The Texas heat can be unbearable, but people of all ages look forward to the summer months. There are many fun things to do for families with young folks not in school, the cost of which can often qualify for tax credits or deductions. Parents of older kids also need to remember that those with part-time work or a full-time seasonal job can file a federal tax return to get back money if they are due to get a refund on money withheld on paychecks.
Below is a shortlist of tips to consider long before we get into tax season next year:
- Newlyweds: Couples traditionally marry in the summer months, so anyone changing their name should report this to the Social Security Administration. They should also report an address change to the U.S. Postal Service, employers and the IRS. This will all help avoid unnecessary headaches during next year’s tax season.
- Cash for camp: Although sleep-away camp does not count, day camps can qualify as an expense for Child and Dependent Care Credit.
- Part-time and summer work: Businesses that cut paychecks must withhold Social Security and Medicare taxes even if the employee does not meet the tax-paying threshold. The child should receive a Form W-2, Wage and Tax Statement even if they no longer work there. Parents can then use this information to help junior file next year and get a tax refund.
- Correct worker classification: A topic for any season, businesses need to correctly determine whether the child was an employee or a contractor. Remember that contractors are responsible for paying their own income taxes, Medicare and Social Security.
Legal guidance may be necessary
Businesses or parents with questions about summer help may need to consult with an attorney, particularly if they have faced tax disputes in the past. Experienced tax law attorneys can answer questions, clarify matters and help taxpayers who have a dispute with the IRS or the state.