It's the hottest time of the year, and we can't wait for the holidays to arrive! While tax season is only in the rearview mirror, summer is crucial for making informed tax decisions. Here are some tips for taxes in the summer and maybe even to save money.
Estimate tax payment
For some taxpayers, such as the self-employed or those earning additional income, quarterly payments to the IRS are required. September 15 is the next quarter's deadline to pay this set of estimated quarterly fees. Making this payment in the next quarter will avoid surprises when paying your taxes at the end of the year.
Summer Jobs
If you are a seasonal employee, you may only be able to work for your temporary employer during the summer. Complete a new W-4 form for each job you are hired for. This form will not only tell your employer how much tax to deduct from your wages but will also determine whether you will receive a tax refund, owe taxes, or be tax balanced when you file your return.
Determine if you are an employee or a self-employed worker: Also, be sure to determine whether you are an employee or a self-employed worker. If your employer gives you a W-2 that reports your income, you are an employee (also called a wage worker). However, if your employer offers you a 1099-MISC, you are generally considered self-employed. If your net self-employment income is $400 or more, the IRS requires you to pay self-employment taxes, so keep in mind how much you earn during the summer.
File a tax return if you expect a refund: Although you don't have to file a tax return if you earn less than $6,350, you may want to file a tax return if you expect a refund. If your employer has withheld many payroll taxes, you will need to file a return to receive a tax refund.
Summer Weddings
Marriage has a profound effect on the tax situation. Although taxes are low on your list of priorities on this important occasion, being prepared for taxes can ease your headaches later.
Update your tax return filing status: If you get married before December 31, you will be considered married for the whole year for tax purposes. You are expected to file as married filing jointly or married filing separately.
Update the withholding tax on your Paycheck: You and your spouse need to update your income tax withholding by increasing or decreasing Form W-4 benefits. Your goal is to make sure the information on the W-4 matches the amount of tax withheld from your pay. This will stop you from getting too large a refund or paying a disproportionate amount of tax when you file.
Update your name and address with the IRS: Be sure to notify the Social Security Administration of the name change after marriage (they will send the information to the IRS) and notify the IRS of the change of address if you move. This avoids any delays in processing the filed tax return.
Summer Camp Expenses
With your children leaving school and bored at home, you may choose to send them to summer camp. If you have to pay someone to look after your children at work, you may qualify for an expense tax exemption. However, remember that kindergarten and day camps are fine, but overnight camps are not. You can count the cost towards the Dependent and Child Care Credit.
To qualify for the child care expense credit, you must be working or actively looking for work. If you are married, you and your spouse must be working or actively looking for work. Remember that simply looking for a job will not qualify you for credit, as income is one of the prerequisites for applying for credit. Stay-at-home mothers or fathers are not eligible.
Summer Rental Income
Are you lucky enough to have a summer home or vacation property? You can rent it out for up to 15 days a year without paying rental income tax and deduct eligible rental expenses from Schedule A of your tax return. If you paid interest on the mortgage on your second home, make sure you have deducted the interest on the mortgage.
Talk to a Professional
Working with a qualified and reliable tax professional doesn't have to be expensive or time-consuming. Speak with a virtual or in-person tax and accountant specialist to fully understand your tax responsibilities and help you make quarterly payments or find out the status of your tax return.
Tax professionals are committed to creating a comfortable and friendly experience so you can get the help you need with your taxes. Rest assured that the professionalism and experience of a tax and accounting specialist will get you where you need to be every tax season and beyond.
FOR MORE INFORMATION ON HOW PAT RASKOB CAN BEST HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLlICK THE BLUE TAB ON THIS PAGE.
THANKS FOR VISITING.
Pat Raskob