Beach weddings, math camps and vacation rentals are synonymous with summer. And without school in session, summer is often a perfect time for some people to start a business or take on a part-time job to bring in some extra cash.
Just remember that the IRS might expect to hear about your summer activities. They could affect your federal income tax return for better or for worse, such as by raising your tax bill or qualifying you for a tax credit.
Keep reading to find out how your own summertime activities might affect your tax return.
Sending the kids to summer camp
As most parents and guardians know, planning and even paying for children’s summer camp starts early in the year.
If you send your child to camp so that you can continue to work during the time that school is out, you might be eligible to claim a credit on your tax return if your dependent child is under the age of 13.
It’s called the Child and Dependent Care Credit, and you can learn more about it on the IRS website. One caveat, though: Only day camps qualify. You can’t claim a credit based on the cost of an overnight camp.
Getting married
Summer is a popular time of year to get married. While you can’t typically deduct the cost of your wedding, getting hitched can affect your federal tax return.
If you are married by the end of the tax year (Dec. 31), your tax filing status will change. Specifically, you and your new spouse will have to choose between filing a joint return and filing separately.
Most couples are better off filing jointly, as we detail in “8 Benefits of Filing a Joint Tax Return.”
Getting a part-time job
Summer marks the start of paid internships and part-time jobs for high school and college students of all ages.
Even if you only work a few months, you will have to report your income to the IRS the next tax season if the amount exceeds the minimum required to file a tax return. This minimum ranges from $5 to $34,700, depending on your tax filing status.
The company where you interned or the employer you worked for part-time should send you a Form W-2 at the start of the next tax season. A W-2 reports how much you made during the time you worked and how much in income taxes and payroll taxes, if any, were withheld from your pay.
Taking on a side hustle
Driving for delivery services like DoorDash, Uber Eats or Shipt is a popular way to pick up some extra cash. Or, maybe you started your own Etsy shop or other business over the summer. Either way, the IRS expects you to report the net earnings you make from your side hustle on your next tax return if it’s $400 or more.
Don’t forget to track expenses such as mileage. When you have a side hustle, the IRS considers you self-employed, so you will be able to reduce your taxable income if you can claim qualifying business-related expenses.
Check out “6 Things Every Self-Employed and Gig Worker Ought to Know About Taxes” to learn more about what you can do to prepare for your next tax return.
Renting a room to travelers
If you decide to rent out your home while you’re traveling for the summer, or you rent out your spare room to other travelers, you might need to report the money you receive on your tax return.
If it’s less than 15 days a year, the IRS will not require you to pay taxes on the money you make. However, if you rent out your home or that extra bedroom for a longer period of time, you will need to report the money you make on a special attachment to your next tax return, called a Schedule E.
Additionally, check with your county and state to see if there are any local or state taxes or regulations you may need to consider when renting out your residence.
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