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FSS Newsletter - July 2014
Summer Time Tax Planning
Summer is here and a lot of you are taking vacations, sending your kids to day camp, visiting your vacation home and possibly employing your children. While tax planning is probably the last thing on your mind right now, we wanted to bring you a few topics to keep in mind while you're enjoying your summer.
Turning a Business Trip into a Vacation
While traveling away from home for business purposes, the IRS allows you to deduct expenses that are considered ordinary and necessary. Examples of such costs include transportation, baggage, lodging and meals, telephone and other necessary expenses related to the business travel. The most common question we are asked is how a business trip could be turned into a family vacation. If you bring your family on a trip that is primarily for business, you are allowed to deduct the business related travel costs as if you were traveling alone. The IRS doesn't define what constitutes a trip to be primarily for business. The key is the main purpose of the trip should be for business reasons and the trip involves more business days than personal days during the entire trip.
Day camp expenses
If you have a child under the age of 13 and are working, you may be able to count the costs of sending them to day camp towards the Child and Dependent Care Credit. The cost of sending them to an overnight camp doesn't qualify.
Vacation home rental
Generally, income received from a vacation home must be reported on your federal income tax return. However, if you rent it for less than 15 days during the year you are not required to report the income on your tax return. If you rent the property for more than the greater of 14 days or 10% of days rented to others at fair market value, other rules apply on how to split the rental and personal expenses on your tax return. These expenses would be limited to your gross rental income on the tax return.
Employing your children
Summer is a popular time for children under the age of 18 to go to work. If you are self-employed or a partnership in which both partners are the child's parents, payments for the services of the child under age 18 are not subject to social security and Medicare taxes. Additionally, payments for children under the age of 21, who works for his or her parents, are not subject to Federal Unemployment Tax (FUTA).
Buying or selling your house
It is important when buying or selling a home to keep all of the closing documents for your house with your tax records. In addition, if you move during the summer because of a new job or business location, keep up with all of your expenses. Subject to special rules, these expenses may be deductible on your tax return.
As always, we recommend discussing any of the above situations with us for specifics on how they apply to your personal situation. For more details we have enclosed the following links:
Turning a Business Trip into a Vacation
http://www.irs.gov/publications/p463/ch01.html
Day camp expenses
http://www.irs.gov/uac/Summer-Day-Camp-Expenses-May-Qualify-for-a-Tax-Credit
Vacation home rental
http://www.irs.gov/taxtopics/tc415.html
Employing your children
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Family-Help
Buying or selling your house
http://www.irs.gov/taxtopics/tc455.html
Sincerely yours,
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