Summertime is here! The kids are out of school, the weather is heating up and summer vacation plans are being finalized. Here are some great tax-savings opportunities to consider while planning your summer fun:
Deduct Summer Camp Expenses
When I was a child, soccer and basketball day camps were one of the highlights of my summer break. Little did I know that my parents could actually deduct some of the cost of these day camps on their tax return via the Dependent and Child Care Tax Credit. The tax credit only applies to day camps; overnight camps do not qualify. This also only applies if both parents are earning an income or looking for work and the children are 12 and under. Unlike other tax credits, income is not considered as a factor, which is great for higher income households. Check with your CPA to see if you qualify.
Hire Your Kids
Do you own a business? Does your child need a summer job? If your kids are under the age of 18, you can hire them and deduct their wages from your business’ taxable income. As a bonus, some of the child’s income could be taxed at the child’s tax rate rather than yours. Double bonus, you could use this money to start a Roth account for your child.
Take Advantage of the Heat
You can enjoy the sun, save money on utility bills and take advantage of a sizable tax credit all at the same time. The IRS is offering a 30% tax credit when you purchase a solar power system for a home that you own (rentals do not count). For example, if you were to purchase a solar power system costing $20,000, you could receive a $6,000 tax credit. In fact, many solar programs exist that make the cost of going solar more affordable by offering a variety of lease and own options.
Travel Medical Insurance
Are you travelling abroad this summer and want to be prepared for any unexpected illness, injury or medical emergency? Premiums paid to a private medical insurance provider can be added to all of you other medical expenses and claimed as an itemized deduction on your personal tax return.
Combine Pleasure with Business
If you can conduct some type of business during the family summer vacation, you might be able to deduct a portion of the vacation costs on your tax return. Is there a client or business partner you could meet with while the family is enjoying some time on the beach? Eligible expenses include the cost of airfare, a rental car or cab fares and even a portion of the cost of lodging.
Make sure to follow up with your CPA or financial advisor to ensure that you are following all applicable IRS guidelines. After all, you can’t rely on a short blog as the only source for your tax advice.
