4 Summer Activities That Could Affect Your Taxes
by Susannah McQuitty
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Ah, summer: The season of weddings, vacations, extra time to pick up pocket money, and much-needed breaks.
Of course, we're already thinking about next year's returns, and not just because we're a bunch of tax nerds. Here's how four of the most common summer activities will likely affect your taxes next year.
I just got married—will that affect my taxes?
Weddings are wonderful events that come with long to-do lists, and the months following are no different.
First, you've got to change your name (if you plan to) with the Social Security Administration (SSA), because your name should be the same on your tax return as it is with the SSA. You can use Form SS-5 to officially change your name.
Next, you’ll need to decide which married filing statues you will change to. There are two to choose from: married filing jointly and married filing separately. If you decide to file jointly, you’ll have access to new tax breaks and possibly a different tax bracket, so your choice matters. Be sure to think it over and pick the best status for you and your spouse. When you come back to 1040.com to file your taxes next year, you’ll be able to select your new status once you begin the filing process.
Once you’ve picked a filing status, you should double-check your tax withholding at work. New tax breaks and tax brackets might mean your employer needs to withhold more or less taxes per paycheck. Even if you file separately, it's a good idea to check on your withholding at least once a year. Check with your employer on how to process a W-4.
Finally, you’ll also need to report any updates to your mailing address with the United States Postal Service, your employer, and the IRS. That way, all your tax documents are sure to go to the right place.
Before the end of the year, newlyweds should:
- Make name changes with the SSA
- Determine filing status
- Double-check tax withholding
- Update mailing addresses
Can I get tax breaks by sending by kids to summer day camp?
The kids need an outlet, and you need a break. What better way to do that than dropping them off at day camp? Not only are they a great help for working parents in the summer, but day camps could also help boost your tax breaks.
The Child and Dependent Care Credit (CDCC) helps parents manage childcare expenses. Day camp costs can count towards that credit amount, so keep good records of your childcare expenses to maximize your credit next year.
Don’t get too carried away, though. Overnight camps don’t count towards the CDCC.
Summer day camp costs may count towards the Child and Dependent Care Credit.
Will getting a part-time job change my taxes next year?
Want to turn that extra free time into more money this summer? A part-time job is a great way to do that, and, of course, any extra income is going to alter your taxes a bit.
Part-time work doesn't usually complicate your taxes. Your employer will withhold taxes, and you’ll get a W-2 next January to file with your tax return.
However, one thing to be aware of is your current tax bracket and how earning a bit more money might affect your taxes. If a part-time job puts you in a higher tax bracket, you'll owe a larger percentage of your total income.
So, what about people who aren't required to file a tax return? It’s still a good idea to file, because that's the only way to claim your refund (if you qualify for one).
Part-time work is usually simple for your taxes. Double-check your tax bracket to see if the extra income will affect your tax rate. Also, even if you aren’t required to file a tax return, you’ll have file anyway to claim a refund.
How different are taxes for jobs like DoorDash, Uber, and other side gigs?
Maybe working part-time isn’t for you, but let’s say you’re doing a lot of driving and want to monetize that with a ride-share platform. Working a side-gig is a great way to make a little extra money during the summer, but make sure you’re covering your taxes, too.
Gig workers make estimated tax payments every three months to cover their tax liability. This is because you don’t have an employer withholding taxes from your income.
Even if you’re only working during the summer, you’ll need to at least make a quarterly tax payment by September 15, 2021. If you pay more than you owe, the overflow will be returned to you via a refund. If you pay less than you owe, the full amount will be due April 15, 2022.
If you work a side gig, make sure you pay quarterly taxes in September and keep good records to file your return next year.
How can I get a better idea of my tax situation?
Whatever you may be busy doing this summer, it helps to get a sneak peek at next year's taxes.
You can use our handy tax calculator to check out how your taxes are doing. Planning ahead helps you adjust if you need to—which means fewer surprises at tax time.
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