Hello, July! We are soooo ready for this first full month of official summer.
This first week of July will be a short one for many of us. We’ll be taking advantage of July 4 falling on Thursday, making it an extra-long Independence Day holiday weekend.
But once the fireworks are over, it’s back to the regular grind where we never are independent of taxes. That’s why we also need to also make some time in July for tax moves.
Here are five to consider.
1. Get ready for disastrous weather. Even though I’m a weather nerd, and forecasters warned that this could be the busiest Atlantic hurricane season ever, I hadn’t planned on this being the first July tax move. But it’s looking like weather watchers might be right, so here we are.
Hurricane Beryl, the first category 4 storm to form in June, made her first landfall this morning, striking Grenada's Carriacou Island with 150 mph sustained winds. It’s the strongest hurricane to ever make landfall in the southern and central Windward Islands.
U.S. Gulf Coast states are watching Beryl’s track closely. They also need to be making hurricane preparations if they haven’t already. And even if you don’t live in a place prone to tropical systems, you need to get ready for the potential natural disaster common in your area.
Even if you’re as ready as you can be, a major disaster can still cause problems. But there is a bit of tax relief if you find yourself in the path of a particularly mean Mother Nature. You might be able to claim your uninsured losses as a tax deduction.
2. Make your back-to-school shopping list. School children are enjoying the summer break, but classes will resume before long. That’s why several states hold back-to-school sales tax holidays. These events, which really aren’t limited to educational purchases, range from a couple of days to a couple of weeks.
During those periods, certain items are exempt from the states’ and usually the local sales taxes. This year, five states and Puerto Rico have scheduled these consumer popular events for July. They are —
- Alabama from July 19 to 21;
- Florida from July 29 to Aug. 11;
- Mississippi from July 12 to 14;
- Ohio from July 12 to 14;
- Tennessee from July 26 to 28; and
- Puerto Rico from July 19 to 20.
My post on these July (and August) tax holidays has more details. You also can check with your state’s tax department for a preview.
3. Donate clothing and household goods. Do you have room for all those new tax-free items you’ll pick up this month? If not, clear out those closets! But instead of spending a nice July day manning a garage sale while strangers go through your old stuff, give the items to your favorite charity. Decluttering donations might even provide you a tax deduction if you itemize. The key is accurately claiming the fair market value of donated clothing and household goods.
4. Take a summer job into tax account. Summertime and the living, at least musically, is supposed to be easy. Some people, though, take on summer jobs. Even if it is a short-term, seasonal job, it will affect your taxes.
If it's a side gig to supplement your full-time salary, you can account for the additional earnings in your regular paycheck's withholding. The Internal Revenue Service's online withholding tool can help here. If you prefer, you can account for the added income by making estimated tax payments.
And while summertime is time off from school for many young people, they want (and their parents need) something else, like a job, to occupy all their free hours. If you're the parent of a youngster who's working now that classes are over for a few months, both of y'all should be aware of the tax implications for young employees.
5. Make your new disaster area tax due date. Residents in areas declared major disasters by Federal Emergency Management Agency (FEMA) are eligible for a range of federal assistance. They usually get tax relief, too. That’s the case for some filers in four states this month, where the IRS has granted affected individual and business taxpayers new July 15 and July 31 deadlines to meet various tax responsibilities.
Depending on when the disaster occurred, the extended due dates could give individual taxpayers more time to file their personal tax return and pay any tax that originally was due April 15; contribute for the 2023 tax year to IRAs and health savings accounts; and make estimated income tax payments.
The bold-type state names are links to the IRS announcements with specific tax relief details for those areas’ new tax deadlines.
The July 15 deadline applies to certain taxpayers in the following three states.
- Part of coastal Alaska was hit by severe storms, landslides, and mudslides that began on Nov. 20, 2023. Tax relief for that disaster applies to the Wrangell Cooperative Association of Alaska Tribal Nation.
- Eight counties in Maine due to severe storms and flooding that began on Jan. 9, 2024. The disaster area covers Cumberland, Hancock, Knox, Lincoln, Sagadahoc, Waldo, Washington, and York counties.
- Four counties in Rhode Island that sustained damages from severe storms and flooding that began on Dec. 17, 2023, and Jan. 9, 2024. The areas are in Kent, Newport, Providence, and Washington counties.
The July 31 deadline is for taxpayers in two Massachusetts counties, Bristol and Worcester, that were hit by severe storms and flooding that began on Sept. 11, 2023.
More July tax moves: OK, done with tax moves? Cool. Now get back to your regularly scheduled summertime activities.
Or, if this month's featured five tax actions have whetted your appetite, you can check out a few more July Tax Moves to make over there in their usual place, the ol' blog's right column just below the clock counting down to the October filing extension deadline.
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