Summer Tax Planning Reminders

A variety of summer activities have the potential to generate taxable income, or to help you qualify for tax benefits. For example, if you engage in part-time, seasonal or gig economy work during the summer, then you may need to adjust your tax withholding or make estimated tax payments to account for the extra income. If your children work during the summer, make sure they are prepared to file a tax return next spring to claim any IRS refunds they have coming.

Self-employed people who travel for business purposes may generally deduct travel expenses to reduce their taxable income. However, if a summer trip involves both business and personal activities, you must take care to only deduct expenditures that serve a clear, legitimate business purpose.

Finally, if you make improvements to your home this summer, then you may qualify for home energy tax credits. A variety of credits exist for projects that improve energy efficiency, or involve generating or using renewable energy like wind or solar power. You must carefully document all eligible expenses in order to claim these credits. Also note that the rules for energy credits may change after this year, so this summer might be the ideal time to complete a project.