Summer’s here and for some people that usually means an uptick in spending. But that doesn’t have to dampen your sunny outlook. Depending on what you’re shelling out your hard-earned cash for, you may be able to score a tax break or credit when April rolls around again. Here are four common summer expenses that can reap some major benefits at tax time.
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1. Child Care
If you’re a working parent, summer vacation means finding a safe place to leave the kids while you’re away from home. If your kids are under the age of 13, you could qualify for a tax credit after paying for daycare or summer camp. At-home care and day camps count, but overnight camps and summer school tutoring do not.
You can only get the credit if you pay for child care expenses so you can work. If you’re married and file a joint return, this rule applies to you and your spouse. That means both of you need to have earned income for the year.
Depending on how much money you make, the credit is good for up to 35% of child care costs. As of 2015, the maximum amount of expenses you can use for the credit is $3,000 for one child or $6,000 for two or more children.
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2. Job Search Expenses
Some people think about changing employers over the summer. If you’re one of them, the money you spend looking for a job may be tax deductible. This could apply to costs that come from mailing your resume, meeting with a job placement agent or travelling for an interview.
There are a few stipulations, however. For one thing, you can’t claim a deduction if you’re looking for your very first job. You’re also not eligible if you’re trying to get a job in a field other than the one you’re currently working in.
Finally, the deduction doesn’t apply if there’s a big gap between the time you ended your last job and when you began searching for a new position.
3. Moving Expenses
Nearly 40 million people pick up and move in the U.S. each year and quite a few of them choose to do so during the hotter summer months. If you’re a recent grad who’s headed to a new city to look for work or you’re someone whose job is being relocated, you may be in luck. The IRS allows you to write off certain moving expenses.
The types of expenses that qualify for a deduction include hiring a moving van, shipping your belongings or pets cross country, renting a storage unit and travelling expenses, such as paying for gas or tolls. Personal expenses that aren’t related to the move – like meals – aren’t eligible for the deduction.
To qualify, you also have to meet the time and distance tests. Basically, the move has to coincide with the start of a new job and you have to work full-time in your new position for a minimum of 39 weeks in the first year following the move.
If you’re moving for your first job, your workplace has to be located at least 50 miles from your old home. Otherwise, your new office has to be at least 50 miles farther from your previous home than your old job was from your old home.
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4. Energy-Efficient Home Improvements
Making some simple home improvements during the summer can be a good way to save money on your utility bills and it can result in a tax credit. As of 2015, a 30% tax credit may be available to homeowners who install geothermal heat pumps, wind turbine systems, fuel cell systems or solar energy systems.
The credits are good for newly constructed and existing homes, although they don’t apply to rental properties. All four expire December 31st, 2016, so you’ll want to act quickly to make sure you don’t miss out.
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