It’s summertime, but that doesn’t mean your tax planning should
take a vacation.
It’s summertime, but that doesn’t mean your tax planning should take a vacation. Here are some ideas for summertime tax savings:
-Give your kids a summer job in your business. Let’s say you employ your teenage daughter in your business. You can deduct her salary as a business expense, and she’ll pay no income taxes on annual earnings up to $4,750. Above that amount, she’ll start paying taxes at a 10-percent rate. What’s more, you can still claim her as a dependent as long as you provide more than half of her support and she is under age 19 or is a full-time student under age 24. To avoid IRS challenges, keep good records and document that the wages you pay her are reasonable for the work performed.
-If travel figures into your summer plans, there may be tax savings by combining business and pleasure on the same trip. Within the U.S., if the primary purpose of the trip is business and you add on a side trip or an extra few days for pleasure, you can deduct all the travel costs to and from your business destination and all other business-related costs. The only costs you can’t deduct are those that relate to the pleasure portion.
-If you’re going to be out of town for awhile, consider renting out your home while you’re gone. The IRS allows you to receive up to 14 days of rental income per year completely tax-free. In fact, you don’t even have to report the income on your return.
-Do you own a boat or recreational vehicle? As long as it has sleeping space, a bathroom and cooking facilities, you may be able to claim it as a second home and deduct the interest payments on your loan.
-If you and your spouse work, the cost of sending your children to a summer day camp may qualify for the child care credit.
Enjoy your summer – and save taxes! Please give us a call. We are here to help you with your tax planning.
-Mary Hubbell is accounting services manager with the accounting and business consulting firm of Bianchi, Lorincz & Co. in downtown Hollister and in Morgan Hill.
