Ah, summer. The weather is warm, kids are out of school, and it’s time to think about tax saving opportunities! Here are five ways you can enjoy your normal summertime activities and save on taxes:
Rent out your property tax-free. If you have a cabin, condo, or similar property, consider renting it out for two weeks. The rental income you receive on property rented for less than 15 days per year is not considered taxable income. In addition, you can still deduct your mortgage interest expense and property taxes in full as itemized deductions! Track the rental days closely — going over 14 days means all rent is taxable and rental income rules apply.
Take a tax credit for summer childcare. For many working parents, the summer comes with the added challenge of finding care for their children. Thankfully, the Child and Dependent Care Credit can cover 20-35 percent of qualified childcare expenses for your children under the age of 13. Eligible types of care include day care, nanny fees and day camps (overnight camps and summer school do not qualify).
Hire your kids. If you own a business, hire your kids. If you are a sole proprietor and your child is under age 18, you can pay them to work without withholding or paying Social Security and Medicare tax.
Have a garage sale. In general, the money you make from a yard or garage sale is tax-free because you sell your goods for less than you originally paid for them. Once the sale is over, donate the remaining items to a qualified charity to get a potential charitable donation deduction. Just remember to keep a log of the items you donate and ask for a receipt.
Start a Roth IRA for your children. Roth IRA contributions are limited to the amount of income your child earns, so earned income is key. This can include income from mowing lawns or selling lemonade. Start making contributions as soon as your child makes some money to take advantage of the tax-free earnings available in a Roth IRA.
Taking the time this summer to execute these tips can put extra money in your pocket right away and provide you tax-saving happiness in the future.
Renting an apartment or condo, leasing a piece of equipment, renting business property, or leasing a car all involve the common practice of borrowing something that is owned by others. This experience can easily become a nightmare with a bad landlord or if you don’t understand your obligations. In Part 2 of this two-part article, we give you the rest of the tips to becoming a smarter renter.
Proactive disclosure. If you think you will need a temporary exception to part of the lease, try to include it in your upfront negotiations. This could be something like a specific rent schedule or allowances for a pet. If this is not possible, consider proactively disclosing the exception to your property owner. This will help build trust and a reputation as a good tenant.
Keep the property clean. This is especially important if you have a pet in a rental home. When landlords come into your home, you will build confidence if the place looks like you treat it as if you owned it. The same is true with rented equipment. Always return it cleaner than you received it.
Know the owner and neighbors. Building a relationship with the property owner and your neighbors helps. If your neighbor has a problem, wouldn’t you rather have them come to you than your landlord? Establishing a good working relationship with a landlord will help you when you need help with a problem in your apartment or with the equipment you rent.
Leave with a smile. This is especially true for home and vacation rentals. When you leave, have the property cleaned and hassle-free for the landlord. Request a reference from the landlord for future rentals.
Renting an apartment or condo, leasing a piece of equipment, renting business property, or leasing a car all involve the common practice of borrowing something that is owned by others. This experience can easily become a nightmare with a bad landlord or if you don’t understand your obligations. In Part 1 of this two-part article, we give you the first three tips to becoming a smarter renter.
Read all agreements. Read the lease agreement thoroughly prior to signing. Ask for clarification of anything you do not understand. Look for clauses in the agreement that might suggest this property owner has problems with its current tenants. If it seems unfriendly, don’t sign it.
Negotiate upfront. Be ready to negotiate your lease terms upfront. If anything is unclear in the lease, have it clarified and put in writing. Do not depend on word of mouth. Be very clear about security deposits, first- and last-month rents, and services included in the lease.
Follow the terms. Be the tenant that pays a little early, not the one that always pays late. That way if you ever need a little extra time to pay, you have established the necessary trust to do so.