Summertime Activities That Can Yield Tax Savings

As summer comes to a close, it’s important to remember that it’s not too late to capitalize on potential tax savings that could benefit you during filing season. Whether you’ve tied the knot, sent the kids to camp, or embarked on a business trip, these activities might have had an impact on your tax situation. Here are some key summertime activities and tips to consider.

Marriage: Streamlining Your Tax Filing

Summer is almost synonymous with wedding season, and with marriage come important financial considerations. For newlyweds, taking a few proactive steps now can help make your tax filing process smoother when the time comes:

• Name Change: If you’ve changed your name, it’s essential to report this to the Social Security Administration (SSA) to ensure your tax returns are processed without issues.
• Address Change: Be sure to notify the United States Postal Service, your employers, and the IRS of any address changes. To officially update your address with the IRS, complete and submit Form 8822, Change of Address. You’ll find detailed instructions on page 2 of the form.

Addressing these changes early can avoid potential delays or complications during tax season.

Summer Camp: Take Advantage of the Child and Dependent Care Credit

Many parents send their children to summer camp each year, but did you know that the associated costs might be eligible for the Child and Dependent Care Credit? This credit can help lower your tax liability, potentially providing significant savings.

To take advantage of the Child and Dependent Care Credit for summer camp expenses, ensure the camp is a day camp, your child is under 13, and the care is necessary for you to work or look for work. You’ll need to provide the care provider’s information and complete Form 2441 with your tax return. The credit can cover up to 35% of qualifying expenses, offering significant tax savings.

Business Travel: Deductions and Compliance

While kids may be enjoying their summer break, business often continues as usual for many parents. If you’re traveling for work, it’s important to remember that certain expenses related to business travel are tax-deductible. These can include airfare, lodging, meals, car rentals, and even expenses for business-related phone calls or internet usage. Whether your business trip lasts a few nights or spans the entire summer, keeping detailed records and understanding the tax rules related to these deductions is crucial for maximizing your tax benefits.

Part-Time Work and the Gig Economy: Filing for Refunds

While summer may be a time for some to have a lighter workload, many individuals take on part-time jobs or side gigs to supplement their income. Whether you’re freelancing, driving for a ride-sharing service, delivering food, or working in seasonal retail, it’s important to be aware of the tax implications. Even if your earnings are below the threshold to owe federal income tax, filing a tax return is still beneficial to claim any refunds you may be entitled to.

When the time comes for filing, make sure to report all income earned, whether it’s from gig work or part-time jobs. This includes income reported on Form 1099-NEC for freelance work, Form 1099-K for payments received through apps, or W-2 forms for traditional employment. Additionally, keep track of any deductible expenses related to your gig work, such as mileage or equipment costs, as these can reduce your taxable income and potentially increase your refund.

Home Improvements: Leveraging Energy Efficiency Credits

Summer is a popular time for home improvements, and if you’ve made energy-efficient upgrades to your home after January 1, 2023, you could be eligible for tax credits of up to $3,200 under the Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit.

Qualifying improvements include installing energy-efficient water heaters, windows, doors, and HVAC systems, as well as renewable energy installations such as solar panels, wind turbines, and geothermal systems. These credits are available through 2032, providing long-term benefits for those making their homes more eco-friendly. For more detailed information on these credits, visit the Home Energy Tax Credits page on IRS.gov.

By understanding the tax implications of your summer activities, you can make informed decisions that positively impact your financial situation. If you have any questions or need personalized assistance, contact your CRI advisor today. Our team is here to help you maximize your tax benefits and minimize your liabilities, no matter the season.