Summer 2022 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.
Summertime gives way to many changes and opportunities. You may find a new or temporary job, begin a new school program, travel, or make changes to your home. Below are some common summertime events and changes in taxpayers’ lives:
Summer Weddings and Taxes
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 2022 Tax Return in 2023. Here are some things to remember:
- Review your tax return filing status: If you get married on or before December 31 of a given tax year, you’re considered be married for the entire year for tax purposes. You must file as married filing jointly or married filing separately. Take a close look at both of your incomes. If you are filing married jointly, your tax brackets might change as well.
- With a new filing status, re-assess your paycheck tax withholding: You and your spouse will want to coordinate your paycheck tax withholding by increasing or decreasing the amount on Form W-4. Your goal is to make sure your W-4 information matches the amount of tax that’s withheld from your pay so you neither receive a large tax refund or owe tax when you file your return next year.
- Review and/or update your name and address changes with the IRS. Make sure you inform the Social Security Administration of your name change after getting married (the administration will send the information to the IRS). Use Form SS-5, Application for a Social Security Card, and report to the IRS your address change if you moved to a new residence with your spouse. That way, there would be no delays on processing your filed tax return. Use Form 8822, Change of Address – FileIT.
- Take a fresh look at taxes and health insurance. You will not pay a penalty on your 2022 Return if you did not have health insurance in 2022. See details on the health insurance related the Premium Tax Credit. If you and/or your spouse purchased health insurance from the Marketplace, make sure the Marketplace knows about your new married status. That way, the Marketplace can update your Premium Tax Credit amount and you won’t be surprised by a smaller refund or a higher taxes owed amount when you file your return.
Summer Camp Expenses
Do you have children that go to summer camp? If you have to pay someone to take care of 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 and Dependent Care Credit. If you are married, both you and your spouse must be working or looking for work. 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. Unfortunately, stay-at-home moms or dads do not qualify.
Summer Rental Income
Do you have a summer home or vacation property, such as a 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. Consider renting your property during the summer to someone looking for a summer vacation.
If you paid mortgage interest on your second home, don’t forget to deduct the mortgage interest.
Storm Damages
Unfortunately, many people will suffer property damage in summer due to storms, tornadoes, wildfires, and other natural disasters. If this happens to you, you can deduct the reduction in value of your damaged property as a casualty loss on your 2021 or 2022 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.