While you’re cooling off by the pool this summer, your opportunity to save on taxes might just be heating up. Here are some summertime tips to keep your 2014 tax plans simmering.
Children Working this Summer
If you are a sole proprietor with children, you might consider putting them on the payroll during the summer months. Wages paid to your children under age 18 are not subject to social security and Medicare taxes. What’s more, their earnings are not subject to Federal Unemployment Tax until they turn 21.
If employing your children is not an option, you might still be able to score a deduction by sending them to summer camp. Day camp expenses for kids under 13 can provide a tax credit of up to 35%. Just remember, overnight camps do not qualify, and child-care must be necessary to allow the parents to work.
Selling Your Home or Moving?
Summer is also a common time for home selling and moving, so be on the lookout for deductions related to these activities. Carefully file away all home sale or purchase papers for next year’s tax filing. If your move is job-related, there is the potential for additional deductions if you meet the 50 miles or more test.
Perhaps your sights are set instead on some leisure travel. Tacking on a few fun days before or after a business trip might be a tax (and cost) efficient way to pay for a vacation — if you follow all the rules. Travel that is primarily for charitable work might also qualify you for a tax deduction.
And finally, no matter what your summer plans are, this is always a good time for a general tax check-up to ensure your withholdings and estimated tax payments are on target.