 Internal Revenue Service IRS Tax News. School is out for the summer, but tax planning is year-round. Isn't that a bummer? Way to throw a wet beach towel on my summer break IRS. And I was going to use that beach towel at the actual beach. But whatever, I guess I'll just do tax planning. IRS Tax Tip 2022-76, May 17, 2022. Now that the April Finally deadline has passed, most people are spending more time thinking about summer vacations than taxes. Can you believe that? The IRS is disgusted with you people thinking about vacations more than taxes. However, summer is a great time to review withholdings and see if summer plans will affect next year's tax returns. So the IRS is saying stop going to the beach, stop going on vacations and whatnot, and sit down and make sure that you got your withholdings set up properly so that you could pay us throughout the year. And if you can spend some more time working during the summer, earning some more wages so you can give us some more of those withholdings, that would be good too. Be lower some common summer times tax situations and tips to help taxpayers figure out if they apply to their tax situation. So in other words, the IRS is basically saying before you make any vacation plans or do any other kind of situation, you really should start with step number one, tax planning, and then move on from there to see if anything is a good move. For example, marriage, perfect example. First thing you do to decide whether or not you're going to get married, tax plan, see if it's a good idea. So getting married, newlyweds should report any name change to the Social Security Administration. So obviously when people get married, they might have a name change situation. You want to make sure that you don't confuse the IRS. That causes problems when they're confused over there. They should also report and address change. There's a link to that to the United States Postal Service, their employers, and the IRS. You want to make sure that, again, don't confuse the IRS. They got to know where you are, who you are, what to call you, what your Social Security number is, or else they're confused. To report a change of address for federal tax purposes, taxpayers must complete form 8822 Change of Address. There's a link to that here and submit it to the IRS. This will help make sure they receive the documents they will need to file their taxes. Sending kids to summer day camp. So that's not something you do without a tax plan first. Should I send kids to summer day plan? Step number one, tax planning strategy and see if it fits. And then if it does, that's when you move on to whatever other concerns you might have about the situation. So unlike overnight camps, the cost of summer day camp may count towards the child and dependent care credit. So you can check that out. There's a link to that here. Working part-time. Should you work part-time? How do you make that decision? Step number one, tax planning. Check out and make sure that the IRS is set up properly. They're number one on your to-do list. So while summertime and part-time workers may not earn enough to owe federal tax, they should remember to file a return. So note that pretty much everybody should basically file a return these days because it used to be obviously that if your income was fairly low, you wouldn't know any taxes because your income is below the certain thresholds. And then you wouldn't have any income taxes below that threshold. But you still might have withholding. So they might have withhold social security, Medicare, federal income tax, and you might get the federal income tax at least in the form of a refund. But now, even above and beyond that, you've got all these other kind of credits that could kick in depending on your circumstance. And they made the software basically free these days. So you might as well check it out and see if you get any withholdings back and or if you can get any of these other credits that are refundable credits, even if your income is low. So they'll need to file early next year to get a refund for taxes withheld from their checks this year. You got the gig economy work. This is when the IRS is really cracking down on their concern about the gig economy work because once again, just like those people that are going on vacation, I don't think these gig economy works know how the stuff works, meaning they're going into the gig economy without first thinking about question number one. What's the tax strategy? Is your silent partner taken care of in this situation? Silent partner being the IRS. And in many situations, the IRS has felt that they have not been adequately taken care of. So they really want to remind you gig people that you got to pay the IRS. So taxpayers may earn summer income by providing on-demand work services or goods, often through a digital platform like an app or website. Examples include ride sharing, delivery service, and other activities. Those who do are encouraged to visit the gig economy tax center at irs.gov, irs.gov, irs.gov, be for victory over tax questions to learn more about how participating in the gig economy can affect their taxes. So make sure that you've got to keep your silent partner happy or else they'll just take down the whole gig economy altogether. They're on their way. They're going to put 1099s. Everybody's got to have a W-2. The platforms have to do the paperwork until they die. So you've got to take care of the IRS on this stuff or else they get angry. So normally employees receive a form W-2 wage and tax statement. There's a link to that here from their employer to account for the summer's work. They'll use this to prepare their tax return. They should receive the W-2 by January 31st next year. Employees will get a W-2 even if they no longer work for the summertime employer. Summertime workers can avoid higher tax bills and lost benefits if they know their correct status. So you've got to know what your status is. Employers will determine whether the people who work for them are employees or independent contractors. So obviously the IRS likes to force the employer, the person that's paying the other person who would be a contractor or employee, the IRS would prefer oftentimes