Weddings. Vacations. Summer camps.
What do the aforementioned three activities have in common? Answer: Due to the COVID-19 pandemic and various gathering restrictions, there were very few of them in 2020. But now that vaccines are here, gathering limits have been largely lifted and everything is back open again. Even with ongoing challenges from COVID variants, the likes of weddings, vacations and summer camps are back on in 2021. And while you may not associate “taxes” with weddings, vacations and summer camps, these all can have an impact on how much you either owe or receive from Uncle Sam come tax time.
Let’s take a look at how the three summer activities could impact your taxes:
Weddings
It’s estimated that three-quarters of all U.S. weddings take place between the spring and fall. So how can saying “I do” impact your taxes? It all depends on how much you and your spouse make combined as a married couple. While getting married usually helps your taxes – as you can file jointly and receive a larger standard deduction than the alternative – there are some situations where your combined income can put you into a different tax bracket and have you paying more to Uncle Sam. Case in point: If you’re tying the knot this summer, know what to expect come tax time so you can plan accordingly.
Vacations
Now that people are traveling and vacationing again, there are some things to note if you rent out property to tourists. If you rent out your property for 14 days or less, then you’re not on the hook for any taxes. But if renting out vacation properties has become a lucrative side hustle for you, then you need to file a Form 1040 to report this revenue stream and determine how much in taxes you’ll be on the hook for. The good news is that you can write off certain housing expenses against your taxes. We’d suggest working with a tax specialist if you need to report home rental income.
Summer Camps
We’ve written quite a bit about the new child tax credit, but there’s another tax credit that involves your children you should familiarize yourself with this summer: the child and dependent care credit. Simply put, you’re able to claim up to 50 percent of any child care costs up to $8,000 if having your child watched in a professional setting allows you to work. For instance, if your child is attending a summer day camp, you may be able to write off the cost of it. Again, we’d suggest working with an accountant or a tax advisor to see if the summer camp you’re sending your child to qualifies.
