We’re halfway through the year which means if you haven’t started summer tax planning it’s time to get the ball rolling. We want you to save as much money as possible when you file next year. Here’s what you need to do to put yourself in a good position.
Check your tax withholding
If you recently got a raise, had a baby or experienced some other major change, check your withholding to make sure you’re having the appropriate amount of taxes withheld from your pay. This will prevent you from being stuck with an unexpected tax bill come April.
Change your filing status
June and September are two of the most popular summer months to get married. No matter when you decide to say “I do” as long as it’s done before the ball drops, the IRS considers you married for the entire year. So, go ahead and embrace your new filing status.
Report any name changes before the tax season begins
80 percent of couples change their last name after getting hitched. Aside from reporting the name change to your bank and DMV, you’ll also need to file for a new Social Security card. Your SSN will remain the same, but the name will be different. Take care of this small task before the tax season begins so you don’t slow down your refund.
Give the Health Insurance Marketplace a life update
More babies are born in July, August and September than any other month. If you’re adding a little one to your family and receive health insurance through the Marketplace, you need contact them. Giving the Marketplace a quick update will allow them to adjust your Premium Tax Credit amount so that you won’t receive too little assistance.
Summer rental income may be tax-free
If you plan to be away a good chunk of the summer, list your home on Airbnb or Vrbo to earn extra income. As long as you keep your bookings to 14 days or less per year your profit is tax-free.
You may be able to deduct Hurricane damage losses
The Atlantic hurricane season runs from June 1st until November 30th. If your home, household items or vehicles are damaged in a storm you may be able to deduct your losses on your tax return. However, it must be a federally declared disaster area.
Hold on to those summer camp tuition receipts
During the summer parents have to find something to with their kids while they go to work. A popular solution is to send them to day camp. According to the American Camp Association day camp tuition can be anywhere from $199 to $800+ per week. That’s pricey but the expense counts towards the Child and Dependent Care Credit when you do your taxes. Even if you decide that you’d rather hire a babysitter instead, the expense will still count towards the credit.
Pay your estimated taxes if you do freelance work
These days many millennials are choosing to freelance rather than work a traditional 9 to 5. It allows them to have a flexible schedule and be their own boss. Since taxes aren’t withheld from freelance income, you’ll probably need to make estimated tax payments. Use Form 1040-ES on the IRS website to determine how much you’ll owe. Payments are usually due the middle of April, June, September and January.
Adjust your 401k contributions
Are you contributing as much as you can to your retirement accounts? Now’s a good time to find out. Review your budget to see if you can afford to contribute more to your 401k. You may not see the benefits of saving now but you’ll thank yourself later. For 2019, you can contribute up to $19,000 ($25,000 if you’re 50 or older) to a 401k.
Make sure you’re not contributing too much to your IRA
Save too little for retirement and you’ll be in trouble. Save too much and you may find yourself in hot water as well. This year most people can only contribute up to $6,000 to their IRA. If your contributions go over the limit, you’ll face a 6% penalty on the excess amount. Do a quick spot check to see where you stand. If you’re on track to go above the allowed limit, you must withdraw the cash before the tax filing deadline.
Pre-register for next year with ezTaxReturn
Save time and money when you file next year by pre-registering now. There are no coupon codes to remember, just use the same email you signed up with and you’ll receive an automatic discount when you do your taxes.