to force them to be employees because they have more leverage that way. If they're an employee, you got all these payroll laws that come into play and you've got the withholdings that are not only do you have to report the wages that the employer paid to the employee, they also have to withhold the money and actually pay directly to the IRS, which you might expect. The IRS kind of likes that. It's kind of a good deal. But if they're a contractor, then they don't have as much leverage and that's what the problem is with a lot of these platforms. The platforms is really a middle person that's connecting two people and the ultimate person you're being connected to is the one that's kind of paying obviously and they're an individual. So the IRS doesn't have any control over them to force the individual who got a pizza or something like that or food or a ride or something to report a 1099 to the driver. So they're going to try to get the platform who is really kind of the middle man to do this kind of stuff, which would obviously add a lot of burden to the platforms would be quite costly and possibly be not very beneficial for the whole system together, but you could see why they'd want to do that. So then if you're an independent contractor, you got to file a schedule C and then you got to pay social security and Medicare in the form of self-employment taxes and the federal income taxes and the employer or the one that's paying and that kid not an employer but the one hiring the contractor then isn't doing the actual withholdings. All right, so independent contractors aren't subject to withholdings, make them responsible for paying their own income taxes plus social security and Medicare taxes in the form generally of self-employment tax in that case. Remember to file their tax return if they got an extension. So if you filed an extension says the IRS, make sure that you still file the tax return. Don't forget about it because then they'll hit you with the sticks and penalties and interest. You know how it works. People who requested extension on October 8th, 17th or missed the April deadline should be sure to file their return. Many taxpayers can prepare an e-file tax returns for free with IRS free file. Great thing because they got these third party softwares that kind of offer the software for free. If you go past the extension deadline, you don't have access to it anymore. I don't think you have access to like prior year software for free. So take advantage of the software. Check it out. Mill tax online software for military personnel people which is free. I think that's over the income threshold still free for military members. I'm not sure if it's better or not than the other free software. So I would suspect that the market software it might be easier because they're competing on the market against other market softwares but and the mill taxes by the government produced software. So I would think it wouldn't be as user friendly but maybe I'm wrong on that. I've never used it. I'd still like to hear some people's comments in comparing and contrasting if you have used it. So it's also available for members of the military and certain veterans regardless of income. This software is offered through the Department of Defense. Eligible taxpayers can use mill tax to prepare and electronically file their federal tax returns and up to three state returns for free adjust withholdings now to avoid tax surprises next year. So they say it like in a nice way so that you don't like you don't have a tax surprise next year but really we know what's happening here. The IRS wants their money during the year. So like you want to check your withholdings to make sure that you're paying them enough throughout the year here. And what what if I don't what if I don't do that what if I just lay on the beach and I just don't do that kind of stuff. Well then the IRS hits you with sticks of penalties and interest which hurts even worse when you got a sunburn. So so you want to make sure your withholdings are right. So taxpayers can avoid a tax prize next filing season by reviewing their tax withholding now life events like marriage divorce having a child or a change in income can all affect taxes. The IRS tax withholding estimator there's a link to that here. It's a great tool to estimate her here because you basically need some kind of actual tax software to do a proper withholding estimate calculation these days because the tax code is changing people's life situations are changing. So there's a lot more there's a lot more I guess uncertainty would be the business term in terms of laws and current life situations that would require you know actual more sophisticated software to at least get some kind of wrap around it. So and the withholding estimator softwares is getting more and more to be a software type of tool. So it's on irs.go v v for victory over tax stuff. It helps employees assess their income tax credits adjustments and deductions for determine whether they need to change their withholding by submitting a new form W for employees withholding allowance certificate. So remember that what you want to do then is adjust your withholdings using the tool and then talk to your HR department about giving them a new W for the HR departments probably not going to give you any advice because they don't want to get sued. So all they're going to do is give you the W for and tell you to do your own advice talk to your CPA or whatever and then you use the tax withholding estimator give them the W for and say I figured it out. Here's my withholdings back to the HR and then they should fix it for you. So taxpayers should remember that if needed they should submit their new W for to their employer not the irs the W for doesn't go to the irs it goes to the employer so they can withhold your money and send your money to the irs. The irs doesn't want your stupid W for they want your money which the employer is going to withhold from you using the W for and then send it to the irs. So keep your keep your W for since the IRS give it to the employer we just want your money dang it. Okay. So there's links to all that stuff here and there'll be a link to this in the description.