Sun, Fun, and Taxes: How Your Summer Activities Might Heat Up Next Year's Tax Return

Summer is typically a time for relaxation, vacations, and enjoying the sunny weather. However, it's also an excellent opportunity to think ahead and prepare for next year's taxes. Many common summer activities can significantly impact your tax return, often in ways people don’t realize.

Are you sending your child to summer camp? That expense might qualify you for the Child and Dependent Care Credit, reducing your tax bill. Are you a student working part-time to save for the next school year? That job could affect your taxes, too. It's crucial to file a tax return to claim any refunds you’re entitled to from your summer earnings.

If you’re engaging in a side hustle during the summer, keep in mind that income earned through payment apps like Venmo or Cash App may result in receiving an IRS Form 1099-K. This form details your transactions and must be reported on your tax return.

Are you planning home improvements this summer? You might be eligible for the Energy Efficient Home Improvement Credit. Renovations that enhance your home’s energy efficiency can lead to substantial tax credits next year, making those upgrades even more worthwhile.

Summer is also a popular season for weddings. Newlyweds should consider the tax implications of their marriage. It’s important to report any name changes to the Social Security Administration and address changes to the IRS using Form 8822. These steps ensure that your tax information is up to date, avoiding potential issues with your return.

Lastly, if your summer plans include business travel, you may be able to deduct certain expenses. Travel away from your home or main workplace for business purposes can qualify for tax deductions, potentially lowering your taxable income.

In the end, taking some time during the summer to consider how your activities might impact your taxes can save you money and stress in the long run. Stay proactive and informed, and you’ll be better prepared for next year’s tax season. For more information, please contact the professionals at The Center for Financial, Legal, & Tax Planning, Inc., at (618) 997-3436.