Have A Sunnier Tax Season With These Summertime IRS Tax Tips
Buying a home? Working a summer job? Volunteering? Activities that are common in the summer often qualify for tax credits or deductions. And, while summertime and part-time workers may not earn enough to owe federal income tax, they should remember to file a return to get a refund for taxes withheld early next year.
Here are some summertime tax tips from the IRS that can help taxpayers during tax season next year:
Marital Tax Bliss
– Newlyweds should 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, employers and the IRS to ensure receipt of tax-related items.
Cash Back for Summer Day Camp
– Unlike overnight camps, the cost of summer day camp may count as an expense towards the Child and Dependent Care Credit. See IRS Publication 503, Child and Dependent Care Expenses, for more information.
Part-time and Summer Work
– Employers usually must withhold Social Security and Medicare taxes from pay for part-time and season workers even if the employees don’t earn enough to meet the federal income tax filing threshold. Self-employed workers or independent contractors need to pay their own Social Security and Medicare taxes, even if they have no income tax liability. Normally, employees receive a Form W-2, Wage and Tax Statement, from their employer — even if they don’t work there anymore — to account for the summer’s work by January 31 of the following year. The Form W-2 shows the amount of earnings, withholdings for state and federal taxes, Social Security, Medicare wages and tips. Employees use the information on this form when they file their annual tax returns.
Worker Classification Matters
– Business owners must correctly determine whether summer workers are employees or independent contractors. Independent contractors are not subject to withholding, making them responsible for paying their own income taxes plus Social Security and Medicare taxes. Workers can avoid higher tax bills and lost benefits if they know their proper status.
We can help you scope out those summer details so you can get the most with each credit and/or deduction. Want to learn more? Call us today! 256.489.1478 or schedule an appointment below.