Next weeks brings us to Memorial Day, the unofficial start of summer. This is a time when many of us turn our attention to winding down and potentially relaxing a bit more, but this is not always the case, and sometimes the things people do this time of year come with tax consequences.
For some people, this season can actually involve working more. Kids who aren’t in school for these weeks may be trying to bank some money before returning to the classroom. They don’t want to end up with a surprise tax bill when it comes to time to file a return next year, though. If this is the only money they make for the year and they are being paid as an employee, then regular withholdings from their paycheck should account for all they owe. If it’s just a part of their income for the year, though, it could be worth the few minutes it takes to use the IRS’s withholding estimator and see how they should enter their withholding.
This forward thinking can be even more necessary if one is doing work as a contractor and/or in the gig economy. This can be a wonderful way to make some extra money with greater time flexibility, but one must keep in mind that it is money being earned without being taxed. This doesn’t mean it’s a bad way to make money, it just means that one must plan accordingly, and thus it becomes another of those summer things to potentially keep in mind.
Much like the fact that if you are sending kids to camp over the summer, keep those receipts for they might help come tax time.
Something else people do more often over the summer is get married. And of course, there are the obvious tax implications here of whether one files a tax return as single or married. There are a lot of other pieces involved that also may need to be attended to, though. For example, if there is a name change involved, the Social Security Administration needs to be notified. If there is an address change involved, that should be reported to the Postal Service, IRS, and employers. Making sure everyone has the correct information now will make it easier when it comes time to file taxes.
The best thing that can happen over the summer, though, may be actually getting in that bit of that time to relax. So here is to hoping that the season treats you and your family well, no matter what you decide to do with it.
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To ensure we don't make the folks at the IRS ornery, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
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