There are some activities that are synonymous with summertime: barbeques, boat rides and family road trips are a few that often come to mind. In some cases, summer fun can lead to tax savings. Three examples to watch for include:
- Spring cleaning and donations. Just before summer kicks off, many clean out their homes. This can lead to large donations. Certain donations to qualified organizations can lead to tax deductions for taxpayers who itemize their returns.
- Purchasing a summer cabin. Taxpayers who buy a second property can get more than just a place to unwind and relax. Those married filing joint tax returns can generally deduct mortgage interest on up to $750,000 paid for a first or second property.
- Adding a pool to your primary residence. In many cases, taxpayers can deduct mortgage interest on loans taken out to significantly improve their primary residence. This could include remodeling the yard to add a pool or adding on a sun room for increased summer enjoyment.
Two other common summer activities that garner the attention of the Internal Revenue Service (IRS): weddings and summer jobs. Those who get married during the summertime will likely need to change their tax filing status while a summer job often means the employee will need to report earnings to the IRS.
A failure to follow the rules for reporting income and filing taxes can result in an audit. Those who audited by the IRS can take proactive steps to protect their interest. An attorney experienced in dealing with the IRS can help.