The Internal Revenue Service (IRS) recently released a publication that encourages taxpayers to make the most of common summertime activities. How, you may ask, can an agency that collects money encourage summer fun? The answer: by highlighting how popular forms of summer fun can translate to tax savings.
#1: Saying "I do" with summertime nuptials
Summer months are a popular time for couples to celebrate their wedding vows with family, friends and loved ones. Marriage can lead to a name change. Those who change their names should report the new name to the IRS. It is also important to update your address with the post office and IRS to help better ensure you receive any important tax documents.
#2: Summer jobs
Getting a fun, seasonal summer job may boost your bank account more than you initially realize. Summer employment may not result in enough income to owe taxes. However, it is still important to keep track of these funds and report to the IRS because you could find yourself with an added bonus: a tax refund. This can happen if the IRS gets more money than needed from your paycheck.
The IRS will also carefully review worker classification. Small business owners who hire on summertime help must carefully consider whether the worker is an independent contractor or an employee. Each is taxed differently. A failure to properly classify summer help can lead to steep penalties.
#3: Withholding review
The agency used this publication as another reminder for taxpayers to review their withholding status. Many of these popular summer activities can impact your withholding. Changes made promptly can help reduce the risk of a surprise tax bill in April.