It’s officially SUMMER! Schools are out, summer camps are gearing up, family vacations are right around the corner, and the summer heat is blazing [especially down here in South Carolina 😰].
While summertime fun may be your main focus for the coming weeks, be sure to take advantage of these four summer tax tips.
4 Summer Tax Tips You Need to Know
1) Revisit Your W-4 Withholdings
Take some time this summer to properly adjust your W-4 withholdings. Put it in your pocket now instead of waiting for the 2019 tax season.
You may not receive a large refund around income tax season 2019, but the offset will be not having to loan the IRS your money until tax time.
FACT: The IRS hands out billions of dollars in tax refunds every year because taxpayers have way too much withheld from their paychecks.
Although over-withholding might give you a decent return at tax time, it also means less money in your pocket each pay period. You can request a new Form W-4 from your employer at any time; however, it may take a short while for the new withholdings to take effect.
2) Increase Your 401(k) Contribution
Tip: Contribute at least as much as needed to capture your employer’s match.
Some employers offer matching contributions, which could be 50 cents on the dollar. Not taking advantage of matching contributions is like turning down free money.
FACT: Within certain limits, your taxable income can be effectively lowered by the amount you contribute.
Each dollar contributed towards your 401(k) helps to avoid IRS and state income taxes. For example, if your federal and state income tax rate is 30% combined, you can rack up $300 in taxes for every $1,000 contributed to your 401(k), all while preparing for your future.
3) Report Employment Taxes By The 2nd Quarter Form 941 2018 Deadline
Avoid end-of-year tax surprises or IRS penalties by meeting the upcoming 2nd Quarter deadline to file Form 941 on July 31, 2018.
If you own and operate a business with employees, you will need to file IRS Form 941 quarterly. You, the employer, are responsible for withholding federal income tax, social security tax, and Medicare tax from each employee’s salary. Click here to file Form 941.
4) Carefully Track Your Charitable Donations
Rule of thumb: Always keep detailed records of what you have donated throughout the year.
You can receive the biggest tax deduction for donations and also comply with the IRS.
By providing an accurate account of every item you donated to charity, you set yourself up to get the biggest IRS tax deduction possible in return. Remember, being smart with your tax planning is all year round. With a little foresight, you place yourself in a far better position come tax season.
As you enjoy all of the great things that the summer season has to offer, be sure to take advantage of these useful tips and create your free TaxBandits account to stay on track with IRS compliance.
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