Looking to reduce your 2015 income taxes? Consider these summertime strategies:
- Take a credit for summer day care. If you have one or more child under age 13, your costs for in-home childcare, a daycare facility, or sending the kids to day camp may qualify for the Child and Dependent Care Tax Credit. The costs must be incurred to enable you (and your spouse, if you file jointly) to work or look for work, and you generally must report some earned income. Payments to your spouse, your dependent, or your child who is under age 19 at the end of the year aren’t eligible. Overnight camps and summer school tutoring won’t qualify either. The credit can equal up to 35% of qualifying expenses, depending on your income. Total expenses are limited to $3,000 for one child and $6,000 for two or more.
- Combine business with pleasure. Add vacation days to a summer business trip, and bring your family along. You can deduct most of your own (but not your family’s) unreimbursed costs, such as airfare and your share of meals and lodging during the business portion of your trip.
- Put your kids to work. If you own a business, give your children a summer job. You can deduct their wages, and if you’re a sole proprietor, you needn’t withhold social security or Medicare taxes as long as your kids are under 18. They can even use their earnings to set up an IRA.
- Clean out your garage and take a deduction. Donate your excess property to a qualifying charity and deduct the fair market value. Be sure to get a receipt and check the documentation rules for high-value items.