Summer’s almost here, and soon most children will be on their long-awaited summer vacation. If you own or manage a business, have you thought of hiring your children, nieces, or nephews for a summer job?
If you do it right, it can be a win-win situation for everyone.
The kids will earn some money and gain valuable real-life experience in the workplace while your business will have some extra help during summer months when other staff may be on vacation. If it’s a family business, there might even be some tax advantages as well.
If your child is doing a valid job and the pay is reasonable for the work, your business can generally claim a normal tax expense for wages paid. Your child will probably pay no or very little income tax on the wages they earned. And if the child is under age 18 and your business is unincorporated, neither your child nor your business will have to pay Social Security or Medicare payroll taxes in most cases.
To make the arrangement work, follow the following guidelines:
- Ensure it’s a real job. It could be a simple job, such as office filing, packing orders, or simple production activities. But it needs to be an actual job.
- Treat your child like any other employee. Expect your child to work regular hours and exhibit appropriate behavior. Don’t show favoritism or you risk upsetting regular employees.
- Keep proper documentation. Keep records of hours worked just as you would for any employee. If possible, pay your child using your normal payroll system and procedures.
- Avoid family disputes. If the arrangement is not working, or is disrupting the business, help your child find a summer job at another business.
School is out, the weather is warm, and it’s time to head out on a summer road trip! Tired of the same old locations? Every state has a number of unique destinations for the everyday explorer. Here are some free ideas for the creative vacation seeker in all of us:
- The World’s Largest Yard Sale. Stretching 690 miles through six states, the World’s Largest Yard sale includes over 2,000 vendors. Every year at the beginning of August, you can drive for four days (from Addison, Michigan to Gadsden, Alabama) in search of second-hand treasures. Along the route are more than 35 major vendor stops. These stops include groups of at least 25 sellers clustered together. But you can also find sales in individual yards, garages, parking lots or even right on the side of the road.
- The Wave Organ. Located in San Francisco, California, the Wave Organ is a sprawling sculpture that incorporates multiple pipes that enter the ocean at different levels to create musical tones when they’re struck by the waves. The sculpture itself is made of granite and marble from an old cemetery. When planning a visit, shoot to be there during high tide when the organ is at its best.
- Miss Crustacean Hermit Crab Beauty Pageant. Do you have a hermit crab that really likes to flaunt its shell? Then Ocean City, New Jersey is the place for you! Every August, contestants vie for the Coveted Cucumber Rind Cup by showcasing their elaborately decorated hermit crabs. Registering your charming hermit crab is free — just make sure you get there early.
- Carhenge. If you don’t have time to travel across the ocean to see Stonehenge, you’re in luck! Head to Alliance, Nebraska to visit Carhenge instead. Built in 1987 as a replica of the iconic stone circle in England, Carhenge uses vintage cars as building blocks instead of the 25-ton stones used in the original. It’s located in the middle of farmland and includes a walking path with some other, let’s just say, interesting sculptures.
- The Austin bats. Hidden under the Congress Avenue Bridge in Austin, Texas from late March until early fall lives the largest urban colony of Mexican free-tailed bats in the world. At its peak, (sometime in August) the colony has as many as 1.5 million bats! Every night around sunset, onlookers pack the bridge, sidewalks and river below to experience the colony taking flight in search of insects. If you decide to watch from the water, you might want to bring an umbrella — unprepared spectators are known to be hit with guano (AKA bat poop)!
Hitting the road is a great way to spend some time with loved ones this summer. Adding quirky stops that will be remembered for a lifetime make it even better!
As summer vacation season begins, please take a moment to review Traveler Safety Tips provided for those who stay in hotels and public lodging. These tips are provided courtesy of the American Hotel and Lodging Association. Be safe out there!
- Don’t answer the door in a hotel or motel room without verifying who it is. If a person claims to be an employee, call the front desk and ask if someone from their staff is supposed to have access to your room and for what purpose.
- Keep your room key with you at all times and don’t needlessly display it in public. Should you misplace it, please notify the front desk immediately.
- Close the door securely whenever you are in your room and use all of the locking devices provided.
