With the new Tax Cuts and Jobs Act (TCJA), tax planning may be more important than ever this year. You still have time to make crucial changes that could save you tax dollars. Then you can use your tax savings for what you want - make your dreams come true.
It's tempting to take a break from everything this summer, but you may regret it come tax season if you push off tax planning. Here are some tips to help you keep your head in the game even when your feet are in the pool:
If you are a sole proprietor with children, consider putting them on the payroll during the summer months. Wages paid to your children under age 18 are not subject to Social Security and Medicare taxes. What's more, their earnings are not subject to federal unemployment tax until they turn 21. If employing your children is not an option, you might still be able to score a deduction by sending them to summer camp. Day camp expenses for kids under 13 can provide a tax credit of up to 35 percent. Just remember, overnight camps do not qualify, and usually both parents must work to claim this credit.
Keep in mind that tax deductions for moving have been limited. The recent tax code changes have eliminated the moving expense deduction. That means most taxpayers will no longer be able to deduct moving expenses. There are exceptions to the new rule, so give us a call if you have questions.
Business and pleasure can mix – if you follow the rules. Perhaps your sights are set on some leisure travel. Tacking on a few fun days before or after a business trip might be a tax- and cost-efficient way to pay for a vacation. But you have to follow all the rules if you want your business travel to remain tax-deductible. Travel that is primarily for charitable work might also qualify you for a tax deduction.
No matter what your summer plans are, this is always a good time for a general tax checkup to ensure your withholdings and estimated tax payments are on target. For mid-year tax planning and projections, contact our office.