Summertime Tax Tips
By summertime, the tax deadline is long gone and you may think you don’t have to worry about taxes until next year. However, many summertime activities, from getting married to working a summer job, can affect your tax situation. Check out these Summertime Tax Tips to avoid surprises next tax season:
Getting married
It’s wedding season! If you’re getting married this summer, make sure to add tax planning to your to-do list. To ensure a smooth tax season next year, here are the areas you should look over:
Name change: Report name changes to the Social Security Administration
Address change: Report address changes to the United States Postal Service and employers
Tax withholding: Review Form W-4, Employee’s Withholding Certificate, to determine if you need to make any changes
Filing status: Determine if you will file as married filing jointly or married filing separately. Typically, it is most beneficial to file jointly, but in unique situations, filing separately may be more beneficial. If you have questions about this, consult with a tax professional.
Tax bracket: Filing jointly may move you into a different tax bracket.
For more information, check out our blog post on how getting married affects your taxes.
Sending kids to a day camp or daycare
While the kids are on summer break, you might need some extra help watching over them while you work. Costs for a day camp (overnight camps are not eligible), daycare, nannies, or other caregivers can be counted towards the Child and Dependent Care Tax Credit.
This credit is only applicable if your child is under the age of 13 and you (and your spouse, if filing a joint return) are working or actively looking for a job.
Working part-time
If you are taking on a part-time or temporary summer job, you will need to consider how this will affect your tax situation. First, you need to determine if the position is classified as an employee or a self-employed worker. If you're an employee, then you will need to fill out a Form W-4 to withhold taxes from your paycheck.
Self-employed and gig economy workers need to consider how much tax to withhold and determine how to pay the tax. You can either do this by withholding more tax from another job you have or by making estimated tax payments. Some jobs where you may be considered self-employed include babysitting, yard work, ride-sharing or delivery services, and other odd jobs.
Making energy-saving home improvements
Summer is a prime season for home improvement projects. Fortunately, the IRS provides tax credits for homeowners who undertake energy-saving upgrades. Eligible improvements include replacing exterior doors, windows, and insulation materials, as well as installing central air conditioners, water heaters, furnaces, boilers, and heat pumps.
For more information on eligible improvements, check out the Home energy tax credits page on the IRS website.
Hosting a garage sale
If you’re among the many who host garage sales over the summer, you might be wondering about how this affects your tax situation. Generally, you don’t need to worry about taxes on the sale of secondhand items because they’re typically sold at a loss. However, if you sell an antique or vintage piece for more than you purchased it for, you will probably need to report this income on your tax return and pay taxes on it.
Alternatively, if you choose to donate Items in good condition, you may qualify for a charitable contribution. To claim this deduction, you will need to itemize on your tax return, donate to a qualified charity, and have proof of all donations. Make sure to keep good records and provide them to your tax preparer. These records should be kept with your tax return after you file in case of an audit.
Meet with a tax professional
Summertime can bring lots of tax benefits for taxpayers and their families, but it may also bring lots of questions. If you would like to meet with a tax professional to see how your summertime may affect your tax situation, we provide tax planning services to help you plan for the next tax season and beyond. Give us a call at (360) 922-0235 to learn more.
Disclaimer: This material is prepared for informational purposes only, and is not tax advice. Please speak with a tax professional or view the resources below to see how this information may apply to you.
