Summer's Coming: How Might That Affect Your Taxes?
Plus, 5 smart tax habits you should take on year round
Depending on where you live, summer weather is either something you dread or something to celebrate. Either way, your calendar is probably filling up with more enjoyable activities than you experienced over the winter. Vacations, summer camp, outdoor parties – it’s hard to fit everything in and still keep up with all of your work and personal obligations.
2025 income taxes are probably not top of mind during June, July, and August – especially if you recently completed your 2024 taxes. April 15 is so far off that it’s not even registering on your radar yet. But if you’re planning for some major life events in the upcoming months, you would benefit from understanding how they will affect your next Form 1040. Here are four of them.
Will you be making home improvements? Good weather often makes peoples’ thoughts turn to fix-up and remodel jobs that would be hard to do in the winter. Are you taking on anything like this in the coming months, and will your work relate to energy efficiency improvements? There are two types of Residential Energy Credits you may be able to claim on a Form 5695 (Part II): The energy efficient home improvement credit is now an annual 30% credit that maxes out at $1,200. It may be used for things like:
Insulation material or air sealing material or systems,
Will you be taking on part-time/gig work?
If you make more than $600 during the tax year as an independent contractor (not an employee), you’ll need to file a Form 1040 and a Schedule C to report your income and expenses. Though some of your work may be paid by cash or checks, you may also receive Form 1099s from individuals and companies who have hired you. Keep thorough records of both money you receive and purchases you make that are needed for your work. You’ll need receipts and other documentation to calculate your income and expenses, and you should save them for at least three years in case you get audited.
Self-employed individuals must file a Form 1040 and Schedule C if they make more than $600 during the tax year.
Filing income taxes as a self-employed individual requires accurate recordkeeping. The most difficult part may be determining which of your business expenses will be acceptable to the IRS. We can help you here. Even though you won’t be filing until 2026, you really need to start planning and tracking now.
Is there a wedding or divorce in your summer plans?
These two life events can make an enormous difference in your 2025 income taxes, as you’ll learn when you start preparing your taxes. For now, though, you must let the IRS know if you or someone in your immediate family will have an address change this year. Fill out and submit a Form 8822 to report it. This is critical, as the IRS communicates with taxpayers through the U.S. Mail. You will not get correspondence from the agency if they have an old address.
Will you be taking any business trips?
Business travel is tricky, and you may want to consult with us if you’re planning to claim expenses for business trips this summer. Combining a work trip and a vacation? You’ll still be able to deduct any permissible business travel by calculating the percentage of your trip that was devoted to personal travel and subtracting that from the total.
5 Habits That Will Make Your Life Easier in 2026
Tax preparation is no fun. Those hours (days?) of your life are usually filled anxiety and dread, the fear that you’ll report something incorrectly and face penalties and interest.
It doesn’t have to be that way. Start now. There are steps you can take now that will reduce all the worry you normally experience at tax prep time. You can, for example:
Take advantage of technology. If you’re not using personal finance or small business accounting software to track your tax-related income and expenses, you’re missing out on what can be a tremendously helpful set of digital tools. Applications like Wave allow you to connect your bank and credit card accounts and categorize your imported transactions so you’ll know what income and expenses to include on your tax return.
Other modestly priced personal and business solutions include Rocket Money, FreshBooks, and Zoho Books.
Set up a paper system
If you’re not ready to make the leap to electronic money management, at least create a well=organized paper system for your tax-related information. Use file folders or large envelopes and separate receipts and other documents by month or category.
Take another look at your tax withholding
W-2 employees: Are you getting large tax refunds every year? Or having to send in a big payment with your taxes? It’s time to adjust your tax withholding so you come out closer to even. Fill out a new Form W-4 and give it to your employer. Let us know if you want some guidance on this.
Be on the lookout for news about tax-related legislation
Congress can make changes to tax law at any time during the year up until December 31. Get ahead of the curve by paying attention to changes that could affect your own income taxes.
Schedule some time with us
If your financial profile is complex and/or you just don’t know where to start with year-round tax planning, let us help. We can help you formulate a plan and a set of actions that will help you accomplish it. When tax time rolls around next year, we can even take over the whole task of tax preparation if you’d like. Just contact us, and we’ll get started.
