Check your plans for summer and discover opportunities for tax refunds, credits and deductions! Seasonal work such as volunteering can reward you with tax benefits. Avoid unnecessary risks and make the most of your summertime activities with these tax tips.
Make your tax season simple by easing into tax prep during the summer
Share your marital happiness
Getting married? Congratulations! Don’t forget to inform the Social Security Administration using Form SS-5 to receive your updated card. If you’re changing addresses, don’t forget to inform the United States Postal Service with Form 8822 or 8822-B. These organizations will be happy for you, and the IRS provides tax benefits for married couples.
Get cashback for your child’s day camp
Summer day camps for children are more beneficial for claiming tax credits than overnight camps. Even if a day camp is oriented towards some specific activity (computer games, let’s assume), planning a happy summer for your children is easy. Discover more details in Publication 503 and fill Form 2441 to get cashback.
Know your summer working status
Getting away from it all and finding a new summer job is fun, but don’t forget to specify your primary status. Being an employee implies tax withholdings, which are the responsibility of the employer so as not to worry about higher taxes later on. Being self-employed is more challenging, as you’ll be paying income taxes independently. Fill your Form W-2 for tracing summer income and related withholdings. Be sure to stay on top of your summer income statements as this form is used for filing annual tax returns.
Reduce your tax liability by itemizing!
Pay attention to purchases, charity, and gambling to discover deduction opportunities you might have missed.
Loan interest deduction
Mortgage loan interest for building and repairing homes gives you another chance to reduce your taxes. If you have a loan that has been secured using another property you own (second home, for instance) as collateral, its interest can be deducted. Discover more about mortgage interest in Publication 936.
More charity work, less taxes
Clean-out for the sake of tax breaks! Find all those abandoned items that you will probably never use again, make sure they’re still good, and donate them to a qualified charity. Proved donations can be written off as tax deductions. Did you use your personal car for the sake of charity work? Get a higher tax break! Individuals performing services for qualified charities can write off mileage as a tax break bonus. Simply count the number of miles driven with your vehicle and get 14 cents deducted for every mile when filing your taxes. Try the Itemize deduction to get a reward for your charity!
Only winnings earned from gambling can be taxed
Pay taxes only for your net income from gambling with Form W-2G. If you won $1000 but lost $700, your liable taxed amount is only $300! Be sure to itemize so you’re not taxed for $1000 of winnings. Just keep in mind that the amount of your losses cannot exceed your winnings.
Track your withholdings
Fill your tax return for refunds
If your summer income was low enough that you do not plan to file a tax return, think about the opportunities you’re missing out on. For every tax return filed, three years after its taxation period, you may have an available tax refund for withheld income tax.
Ensure that your withholdings are sufficient
Employees should check their tax withholdings at least once a year. Use the Withholding Calculator to get an idea of whether your withholdings require adjustment or if your figures add up. The calculator considers credits, income taxes, and deductions. Submitting Form W-4 on time is important, you can send it to either your employer or the IRS.