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Now that the April filing deadline has passed, most people are spending more time thinking about summer vacations than taxes. However, summer is a great time to review withholding and see if summer plans will affect next year’s tax return. The IRS has put together some common summertime tax situations and tips to help taxpayers figure out if they apply to their tax situation.
Getting marriedNewlyweds 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.
Sending kids to summer day campUnlike overnight camps, the cost of summer day camp may count towards the child and dependent care credit.
Working part-timeWhile 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 workTaxpayers may earn summer income by providing on-demand work, services or goods, often through a digital platform like an app or website. Examples include ride sharing, delivery services and other activities. Those who do are encouraged to visit the Gig Economy Tax Center at IRS.gov to learn more about how participating in the gig economy can affect their taxes.
Normally, employees receive a Form W-2, Wage and Tax Statement, from their employer to account for the summer’s work. They’ll use this to prepare their tax return. 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.
Adjust withholding now to avoid tax surprises next yearTaxpayers 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. Employees should regularly assess their income tax, credits, adjustments and deductions and 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.