While you are basking in the beautiful sunshine we are experiencing this summer, you can think about ways to save on your tax bill this year. Here are some deductions and credits you can take advantage of in the summer of 2016:
Summer Camp – The cost of day camp can be claimed as part of the dependent care credit as long as both spouses work and the child is under 13. Overnight camps are not included.
Vacation Homes – The mortgage interest and property taxes on a second home can be a deduction on your schedule A. In addition, if you rent the home for less than 15 days a year, the income does not have to be reported.
Summer Jobs – If you take a summer job or an internship, make sure your status is as an employee and not an independent contractor. An employee will have the social security, Medicare, and income taxes withheld from their paycheck, an independent contractor will be responsible for the all those taxes when they prepare their tax returns next year!
Volunteer – If you do volunteer work this summer, you can deduct 14 cents per mile for driving to the organization or delivering meals for the organization or any other service you perform with your personal automobile. You can also deduct the cost of your babysitter while you are volunteering for the charitable organization.
Go Solar – You could save thousands of dollars off your utility bills over the next couple of decades by installing a solar energy system. And with the recently extended solar investment tax credit covering 30% of the cost of the system and installation, it’s probably more affordable than you think. New York State has a similar incentive.
Home Improvements – The Nonbusiness Energy Property Credit can get you up to 10% back if you make certain energy-efficient home improvements. These include insulation, high-efficiency water heaters, heating and air-conditioning systems, and external windows. Not only will these improvements help you save money on your utility bills, but a tax credit for 10% of the cost can make it an easier decision. Keep in mind that this tax credit has a lifetime cap of $500 and is set to expire at the end of 2016.
Ellen Rose is a CPA with over 25 years of tax, accounting, and business experience. She is knowledgeable, client-focused accountants who make sure their clients get the best possible service and attention. Her accounting practice focuses on the needs of small businesses and start-ups. She is especially passionate about helping entrepreneurs succeed and thrive in today’s very competitive and challenging business climate. Sternbach & Rose, CPAs – Where you’re never just a number.