Tax Tips for the Fall
Fall is back and in full swing! Kids are back to school, the leaves are changing, and the holidays will be here before we know it. But before we put away our summer clothes and memories until next season, there are a few things to note about preparing for the 2021 tax season.
Did you know that certain summer activities can qualify tax deductions? From vacation homes to summer camp, and more. Here are a few tips to start preparing for spring tax season now so that you don’t miss out on commonly overlooked tax breaks!
Did you know that if you rented a vacation home out for the summer, then you may be eligible for a tax deduction (in the form of a rental loss)? To do this, you will need to distinguish how many personal days were spent in the home and how many days were rented. This information is crucial in determining the percentage of expense you can apply against the rental income.
You will also need to decide whether the rental should be classified as a business or personal home. If you rarely stay at the property and spend only 14 or fewer days there a year, then this residence would be deemed a business.
Be sure to classify your property accurately to ensure that you are accurately reporting your tax income and expenses.
Another everyday activity for many kids during the summer is camp! You may be able to claim tax deductions for any child under 13 who attended camp this year as part of the Child and Dependent Care Credit.
To be considered, the taxpayer and their spouse must be working full time, attending school full time, or looking for employment. If all requirements are met then the expenses accrued can be eligible for the credit. However, this may not include expenditures from summer school or overnight summer camps; speak with your accountant about what may or may not be included as “child care”.
Summer is the most popular season for weddings; and although things turned out a bit differently this year, there were still plenty of marriages happening. While it’s not possible to receive tax deductions from your wedding expenses, you do need to be careful about filing your personal taxes once you become legally married.
For example, if you got married this past summer your taxes were likely filed under “Single” or “Head of Household” in 2019, but that changes when filing for 2020. Once you become legally bound to another person, you will need to decide if you will list yourself as married filing jointly or married filing separately; this is another situation to discuss the tax benefits of with your accountant. It is also important to note any address changes that may have occurred so that all information is up to date on your returns.
We hope you found these tax tips helpful! If you require tax planning advice, Taurus CPA Solutions is here for you. Visit our services page for more info, contact us online today, or give us a call at 410-465-4600.