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Saturday February 16, 2019
IRS Summertime Tax Tips
- Summer Jobs - Many students and younger individuals work during the summer. They may not have earned enough to owe income tax, but their employers will withhold Social Security and Medicare taxes from their pay. If the individual is self-employed, he or she must pay Social Security and Medicare taxes even if there is no income tax obligation. These taxes will also count toward future Social Security benefits. The employer should send a Form W-2, Wage and Tax Statement, by January 31, 2019. It will show the withholding amount for state and federal taxes, Social Security and Medicare. Taxpayers will need this form in order to file their annual tax returns.
- Withholding - Seasonal or part-time workers should check their withholdings to be sure that the correct amount of tax is withheld. The Withholding Calculator on IRS.gov will help with that process. Taxpayers can estimate their income, credit adjustments and deductions in order to determine the correct withholding amount.
- July Weddings - Newlywed taxpayers may want to recheck some items after the honeymoon. A name change should be reported to the Social Security Administration and an address change should be reported to the United States Postal Service. This will ensure that any tax forms or items needed to file taxes are sent to the correct address. Once again, the Withholding Calculator at IRS.gov will be helpful, particularly if there are two wage earners.
- Summer House Clean Up - Summertime presents a good opportunity to conduct a home cleanup and clear-out effort. Many taxpayers will find that some household goods are no longer needed. If a taxpayer makes a donation of household goods that are in "good used condition or better" to a qualified charity, the taxpayer may receive a charitable deduction. The charity should provide a receipt that includes the date of the gift and description of the items. If the value of the gift is over $5,000, the taxpayer will need to obtain a qualified appraisal to substantiate the deduction.
- Volunteer and Drive - Many taxpayers with good hearts will volunteer for charitable organizations. Driving activities while on organization-sponsored trips qualify for a deduction of $0.14 per mile for charitable travel. Volunteers will need to record the date of the trip date and the mileage in order to itemize their deductions.
- Day Camp Credit - Working parents with children under 13 years of age may qualify for the Child and Dependent Care Credit. This is not permitted for overnight camps, but a day camp may count for the credit. IRS Publication 503, Child and Dependent Care Expenses, will be helpful for taxpayers who desire to claim this credit.
- Remember to File for Tax Refund - Even if the amount of income earned is not enough to require filing of an income tax return, there is still a good reason to file. If the taxpayer's employer has withheld funds for federal income tax, the taxpayer will qualify for a refund if he or she files a tax return. Taxpayers can file any time within three years and receive the refund without penalty.