- Check to see that any sliding glass doors or windows and any connecting room doors are locked.
- Don’t invite strangers to your room.
- Be aware of potential phone scams and prank calls to your guestroom. Hotel employees will never request credit card or personal information over the phone, nor will they advise a guest to damage hotel property.
- Place all valuables in the hotel or motel’s safe deposit box.
- When returning to your hotel or motel late in the evenings, be aware of your surroundings, stay in well-lighted areas, and use the main entrance.
- Take a few moments and locate the nearest exit that may be used in the event of an emergency.
- If you see any suspicious activity, notify the hotel operator or a staff member.
Source: American Hotel & Lodging Association
It seems like summer has just begun and the Back-to-School advertising blitz has already started. Are there any tax savings opportunities? Certainly, if you are tax smart about your spending. While the amounts may be small, they can add up in a hurry. Here are some ideas:
Purchasing the class supply list could have deductions in it – Often schools send a list of requested supplies for the school year. Some of the items on the list are clearly for personal use (such as an eraser or a ruler) while other items on the list are often for school use and classroom use (such as 24 pencils or paper towels). This classroom supply technique effectively transfers the school expenses to our children. Keep track of these non-cash classroom/school donations for possible non-cash charitable deductions.
Donate funds versus buying the supplies – Instead of buying the classroom supplies yourself, consider providing a check written to the school as a donation. This helps in two ways: First, it becomes a clear cash donation with a canceled check as a receipt. Second, if your school has a good supply agreement, the purchasing power of your donation will go further.
Whenever you donate, get a written confirmation from the school or your child’s teacher representing the school – Most teachers do not have the form, so bring one with you that the teacher can sign. You can get the directions on www.irs.gov or simply use a respected charitable group like Goodwill, or the Red Cross for a format to copy.
Leverage the school’s PTA – This non-profit parent group, if a qualified charitable organization, is a great resource to help your school AND help you get deductible donations for funds you would otherwise provide to your child’s school.
Use checks not cash – If you usually provide donations to the school in the form of cash (like providing additional money to help other kids go on field trips) make those donations in the form of a check. Cash donations without receipts are not deductible.
Donate funds versus taking the raffle ticket – Raffles, subscription drives, and silent auctions are fun ways schools raise funds. To maximize your ability to deduct your donations, forego the possible prize. Then the entire donation is clearly deductible.
Don’t forget your out-of-pocket expenses for your volunteer activities – Perhaps you donate your time at school functions, donate books to the school library, or help assist the teaching staff. Your out-of-pocket expenses and your mileage should be tracked for charitable deduction purposes.
Teachers, save your out-of-pocket expenses – The $250 deduction for qualified educators’ out-of-pocket classroom expenses is a popular tax provision in Congress that is now a permanent part of the tax code.
Finally, don’t forget to review state rules for educational expenses. There are often credits available for out-of-pocket school and other educational expenses.
For millions of working parents, the summer comes with the added challenge of finding care for their out-of-school children. With summer underway, you probably now have the childcare summer gap covered. There is a good chance this care is eligible for the Child & Dependent Care Credit.
Qualifications for the credit
To take advantage of this tax savings opportunity you must meet the following qualifications:
- You have: one or more dependent children under the age of 13
- You have: earned income (wages, salary, tips, or business income)
- You have: qualified day care expenses
- You are: financially supporting and maintain a home for your dependent child
What you should know
Taxpayers that use daycare to bridge the summer gap could be eligible for a tax credit if they qualify and organize now. To receive the credit:
- The care must be provided so you can work – The care can also qualify if you are looking for work.
- The care does not have to be at a facility – This means day camps, daycare, and nanny care qualify. However, overnight camps or summer school costs do not qualify.
- If married, both spouses need to work – There is some leeway if one spouse is a full-time student or is disabled.
- You need to keep records – You need to have receipts for the care expense and you will have to report the caregiver’s tax information (name, address, and tax ID/Social Security number) to receive the credit.
- The care payment needs to qualify – You may not pay a dependent or your spouse to care for your children. But beyond this, who you pay is flexible.