Gorgeous weather, cold drinks and barbeque -- summer can feel like an endless vacation. But between day trips, the annual family vacation and regular day-to-day expenses, summer can also feel like an infinite temptation to spend. There are numerous ways to save money for the whole family this summer, but what about solutions that can really pay off later on (hint: around tax time)?
While taxes may be the furthest thing from your mind this summer, here are a few simple things to keep in mind now that could help lower your tax burden or boost your refund later.
Do you rent your home on Airbnb? If you rent your personal residence for fewer than 15 days a year, you don't have to report any of the rental income you earn on your tax return; however, you cannot deduct direct costs that result from the rental as rental expenses. You can still deduct expenses like qualified mortgage interest and property taxes as itemized deductions.
If you rent your home for 15 days or more, the money earned must be reported on your tax return. For short-term rentals of 30 days or less, check with your local, county or state government on any "transient occupancy" taxes you may owe based on the rental fee.
Do your kids attend day camp while you are at work? Day camp or summer camp fees -- even for camps centered around a sport or activity -- qualify for the Child and Dependent Care Credit, if the camp provides care while the parent or parents were at work. However, overnight camps do not qualify. For a qualifying child under age 13 or a disabled dependent of any age, you may qualify for a tax credit of up to 35 percent of qualifying expenses of $3,000 (up to $1,050) for one child or dependent, or $6,000 (up to $2,100) for two or more children or dependents.
Does your child work a part-time summer job? If your child has a job this summer and you claim them as a dependent, both of you should remember that they need to file a tax return when they earned more than $6,300. Even if your child earns less than $6,300, it may still be a good idea for them to file a tax return since they could be eligible for a tax refund if they had federal taxes withheld.
Do you own your own business? Think about hiring your child this summer. There are several benefits to having your child help out the business in the summer time, but did you know one of them could be lowering your tax burden? If you are a sole proprietor or single-member LLC and your child is under 18, you can pay your child for their hard work and you won't have to pay Social Security and Medicare taxes. If they are under 21, the IRS will not require you to pay unemployment taxes for them either. The wages you pay them are also a tax deductible business expense for you.
Searching for a new job? Summer job search expenses can potentially benefit you even if you do not end up taking the job. Employment, outplacement agency fees, resume expenses and career seminars may be deductible, so save those receipts. Pro tip: if you travel specifically to try to land a new job, the back-and-forth travel expenses may be tax deductible if the travel is directly related to your job search.
Do you volunteer during the summer? If you volunteer for a charity this summer and drive your car to help out, you may be able to deduct the mileage at 14 cents per mile. If you bought supplies for the charitable organization, you may also be able to deduct the amount you paid for the supplies.