IRS Providing Summertime Tax Tips
Utica, NY (WIBX) - The IRS throughout the months of July and August will issue special Summertime tax tips to those looking to save money, and those choosing to prepare for the next tax season. IRS spokesperson for the New York region, Dianne Besunder said, "People who are paying for summer day camp for their children under the age of 13, should definitely save those receipts because those receipts for the expenses that you paid to keep the child in day camp, will make you eligible for a credit when you file your tax return."
She said filers can get a credit for up to $3,000 in expenses for one child and up to $6,000 for two children. However, she said its only for day camps--overnight camps do not qualify. Also, she said a filer can get a credit up to 35-percent of the camp expenses depending on the person's income.
Another Summertime tax tip targets students with summer jobs. Besunder says students should understand the tax structure especially concerning the Form W-4, Employee's Withholding Allowance Certificate. She says any summer job earnings is subject to IRS tax withholding, even if the student is claimed as a dependent on their parents tax return.
The IRS listed the following tips for students working summer jobs:
- If you have multiple summer jobs, make sure all your employers are withholding an adequate amount of taxes to cover your total income tax liability.
- Whether you are working as a waiter or a camp counselor, you may receive tips as part of your summer income. All tips you receive are taxable income and are therefore subject to federal income tax.
- Many students do odd jobs over the summer to make extra cash. Earnings you receive from self-employment, including jobs like baby-sitting and lawn mowing, are subject to income tax. If you have net earnings of $400 or more from self-employment, you will also have to pay self-employment tax. This tax pays for your benefits under the Social Security system.
- Food and lodging allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay, such as pay received during summer advanced camp, is taxable.
- Special rules apply to services you perform as a newspaper carrier or distributor. Employee news carriers under age 18 are exempt from Social Security and Medicare taxes. Generally, self-employed news carriers must pay self-employment tax.
Besunder says there are also tips for small business owners and those traveling on business and have to pay for gas. "People who are on business will see that the IRS's mid-year raised standard mileage rate--which is an expense you can claim against your business expenses--went from 51 and a half cents to 55 cents--So, that's something that will be shown in the tax return, so that will be a little help in recognition of many items including the fact that gas has gone up in the last six months," Besunder said. The Summertime tax tips will be issued throughout the summer at, www.irs.gov.