The summer months provide a number of opportunities for mindful people to find clever ways to earn tax credits or deduct additional expenses from their income taxes.
Here are five ways you can take advantage of common summer expenses and turn them into savings when tax season rolls around early next year.
[See: Answers to 7 Burning Tax Questions.]
Day camps. If you send your children to any day camps this summer, the cost of those camps qualifies under the Child and Dependent Care Credit, which allows for up to $3,000 in credit on your taxes for such expenses. This does not cover overnight camps, but does cover special day camp activities for children under the age of 13.
So if you wish to send your child to an adventure day camp during the summer, you can get a tax credit for the cost of that camp, provided the total child care you’re claiming for the year remains at less than $3,000.
[See: 10 Smart Ways to Spend Your Tax Refund.]
Service projects. If you’re driving your personal vehicle while helping with a qualified charity, you can earn a deduction for every mile you drive. The IRS offers a tax deduction of 14 cents per mile driven, so if you’re picking up items as part of your volunteer work or transporting children for a charity, keep track of those miles.
If you drive 10 miles a day for charitable purposes during the course of the summer, that adds up to 900 miles, or a $126 tax deduction.
Rent your vacation home — but just a few times. Let a few trusted people rent your cabin or vacation home, but keep the total time rented under 15 days. Why? Payments for renting your property for less than 15 days are almost always not taxable.
So if you have a cabin by the lake or a summer home that you reside in for part of the year, you can rent it for 14 days or fewer each year and not have to report the income from that rental at all.
This allows you to be selective in whom you rent to (such as a friend of a friend) and also earn a bit of tax-free income.
Gambling. If you stopped at a casino on your summer vacation and won some money, you need to report it on your income taxes. However, there’s a nice catch — if you lose money on other casino trips, you only have to report your overall winnings for the year if they’re positive.
So, let’s say you hit the casino five times over the course of the summer, winning $400 the first time and losing $100 on all other trips while enjoying some of the other perks of the casino such as free drinks and meal vouchers. At the end of the year, your net winnings are $0, so you don’t have to report anything, but you got to enjoy several fun experiences along with a bunch of free drinks and meals.
[See: 9 Red Flags That Could Trigger a Tax Audit.]
Disaster damage. If you suffer disaster damage in excess of 10 percent of your gross income that isn’t covered by insurance, you can deduct that disaster damage from your income taxes if it occurs within a federally declared disaster area, as many hurricanes, tornadoes and large wildfires do. Keep careful records of any and all damage done to your property during a major disaster, and a tax advisor or good tax preparation software can help you recoup some of that loss next spring.
Summertime provides lots of opportunities for a careful person to take advantage of the tax laws and ensure additional credits and tax advantages for themselves next spring. If these credits and deductions apply to you, keep careful track of the numbers and be ready when you file your taxes next year. You may wind up with more money in your pocket than you expected.
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5 Tax Benefits to Maximize This Summer originally appeared on usnews.com
