Ways Summer Activities Can Impact Your Tax Return Next Year

July 1, 2023

With the arrival of warmer temperatures and longer days, summer is in full swing. But what many people don't realize is that the activities they engage in during this season can have a significant impact on their tax returns next year. To make sure you don't overlook any potential tax implications, here are some tips for some common summertime activities.

Getting Married

For those tying the knot, it's important to report any name change to the Social Security Administration and update their address with the United States Postal Service, employers, and the IRS. This ensures that they receive all the necessary documents and items required for filing their taxes.

 

Summer Day Camp

Summer day camp expenses may qualify for the child and dependent care credit, but this is not the case for overnight camps. Publication 503 goes into more detail about the credit for child and dependent care expenses.

 

Part-time Work

Temporary or part-time work during the summer may not always result in an income tax liability. It's important to remember to file a tax return, as taxes are often withheld from paychecks, and filing a return can result in a refund of the taxes withheld.

 

Gig Economy Work

Taxpayers who engage in on-demand work during the summer, such as ride-sharing or delivery services through digital platforms, may earn additional income that could affect their taxes. It is recommended that they visit the Gig Economy Tax Center on IRS.gov to learn how participating in the sharing economy can impact their taxes.

 

Participating in the gig economy as an independent contractor can also affect tax bills and benefits. Employers will determine whether individuals are classified as employees or independent contractors, and the latter are not subject to withholding. This means that independent contractors are responsible for paying their own income taxes as well as Social Security and Medicare taxes, so it is important to know your status to avoid any surprises at tax time.

 

Get Help

There are many benefits to seeking the help of a tax professional. They can guide you through the complex tax regulations and make sure that you file your taxes correctly. Don’t hesitate to reach out to us for assistance.

Sources: Image by Hichem Meghachou