Spring is often viewed as the season for cleaning and getting organized, while summer is seen as the time for rest and relaxation. But we would argue quite the opposite. You can actually take advantage of summertime to focus on organizing a very important aspect of your personal and professional life — your taxes.
Here are few things to consider:-
- Many people use summer months to take their annual vacation, so (depending on your industry), you may find that business slows down and you may have more time on your hands that can be used productively in a different way.
- Summer falls towards the middle of the calendar year – so it is a good time to reflect on the first half and make plans and goals for the remaining months.
- Longer hours of daylight may help you to get more accomplished. It often doesn’t ‘feel’ as late as it actually is so you may find yourself having more energy to work a bit later in the day than you would during fall or winter.
TAX TIPS FOR YOUR SMALL BUSINESS
As a small business owner, there are several tax credits and deductions that you may be able to take advantage of. We will list a few of them below:-
As an entrepreneur, lifelong learning should be one of your main goals. If you have recently taken a course that is either part of a postsecondary degree program or one that was necessary to improve your job skills, you may be eligible for the Lifetime Learning Credit of up to $2000. Even better, the IRS states that there is no limit on the number of years the lifetime learning credit can be claimed for each student.
You might also be making the most of the beautiful summer weather by taking more business trips by car. Remember, those work-related miles add up. In our recent Blog post, we explained that business-related mileage is a tax deductible expense, if you use your vehicle for work. Simply use a spreadsheet or mobile application to log the miles driven for work. Then multiply the number of miles by the applicable standard mileage rate.
Your Home Office
If you use a room (or set of rooms) in your home for the purpose of full-time business operations, you may be eligible for a home office deduction. Be advised, however, that the IRS is very strict about this rule. Your room or rooms must serve exclusively as a home office. In other words, if your home office doubles as an Airbnb on Friday nights, you have violated the exclusive-use requirement and will not be able to benefit from home office deductions.
TAX TIPS FOR YOUR PERSONAL LIFE
Aside from activities that affect your business, you can also use summertime to look at possible credits or deductions related to your personal life.
If your home remodeling projects include energy saving improvements, then you may be able to offset some of the cost by claiming a tax credit. The IRS lists the qualifying products for its Energy Incentives program and notes that for 2016, “the residential energy property credit is limited to an overall lifetime credit limit of $500 ($200 lifetime limit for windows).”
If you have children under the age of 13 who are attending camps, you know that the costs can add up quickly. Be be sure to collect receipts that include the camp or child care provider’s tax identification number. You may able to use these receipts if:-
- You qualify for the Child and Dependent Care Credit. Note that this applies to day (not overnight) camps. If the cost of transportation to and from camp is included in the camp’s fees, then that counts, too. To find out if you qualify for this Credit, visit the IRS website.
- If you have been contributing to your employer’s Dependent Care Flexible Spending Account, you can also deposit up to $5,000 to cover some or all camp expenses tax free. If you haven’t done it for this year, consider enrolling at your employer’s next benefit election period.