17 Jul Five summer activities that can reduce your taxes
Just because it’s summer vacation, it doesn’t mean you should stop thinking about your taxes.
Many of your summer activities — taking a summer job or hiring a seasonal employee, going on vacation, sending the kids to camp — could impact how much you owe the federal government next year.
The IRS gave out these tips to help taxpayers lower taxes and avoid headaches with their taxes next year:
Know the rules for seasonal employees
As with other workers, business owners must correctly determine whether summer workers are employees or independent contractors. Also summer workers may not earn enough from summer jobs to owe income tax, but employers usually must withhold Social Security and Medicare taxes from pay.
If your seasonal employees are independent contractors, they are not subject to withholding, making them responsible for paying their own income taxes plus Social Security and Medicare taxes. They also need to pay their own Social Security and Medicare taxes, even if they have no income tax liability.
Know the rules if you are a seasonal employee
For those who work a seasonal or part-year job, checking you withholdings now can help make sure employers withhold the right amount of tax. Taxpayers who work part of the year should check early in the employment period to determine an accurate amount for their withholding. The Withholding Calculator on IRS.gov helps employees determine whether they need to submit a new Form W-4, Employee’s Withholding Allowance Certificate to their employer.
A June Bride
June is a very properly month for weddings and you can help make wedded bliss last longer by doing a few things now to avoid problems at tax time.
First, report any name change to the Social Security Administration before filing next year’s tax return.
Then, report any address change to the United States Postal Service, any employers and the IRS to ensure receipt of tax-related items.
Finally, use the Withholding Calculator at IRS.gov to make sure withholding is correct now that there are two people to consider.
Spring cleaning donations and volunteering deductions
If your spring cleaning overflowed into the summer, those long-unused items that you donated to a qualified charity may qualify for a tax deduction. The recent tax cuts changed the amount you can claim, but every dollar still counts.
Taxpayers must itemize deductions to deduct charitable contributions, and be sure to have proof of all donations.
Also, if you volunteered for a charitable cause, you may be able to deduct your mileage. While there’s no tax deduction for time donated toward a charitable cause, driving a personal vehicle while donating services on a trip sponsored by a qualified charity could qualify for a tax break. Itemizers can deduct 14 cents per mile for charitable mileage driven in 2018. Keep good records of mileage.
Get tax credit for summer day camp expenses
Many working parents must arrange for care of their younger children under 13 years of age during the school vacation period. A popular solution — with favorable tax consequences — is a day camp program. Unlike overnight camps, the cost of day camp may count as an expense towards the Child and Dependent Care Credit.