People often make life changes during the summer, both short-term and long-term. Many of these changes may require adjustments to your tax planning, and some create opportunities for significant tax savings.
Students who work part-time over the summer may have more federal income tax withheld from their pay than they owe. Make sure that working youngsters in your home are prepared to file a federal tax return next spring to claim any refund they have coming. Taxpayers of all ages who take on gig economy work should also be aware that they may owe self-employment tax. In general, any extra income may necessitate adjusting your withholding or estimated tax payments. The IRS Withholding Estimator tool (link below) can help you with the calculations.
Summer home improvements projects that reduce energy use, like installing Energy Star-certified windows, may make you eligible for the Energy Efficient Home Improvement Credit. Tax credits also exist for clean energy conversions, like installing rooftop solar panels. All these tax-reducing opportunities require carefully documenting each expense.
Our tax professionals at RTW Xxact Enterprises can help you determine whether you qualify for tax savings based on your summer activities.
IRS Withholding Estimator: https://www.irs.gov/individuals/tax-withholding-estimator