The tax filing deadline has passed and the summer holidays lie ahead of us. The slower pace of this time of year is an ideal time to review your tax position and prepare for next year’s tax return.
Below are some common summertime tax situations and tips that may be helpful:
Newlyweds should report any name change to the Social Security Administration. They should also report an address change to the United States Postal Service, their employers and the IRS. To report a change of address for federal tax purposes, taxpayers must complete Form 8822, Change of Address and submit it to the IRS. This will help make sure they receive the documents they will need to file their taxes.
Sending kids to summer day camp
Unlike overnight camps, the cost of summer day camp may count towards the child and dependent care credit.
While summertime and part-time workers may not earn enough to owe federal income tax, they should remember to file a return. They’ll need to file early next year to get a refund for taxes withheld from their checks this year.
Gig economy work
Taxpayers may earn summer income by providing on-demand work, goods or services, often through a digital platform like an app or website. Examples include ride sharing, delivery services and other similar activities. For more on how working in the gig economy can affect your taxes, please see this article here.
Normally, employees receive a Form W-2 from their employer to account for the summer’s work. They should receive the W-2 by January 31 next year. Employees will get a W-2 even if they no longer work for the summertime employer.
Summertime workers can avoid higher tax bills and lost benefits if they know their correct status. Employers will determine whether the people who work for them are employees or independent contractors. Independent contractors aren’t subject to withholding, making them responsible for paying their own income taxes plus Social Security and Medicare taxes.
Extension deadline is October 17
People who requested an extension to the April tax deadline have until October 17 to file their return. If you filed an extension, please be sure your tax manager has all the information needed to meet the extension deadline.
Adjust withholding now to avoid tax surprises next year
Taxpayers can avoid a tax surprise next filing season by reviewing their withholding now. Life events like marriage, divorce, having a child, or a change in income can all affect taxes. The IRS Tax Withholding Estimator on IRS.gov helps employees assess their income tax, credits, adjustments and deductions, and to determine whether they need to change their withholding by submitting a new Form W-4, Employee’s Withholding Allowance Certificate. Taxpayers should remember that, if needed, they should submit their new W-4 to their employer, not the IRS.
Our client services team here at Antares Group is works throughout the year with our clients offering tax and business planning advice. Call us today or visit www.antarescpas.com.
Tanya Drinkwater, CPA, is a Senior Supervisor with Antares Group, Inc. She can be reached at email@example.com.