It's summertime and lazy days beckon. However, there's one
activity you should fit into your schedule: reducing your 2010 income taxes.
The good news is that you have plenty of
tax-saving opportunities. Here are some suggestions:
* LET THE KIDS HAVE FUN. That cool day of art
instruction at the local museum or the karate camp your child's been asking about might
qualify for a tax break. When you pay dependent care expenses so you and your spouse can work, you
may be able to claim a credit of up to 35% of the cost. The maximum
childcare credit for one child is $1,050 ($2,100 for two or more
children). Overnight camps don't qualify, and the child generally must
be a dependent under age 13. Remember to ask for the day camp's tax
identification number.
* COMBINE BUSINESS AND VACATION TRAVEL.
Travel expenses are deductible if the travel is undertaken primarily
for business purposes; thus you may wish to combine attendance at
an out-of-town business conference with a visit to family or friends.
The expenses attributable to the personal part of the trip, though,
remain nondeductible. When doing any business traveling, make a
distinction in your records between expenses for lodging and transportation and those
for meals and entertainment. The latter are subject to a 50% deduction
limitation.
* IF YOU ARE GOING TO BE OUT OF TOWN for a
while, consider renting out your home while you're gone. The IRS allows you to receive up to
14 days of rental income per year completely tax-free. In fact, you
don't even have to report the income on your return.
* IF YOUR IDEAL VACATION is getting out on
the waterways or hitting the highways in an RV, you may be able to take
advantage of another tax break. Did you know that the cost of
financing the purchase of a boat or RV may be deductible? In order to
qualify, the boat or RV must have cooking facilities, sleeping
accommodations, and a bathroom.
* WHAT IF YOU DON'T TAKE VACATIONS? Hiring
your children to work in your business during the summer can mean a
deduction for the wages you pay them, plus a social security payroll
tax savings for an unincorporated business.
