a time for relaxation, fun, and adventure. But did you know that certain summertime activities might affect your taxes?
Here are five things you might do this summer (courtesy of a recent reminder from the IRS) and some tips on managing related tax issues when it's time to file your next return.
1. Wedding: Getting married
Summer is a popular season for weddings, and the IRS reminds newlyweds to take steps to make future tax filings a bit easier.
- First, if there has been a name change, you must report it to the U.S. Social Security Administration to ensure that the name on your tax return matches your Social Security records.
- Second, if you have moved, you should notify the United States Postal Service, your employers, and the IRS.
- Note: Just so you know, you must complete and submit Form 8822 to officially change your mailing address with the IRS.
Updating these details now can help save time and avoid complications when filing your first tax return after getting married.
2. Summer camp: Is it tax deductible?
Surveys show that good summer camps can be hard to get into in many areas of the U.S. But if you can send your child to a camp program this summer, the cost might qualify for the Child and Dependent Care Credit.
- This credit is available for costs related to the care of children under age 13.
- The tax benefit can offset expenses associated with the care of those children, including summer day camp fees if the care is necessary for a parent(s) to work or look for work.
To take advantage of this tax break, keep detailed records of camp fees to ensure they meet IRS eligibility requirements. For more information, see Is Summer Camp Tax Deductible?
3. Summer jobs
Summer often brings opportunities for part-time and seasonal work. Even if you don't earn enough to owe federal income tax, the IRS recommends you file a tax return to receive any refunds.
Additionally, some people may have gig work or side hustles during the summer. The IRS offers some reminders:
- Earnings from these activities are taxable.
- Also, if you're paid through payment apps, you might receive an IRS Form 1099-K.
- For more information, see Will You Get an IRS 1099K From Paypal, CashApp, etc.?
You can visit the IRS Gig Economy Tax Center online for more information on how these earnings can impact your taxes. Part-time and seasonal workers can visit IRS.gov or see Who is Required to Fle a Tax Return? for more information.
4. Home improvements: Tax credit
Some homeowners take advantage of the warmer weather to make energy-efficient home improvements. The good news is certain upgrades can provide tax benefits.
If you make qualified energy-efficient improvements to your home this year (or made them after Jan. 1, 2023), you might be eligible for tax credits.
- For example, you may be eligible for the Energy Efficient Home Improvement Credit if you install qualifying upgrades like energy-efficient windows, doors, or heating and cooling systems.
- Additionally, installing solar panels, wind turbines, or geothermal systems can qualify you for the Residential Clean Energy Credit.
Due to the Inflation Reduction Act, these credits, available through 2032, can provide incentives of up to $3,200 for homeowners to invest in energy efficiency. Be sure to keep all receipts and documentation to claim these benefits.
5. Business travel: Tax deduction
Business travel doesn’t stop just because it’s summertime. All year round, tax deductions are available for certain people who travel away from their home or principal place of work for business reasons.
- If you travel for work, you can generally deduct certain expenses like airfare, lodging, and meals, provided they are necessary and directly related to your business.
- Keeping detailed records of all expenses is crucial to substantiate your deductions.
Familiarizing yourself with IRS guidelines on business travel can help you maximize your deductions and reduce your taxable income.
Summer 2024 and your taxes: Bottom line
Staying informed about how these and other activities affect your taxes helps you manage tax liability and potentially save money. Whether it’s keeping receipts for home improvements and travel, filing the necessary forms after a marriage, or claiming credits for childcare, a little planning can also make the next tax season less stressful.
Always consult a qualified tax professional if you have questions about how specific activities may affect your personal tax situation.
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2024-06-16T01:05:42Z dg43tfdfdgfd