V & R Accounting

Summer Activities and Taxes – Did You Know?

Summer is a time to relax and have fun, but some seasonal activities may have tax consequences. Being aware of them now may save you time and hassle later.

If your child attends a day camp so you can work or look for work, some of the cost may qualify for the Child and Dependent Care Credit. Be sure to keep records and obtain the camp's tax identification information.

Students with summer jobs may be entitled to tax refunds if income tax is withheld from their pay. Adults earning income from seasonal, part-time, or gig work may need additional withholding or quarterly estimated tax payments.

Summer is also a popular wedding season. If you change your name after marriage, update your records with the Social Security Administration. If you move, update your address with the IRS and submit a new Form W-4 to your employer so your withholding reflects your current tax situation.

Health Savings Accounts - Did You Know?

Changing jobs? If you have a health savings account (HSA), you can take it with you. Unlike flexible spending accounts (FSAs), which are usually tied to your employer, your HSA belongs to you. You can continue using your HSA funds after leaving the job where you opened the account. However, you may make new HSA contributions only if you remain eligible to contribute. To remain eligible, you generally must be covered by an HSA-eligible high-deductible health plan (HDHP) and have no disqualifying coverage.

Unfiled 2022 Federal Tax Refunds Must Be Claimed by April 15 – Did You Know?

The IRS estimates that over one million people are owed tax refunds from 2022, with the majority of those refunds exceeding $600. However, in order to claim their refunds, people must file their 2022 tax returns by April 15, 2026. Some people may also need to file 2023 and 2024 returns in order to receive an IRS refund.

Those who qualified for the Earned Income Tax Credit (EITC) in 2022 but did not file a return could be missing out on much larger refunds, potentially exceeding $6,000. The adjusted gross income limits for the 2022 EITC ranged from $16,480 to $53,057 (or $22,610 to $59,187 for joint filers), depending on a person's number of qualifying children.

Filing an accurate tax return for 2022 may require referring to income statements like W-2 and 1099 forms. If you cannot locate those forms but have an IRS online account, you can generally obtain the needed information by using the free IRS Get Income Transcript tool (link below). Most people can set up an account in about 20 minutes, less time than it takes to request and receive replacement documents from employers, banks, etc.

IRS Get Transcript Online tool: https://www.irs.gov/individuals/get-transcript

Changes to Postmarking Procedures May Affect Mailing of Tax Forms – Did You Know?

The U.S. Postal Service (USPS) made an announcement in late December that may affect millions of people who mail tax forms or payments this filing season. In general, forms and payments sent by mail are considered to be on time if they are postmarked on or before the due date. Historically, mailed items were usually postmarked the same day they were handed to a postal employee, or deposited in a USPS drop box before the last scheduled pickup time.

However, the USPS is now in the process of consolidating mail processing activities down to just 60 regional sorting locations, with a limited number of truck deliveries to those facilities daily. Since most mailed items will not get postmarked until they arrive at one of the 60 locations, many postmarks will show a date several days after the item was originally mailed. These changes are especially likely to affect rural communities, many of which will now be hundreds of miles from the nearest processing facility.

Therefore, anyone who needs to send tax documents through the mail should play it safe by dropping parcels off at a post office or collection facility at least a week before the IRS deadline. As an alternative, consider e-filing tax forms whenever possible. A tax professional can help you securely submit your return, other IRS document or tax payment electronically for fast, verified delivery.