Upcoming Tax Year

Summer Activities that will Impact your Upcoming Tax Year

It’s summertime again! It’s the most relaxing time of the year when you go on vacation, to camps, family events, weddings, and whatnot? As you enjoy your break, it’s equally vital that you take note of your summer activities. You might be wondering why that is so. Certain activities can substantially impact your taxes in the upcoming tax year. Here are some of the most prominent summer activities that will affect your taxes next year.

Marriage

Summer is a great time to get married. You can have options for beautiful outdoor wedding venues, lively weather, and variations in clothing design. According to our 2021 Real Weddings Study, 80% of people get married from May to October. If you and your partner are planning to tie the knot this summer, remember that it will impact your taxes. Tax codes result in paying more as a married couple than a single filer. For instance, the federal income tax rate is 37% which amounts to $523,601 for single filers, whereas for married couples, the amount is $628,300 or above.

As newlywed couples, report any name change to the Social Security Administration. Apart from that, the change in address needs to be updated. These updates are a must when you file your taxes.

Sending Kids to Summer Camp

Summer camps are fun and memorable experiences for kids to learn and grow. Sending your kids to summer camp allows you some time to work on your projects. However, summer camp indeed accounts for a significant amount of expenses. Hence, your summer camp expense qualifies for the child and dependent care credit. For the 2022 child care tax credit, you may be eligible for up to 35%. The credit can qualify for up to $3,000 of qualifying expenses for one child for a maximum credit of $1,050 for 1 dependent. In the case of two or more children or dependents, the qualifying expenses can amount to $6,000 for a maximum credit of $2,100..

Part-time work

Have you taken up a side hustle or part-time job? Well, chances are you are being considered a contractor rather than an employee. However, your employer determines whether or not you are deemed an employee or a contractor. As an independent contractor, you will receive Form 1099-NEC. On the other hand, as an employee, you will receive a W-2 Form. You will need to file early next year to get a tax refund withheld from your checks this year.

Side-Gigs

Working on side gigs, such as ride-sharing apps like-DoorDash or Uber, is a great way to earn extra money in summer! Nevertheless, it would be best if you remember that you’re covering your taxes for it. As a gig worker, you can make estimated payments every three months to cover the tax liability as you do not have an employer.

Renting Out Homes

Summer is when most people go out for vacation and look for places for a temporary stay. So, this is a great time to earn some extra money by renting out your extra space. You can generate taxable income by formally renting your place to another person. This rental income must be reported however if it is less than 14 days out of the year it can be tax free income.

These are some major summer activities that can impact your taxes in the upcoming tax year. Now that you know all about them, I hope you will work accordingly to simplify your tax filing process. Besides, Ahad&Co, the best CPA firm in NYC, is always by your side to help and guide you with your taxes.