Depending on where you live, summer weather is either something you dread or something to celebrate. Either way, your calendar is probably filling up with more enjoyable activities than you experienced over the winter. Vacations, summer camp, outdoor parties – it’s hard to fit everything in and still keep up with all of your work and personal obligations.
2025 income taxes are probably not top of mind during June, July, and August – especially if you recently completed your 2024 taxes. April 15 is so far off that it’s not even registering on your radar yet. But if you’re planning for some major life events in the upcoming months, you would benefit from understanding how they will affect your next Form 1040. Here are four of them.
Will you be making home improvements? Good weather often makes peoples’ thoughts turn to fix-up and remodel jobs that would be hard to do in the winter. Are you taking on anything like this in the coming months, and will your work relate to energy efficiency improvements? There are two types of Residential Energy Credits you may be able to claim on a Form 5695 (Part II): The energy efficient home improvement credit is now an annual 30% credit that maxes out at $1,200. It may be used for things like:
Insulation material or air sealing material or systems,
- Exterior doors,
- Windows and skylights, and,
- Central air conditioners.
Will you be taking on part-time/gig work?
If you make more than $600 during the tax year as an independent contractor (not an employee), you’ll need to file a Form 1040 and a Schedule C to report your income and expenses. Though some of your work may be paid by cash or checks, you may also receive Form 1099s from individuals and companies who have hired you. Keep thorough records of both money you receive and purchases you make that are needed for your work. You’ll need receipts and other documentation to calculate your income and expenses, and you should save them for at least three years in case you get audited.
Self-employed individuals must file a Form 1040 and Schedule C if they make more than $600 during the tax year.
Filing income taxes as a self-employed individual requires accurate recordkeeping. The most difficult part may be determining which of your business expenses will be acceptable to the IRS. We can help you here. Even though you won’t be filing until 2026, you really need to start planning and tracking now.
Is there a wedding or divorce in your summer plans?
These two life events can make an enormous difference in your 2025 income taxes, as you’ll learn when you start preparing your taxes. For now, though, you must let the IRS know if you or someone in your immediate family will have an address change this year. Fill out and submit a Form 8822 to report it. This is critical, as the IRS communicates with taxpayers through the U.S. Mail. You will not get correspondence from the agency if they have an old address.
Will you be taking any business trips?
Business travel is tricky, and you may want to consult with us if you’re planning to claim expenses for business trips this summer. Combining a work trip and a vacation? You’ll still be able to deduct any permissible business travel by calculating the percentage of your trip that was devoted to personal travel and subtracting that from the total.
5 Habits That Will Make Your Life Easier in 2026
Tax preparation is no fun. Those hours (days?) of your life are usually filled anxiety and dread, the fear that you’ll report something incorrectly and face penalties and interest.
It doesn’t have to be that way. Start now. There are steps you can take now that will reduce all the worry you normally experience at tax prep time. You can, for example:
Take advantage of technology. If you’re not using personal finance or small business accounting software to track your tax-related income and expenses, you’re missing out on what can be a tremendously helpful set of digital tools. Applications like Wave allow you to connect your bank and credit card accounts and categorize your imported transactions so you’ll know what income and expenses to include on your tax return.
Other modestly priced personal and business solutions include Rocket Money, FreshBooks, and Zoho Books.
Set up a paper system
If you’re not ready to make the leap to electronic money management, at least create a well=organized paper system for your tax-related information. Use file folders or large envelopes and separate receipts and other documents by month or category.
Take another look at your tax withholding
W-2 employees: Are you getting large tax refunds every year? Or having to send in a big payment with your taxes? It’s time to adjust your tax withholding so you come out closer to even. Fill out a new Form W-4 and give it to your employer. Let us know if you want some guidance on this.
Be on the lookout for news about tax-related legislation
Congress can make changes to tax law at any time during the year up until December 31. Get ahead of the curve by paying attention to changes that could affect your own income taxes.
Schedule some time with us
If your financial profile is complex and/or you just don’t know where to start with year-round tax planning, let us help. We can help you formulate a plan and a set of actions that will help you accomplish it. When tax time rolls around next year, we can even take over the whole task of tax preparation if you’d like. Just contact us, and we’ll get started.
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