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Tip of the Month for August 2005
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TIP: Summer Fun Tax Breaks
Tax breaks for summer fun... sounds too good to be true? Maybe not, if your plans for kids and family this summer meet the key criteria below. As always, consult your personal tax advisor to ensure that these write-offs apply to your situation.
Summer Camp Costs You may be eligible for a tax credit for your kids’ summer camp costs. The basic criteria are straightforward:
Employ Your Kids for the Summer If your children are older and can lend a hand with your business, you can put them on the payroll, and deduct the wages from your business tax returns. Your kids are at a lower tax bracket, and you will benefit from shifting what is essentially your money into their pay packets. Also remember that you don’t have to deduct FICA taxes if your summer help is under 18 years of age. Note: it doesn’t matter whether the business is your primary source of income or a sideline; the benefits outlined above still apply. Leverage Business Travel If enrolling the kids in day camp or offering them a job aren’t options, then perhaps you can minimize the high costs of vacation breaks by taking your family with you on a business trip. You can get a little fun too if you extend the business trip for some R&R, made sweeter by a tax break on some of your personal travel costs. Here’s how it works:
The cost of summer fun can really add up, and tax breaks can give some welcome relief, but make sure your write-offs will pass the taxman’s scrutiny next year. Your professional tax counselor can help you devise the right tax strategies to address your specific situation. |