Summertime Tax Tips
With summer coming to a close, this seemed a fitting time for a run down of tax tips related to activities often associated with or taking place in summer. Some of these have been the subject of articles earlier this summer, covered here in case you missed them, while others have not.
Vacation Home Rentals – if you own and rent a vacation home to others, you generally must report the rental income on our tax returns (there is an exception in certain situations where the home is rented fewer than 15 days). You can offset this income with rental related expenses, however, there are limitations on the amount of expenses you can deduct if you also have personal use of the home for more than 14 days during the year. Net rental income may also be subject to the relatively new Net Investment Income Tax.
Weddings – summer nuptials also have tax implications (oh, how romantic). This was actually the subject of my last column, so check out the August 21 edition for more.
Vacation Gambling – been to Vegas (or Tunica)? How about the track? Gambling winnings are taxable, including non-cash winnings such as cars or trips. You should keep track of wins and losses, as you can deduct losses as an itemized deduction up to the amount of gambling income.
Day Camps – In "Making Summer Less Taxing" published on July 10, the cost of child care while working or looking for work may qualify you for the Child and Dependent Care Credit. This includes pay for care at home, at a daycare facility or for day camp, but does not include overnight camps or summer school tutoring costs.
Back-to-School – as your kiddos (or maybe even yourself or spouse) head off to college this fall, remember there are some important tax benefits, including credits, that help make this transition a bit easier, at least financially speaking. See "Making Summer Less Taxing, Part II" published July 24, for more.
Job-Hunting Expenses – Many people change jobs in the summer. If you incur expenses in a job search in your current line of work, you may be able to deduct them. Expenses searching for a job in a new occupation don't qualify. For example, you can deduct the cost of preparing and mailing a résumé, as well as travel expenses if the trip was mainly for looking for a new job. Job placement fees are also deductible. The deduction is a considered a miscellaneous itemized deduction.
Travel for Charity – if you travel to do charity work for a qualified organization, such as a summer mission trip, the cost of your travel may be deductible as a charitable contribution if not reimbursed, and if the work is real and substantial throughout the trip, and there is no significant element of personal pleasure, recreation or vacation in the travel. You cannot deduct, however, the value of your time or services.
Student Summer Jobs – as I mentioned in the "Profit From It' column of May 29, summer jobs give students a chance to learn about work, but there are certainly tax implications involved. They get a chance to learn about the tax system too! Some work may count as self-employment, so they should keep good records, as any related costs associated with these may be deductible. See also the June 12 article, "Teaching Your Teen How To Manage A Summer Salary".
Moving Expenses – summer is also moving season. If a move is made due to a job change (or to work in the same job in a new location), and you meet certain requirements, certain costs of moving give rise to a deduction, including transportation and lodging costs, as well as the cost of packing, crating and shipping your things. You should also consider updating your address with the IRS using Form 8822 and with the US Postal Service.
Tax Return Extensions – if you are among the nearly 13 million folks (self included) who filed for an extension of time to file your tax returns back in the spring, your individual tax return is due October 15. Remember, you don't have to wait until that date to file. You can file your return at any time you are ready.
Perhaps a few of these reminders are applicable to you. Hopefully, you find them helpful as you get back into the swing of more normal routines this fall and prepare for another tax filing season early next year.
