How Your Summer Plans Could Impact Next Year’s Tax Return
There’s no need to pretend. We know tax planning wasn’t exactly at the top of your summer to-do list. But hear us out … as you’re cooking up exciting summer plans, it’s good to remember how your tax filing could be affected.
Tax tips to keep in mind this summer
Here are five situations where your summer fun could score you tax deductions or otherwise impact the taxes you do (or don’t) pay during tax time — and how to prepare accordingly.
1. You’re getting married this summer.
Planning on tying the knot this summer? If so, keep these tips in mind:
- Name changes: Report any name changes to the Social Security Administration and your employer, if applicable. To prevent delays in processing your tax return next year, your name must match up with your Social Security number. You can get more information on reporting a name change online or by calling 800-772-1213.
- Change of address: Notify the IRS of a change of address if you move. This will ensure you receive any vital tax mail at your new address.
- Adjust tax withholding: Getting married tends to affect your filing status and could also change your tax bracket. It’s a good idea for newlywed filers to revisit their Form W-4 and adjust their tax withholding as needed, especially if you both work or have any dependents. Not sure where to start? Give our Refund Booster (W-4 Calculator)1 a try.
2. You’re planning on sending your child to a summer day camp.
This summer, sending your kids to day camp may just qualify you for a tax break.
As one of the tax benefits available to parents, you can claim the Child and Dependent Care Credit if you paid someone to care for your child while you worked or looked for work. This includes day camp fees (unfortunately, overnight camps do not qualify), babysitter or daycare fees, pre-school fees, etc. So, if you’re signing the kids up for day camp, be sure to keep a record of any fees you paid.
To qualify for this tax credit, you must have earned income during the tax year, and the child(ren) must be under 13 years old.
3. You’re earning income from a side gig.
Summer side hustles can be a great source of extra income, but don’t forget to consider the tax implications.
If you are self-employed and earning taxable income that is not subject to withholding, you must remember to pay estimated taxes to the IRS. And if you sell goods or services via payment apps like eBay or Venmo, make sure you understand the new reporting regulations that went into effect at the beginning of 2022.
4. You’re working a part-time job.
If you are a seasonal worker getting a part-time job this summer, it’s possible you might not earn enough income to owe any federal income tax. But if you don’t anticipate a tax bill, you should still remember to file a return next year — and file early! This will ensure your tax refund hits your bank account as quickly as possible.
5. You filed a tax extension this year.
This is more of a reminder, but if you requested a tax extension this year to get more time to complete your return, remember to file your income tax return as quickly as possible. It’s always best to file while last year is still fresh in your mind rather than waiting until the end of the year.
This year’s tax extension deadline isn’t until Oct. 17, 2022, but we challenge you to file this summer if you can. You’ve got this!
This article is for informational purposes only and not legal or financial advice.
1Refund Booster may not work for everyone or in all circumstances and by itself doesn’t constitute legal or tax advice. Your personal tax situation may vary.
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