Tax season is over and summer has arrived with sunshine and plenty of showers. As many of us begin to enjoy the warmer weather and plan for a much needed getaway, earning tax credits on summer activities, can be easily forgotten. Here’s how you can pile up the tax benefits this summer.
Send your child to summer camp
If you and your spouse are both working and plan to send your child (under 13 years of age) to summer day camp, you can save money by claiming the Child and Dependent Care Tax Credit. The actual credit amount you’ll receive depends on your income tax bracket, but doing so could save you anywhere from 20%-35% off the cost of camp. It doesn’t matter if it’s a program-based day camp for cheerleading or music, as long as it’s not an overnight camp, you can claim the credit. You can also claim this credit under the same conditions, if your child is cared for by a day-time nanny (or someone that you cannot claim as a dependent). Parents, everywhere, who are either working, seeking employment, going back to school, or disabled can claim this credit to alleviate the cost of child care during the summer.
Take a summer vacation while on business
You can claim your summer vacation expenses if you plan to engage in business related activities. For example, let’s say you’ll be attending an industryelated conference this summer (or anything that is related to your business and profession). Well, you can take the opportunity to plan a family vacation around this conference, while being able to deduct many expenses for your business. By bringing the family along, you can plan a trip that allows you to work, while spending the rest of your vacation with your family. The bonus is you can deduct your airfare, food, hotel, transportation and other business related expenses, as long as you can provide proper documentation that you did indeed work while on vacation. Your kid’s and spouse’s expenses may not be deductible (if they are not working for your business), but you can definitely save by combining two trips into one.
Donate your spring cleaning to charity
Many of us do major spring cleaning after a grueling winter. Instead of throwing out half of your closet and that couch you’ve been dying to get rid of, donate them to your local church, or other qualified charity (it must be a non-profit or tax-exempt organization). Depending on your contribution value (a good rule-of-thumb is approximately 25% of the purchase price of each item), you can get a nice tax credit, which you can use to update your summer wardrobe, or refresh your decor. The key, with tax credits, is documentation. So, make sure you can record what you’re giving, the condition of the items, what the donation value is, the dates they were donated, what you paid for the items originally, etc. Donations over $500 require separate forms, so make sure you check the IRS guidelines, before donating, so you know exactly what you’ll need to make the claim on your taxes.
Rent out your vacation property
For those who own a vacation property, you may be missing out on potential tax credits related to your investment asset. Many people purchase properties for investment purposes and don’t realize the extensive tax benefits associated with these purchases. For example, some of the areas you can earn tax credits on, are depreciation, insurance premiums, homeowner association dues and condo fees, repairs to the property (including cleaning and maintenance), operating expenses, travel (associated with your rental property), unexpected events that may cause a loss, tax losses, advertising your property and more. Although there are many tax credits associated with rental properties, you should review the specific rules, provided by the IRS, to fully understand how you can maximize the tax benefits on your income property.