Summer is usually the time for relaxing, but it can also be a time for tax savings, especially if you’re still reeling from an unexpectedly large tax bill in April. Here are four timely tips:
- Rent your home. If you rent out your main home or a vacation home part of the time, you may be entitled to deductions like other landlords. This includes the rental-related portion of mortgage interest, property taxes, repairs, utilities, insurance, etc. Keep in mind, if your personal use exceeds certain limits, you can’t deduct a loss. And if you rent for less than 14 days, the rental income is tax free.
- Send young kids to camp. Who’s watching the kids while school’s out for summer? Depending on your situation, you may be able to claim a Child and Dependent Care Tax Credit for the cost of sending children under age 13 to summer day camp. However, the cost of overnight camp doesn’t qualify for the credit.
- Hire your child. If you have an older child looking for employment this summer, hire them to work for your business. Reasonable wages are deductible by the business and your child will likely owe little tax, if any, on the earnings. Plus, they may be eligible for other employee benefits.
- Take a business trip. Spend some time seeing a different city this summer while you’re on a business trip. When you travel for business, you can generally deduct expenses — including airfare, lodging and 50 percent of the cost of meals — attributable to the business portion of the trip. But you must spend more time on business matters while you’re away than you do on sightseeing or other personal activities.
Finally, create a tax projection well before year-end. Use this information to determine if the steps you’re taking now will help you avoid a large tax bill at the end of the year. Call today to make an appointment to review your situation.
— By Nancy J. Ekrem, CPA
Dewar Meeks + Ekrem pc
Certified Public Accountants & Business Consultants