Hot Tax Tips for a Hot Summer

Casey McCartyTax TipsLeave a Comment

Outdoor temperatures too hot to do extensive physical activity yields an unpleasant time for winter-loving Northerners. A similar feeling can is being hit with a large tax payment in the springtime of the following year. One should remember taxes as they embark on a hot summer’s income endeavors.

Summer jobs

Teenagers often find low wage jobs in summer in the hiatus of classes, homework and after-school activities. These teenagers should remember they may not have all of their money in their pockets at the end of summer. Instead, they may have taxes withheld from their paychecks like their older, full-time colleagues do.

If a teenager is starting a new job in the summer, they will need to fill out a Form W-4. This is the form employers use to figure out how much to deduct from their employees’ paychecks for federal income taxes. The Internal Revenue Service provides an online tool to assist taxpayers in filing out this form.

Teenagers who mow lawns, clean houses, babysit or run their own lemonade stand and are not employed by a company are considered self-employed. These taxpayers should maintain good records of what money they receive from where. They should also keep a record of their expenses associated with their self-employment.

Teenage waiters, waitresses and tipped employees must report any tips equal to or greater than $20 in a single month. These tips are considered taxable income to the IRS.

Meeting with Tom can help answer questions you have about teenage tax payments as applied to the 2018 tax year.

Tax on summer rentals

If you receive rental income, it generally needs to be reported to the IRS. This includes rent from renting your house, cabin, boat or other property. If the rental property is used as your residence, then any rental expenses you wish to deduct are limited to the amount of rent received from your property.

The IRS deems any living unit as a residence if you use it for personal purposes if you use it for more than the greater value of 14 days or 10 percent of the total days you rent the unit to others at a fair rental price.

A special rule dictates in the event you use a unit as a residence and rent it for fewer than 15 days, do not report any rental income and do not deduct any expenses as rental expenses.

There are more rules for renting property, too. You can meet with Tom for any further questions about rental property as applied to the 2018 tax year.

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