Summer 2020 Tax Breaks and Tips
Summer 2020 is here and taxes may be the last thing on your mind, but giving tax breaks a little bit of thought now could save you a lot of money when tax season comes around again. Read on for summertime tax tips that might help you save money at tax time.
Summer Jobs: Be sure to fill out a new Form W-4 for each job when you are hired. Not only will this form let your employer know how much income tax to withhold from your paycheck, it ultimately will determine whether you will get a refund, owe taxes, or be tax balanced (not get a refund nor owe taxes) when you file your tax return next April. Use the eFile Taxometer; a free W4 Tax Withholding Assessment Tool to help you determine your tax withholding situation and give your paycheck(s) a taxercise.
If you are a dependent, you may want to claim “exempt” on your W-4(s). Be aware that your employer will still withhold Social Security and Medicare taxes, but not income taxes. If you are claimed by someone else as a dependent and you earn a total income of $6,350 or less during the year, you generally will not owe taxes or be required to file a tax return (though you may want to file a return to claim tax credits or a refund).
No matter what job you do this summer, here are more tax tips:
Getting married greatly affects your tax situation. Though taxes may be the last thing on your mind, being prepared tax-wise when you tie the knot can easily help you file your 2019 Tax Return in 2020. Here are some things to remember:
Learn more about how getting married affects your tax return.
Do you have kids that go to summer camp? If you have to pay someone to care for your children so you can work or look for work, you can get a tax break for the expenses. It doesn’t matter whether you send your kids to day care or to day camp this summer (overnight camps don’t qualify)–you can count the costs toward the Dependent and Child Care Credit.
Keep in mind that you must be working or actively seeking employment in order to qualify for the Child Care Credit. If you are married, both you and your spouse must be working or looking for work. And the job-seeking must pay off at some point during the year, because both spouses must have earned income in order to claim the credit. Sorry, but stay-at-home moms or dads do not qualify.
If you are having a garage sale or yard sale this summer, you may wonder if you need to worry about taxes. These types of sales are generally tax-free, because your used items are sold for much less than for what you bought them, making the “cost of goods sold” much higher than the selling price. On the other hand, if you sell items which you have marked up in value at a flea market, farmer’s market, or craft fair, you will probably need to report your profits and losses, pay self-employment tax, and collect sales tax.
Have unsold items that are in good condition? you can donate them to charity and deduct their fair market value. Since you need to itemize the deductions, make sure that you keep receipts or other documents as proof of your donations in case the IRS sends you an audit notice,
Edutain yourself with Tax History and Facts
Tax Plan and TaxStimate for 2019
Though you cannot donate your time towards a charitable cause, you can claim an itemized deduction for driving a personal vehicle and donating services on your trip. You can deduct 14 cent per mile driven in Tax Year 2019. Keep all mileage records in case the IRS asks for them after reviewing your accepted tax return.
Do you own a business? If you have children under the age of 18, you can hire them to work for you and then deduct the wages you pay them from your own taxable income. Furthermore, if you operate a sole proprietorship, you can employ your children without having to pay any Social Security or Medicare taxes on their wages. But make sure you pay them an amount that is reasonable and based on the work they are performing (in order to avoid an IRS tax audit).
Do you have a summer home or vacation property (house, condominium, apartment, boat, mobile home, or similar property)? You can rent it out for up to 15 days a year without paying taxes on the rental income, and you can deduct the qualified expenses for the rental home on Schedule A of your tax return. If you paid mortgage interest on your second home, don’t forget to deduct the mortgage interest.
If you visit a casino during your summer vacation, you will need to report any gambling winnings on your tax return. You can deduct your gambling losses if you itemize deductions, but only if you have winnings that are equal to or greater than the amount of your losses.
Summers can get exceptionally hot in many parts of the country, so you may use a lot of extra energy to keep cool. In 2019, when you install certain renewable energy sources in your home, you can claim the Residential Energy-Efficient Property Credit, which is worth up to 30% of the total cost, as well as save money on utility bills. This credit is not restricted to your primary residence (except for fuel cells), and it may be claimed for newly constructed homes. There is no cap or upper limit on the credit (except for wind turbines and fuel cells), however, you must own the home (rentals do not count).
Unfortunately, many people have suffered property damage this summer due to storms, tornadoes, wildfires, and other natural disasters. If this happened to you, you can deduct the reduction in value of your damaged property as a casualty loss on your 2019 Tax Return if your home county has been declared a federal disaster area. You may get additional tax breaks, such as extended deadlines, or the right to file immediately to claim your casualty loss benefits.
Now is a good time to make sure your personal tax records are up-to-date. Preparing and e-Filing your tax return on eFile.com is a great way to maintain your records in digital format. We also recommend that you print your tax return each year and keep a hard copy for your records.
If you prepared and e-Filed your return on eFile.com, sign into your eFile.com account here to print your tax return.
If you do not yet have an account with eFile.com, you can create a free account here.
If you did not e-File with eFile.com, you can find out how to order a free transcript of your tax return from the IRS here.
If you e-File an IRS extension for your 2019 tax return by April 15, 2020, you have until October 15, 2020 to file or e-File your 2019 Tax Return. Check your state(s) regarding extensions and deadlines. However, if you have all of your information ready, why wait? Create an eFile.com account or sign into your existing account to complete and efile your 2019 Tax Return.
Waiting to file because you don’t have the money to pay your taxes? You might want to know that not filing is more expensive than not paying. Find out about the penalties for not filing a tax return and for not paying.
Though Tax Day is not until next April, it’s not too early to think about how to tax plan! Review our list of stupid and smart things to do when filing taxes to help you decide what to do (and not do) when completing your 2019 Tax Return!
There are simple things you can do all year round to save money on taxes and other expenses. Check out some practical money-saving tips and ways to save on everyday expenses and bills.
Research & References of Summer 2020 Tax Breaks and Tips|A&C Accounting And Tax Services
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