During the busy months of summer, the last thing on your mind is your income taxes. However, reducing your tax liability is a year-round occupation and now is the time to consider some pertinent tax breaks and obligations.
Have you moved this summer or are you preparing for new education expenses this fall? These may offer some tax breaks that you can use to reduce your tax payments and even garner you a larger refund when tax time does arrive.
Here are five summertime tax tips to keep in mind:
1. Moving Expenses
Summer is the most common time of year to make a big move. If you have moved for your job, some of these expenses may be tax deductible. If you have moved over 50 miles to accommodate a new job and you continue to work in that area for at least 39 weeks during the year after the move, some of the costs of moving can be deducted on your tax return. Make sure to keep receipts of all your moving costs for your tax records.
2. Check Your Withholding Taxes
We are now past the second half of the tax year, so now is a good time to check your withholding taxes to ensure you aren’t paying too much/little to the IRS. If you have recently gotten married, had a child, or had a change in income, you may need to adjust your withholding status with your employer.
3. Business Trips and Vacations
Did you combine a business trip with a family vacation this summer? You may be able to deduct the portions of your trip that were related to business, combining work with pleasure. It is important to only deduct the portion of the trip that is for your work use. For example, your airline ticket may be deductible, but tickets for your family members would not count as deductions.
4. Education Planning
There are several tax credits and deductions that can be used to offset your education expenses. Tuition and some other education-related costs may be tax-deductible for you, your spouse, or your dependents. The Lifetime Learning Credit and the American Opportunity Credit are both possible options to help you with the cost of education. Consider seeking the advice of a tax professional so you understand which education tax breaks apply to you.
5. IRS Extensions and Notices
If you filed for a tax extension back in April, you generally have 6 months to file your income tax return. That means the extended deadline for 2015 returns is October 17, 2015 (because October 15th is a Saturday). Don’t wait until the last minute! If you haven’t already filed, get your information together now.
Summer is also a time when many taxpayers receive notices from the IRS regarding their filed tax return. Make sure to respond expediently to the IRS whenever you receive a notification regarding taxes owed or other discrepancies.
By keeping an eye on your tax deduction opportunities and liabilities year round, you can make tax time less stressful when it does arrive. Have a wonderful summer – but make sure you take the time to review your tax options so you stay ahead of the game when it comes to reducing your tax bill.