The forecast for tax reform this summer remains cloudy. Strategy: Continue to rely on current law. At this point, you can still make tax moves this summer to improve your tax outlook, whether or not Congress eventually passes tax reforms. Keeping that information in mind, here are nine top tax-saving ideas for the upcoming summer months:
1. Give yourself a vacation. Say you've booked your flights and hotel for a weeklong visit with a top client. As long as the primary purpose is business related, you can deduct your expenses associated with the business travel—including airfare, lodging and 50% of your meals—even if you add a couple of vacation days to the end of the trip. But any costs that are attributable to the vacation days aren't deductible.
2. Harvest capital losses. Harvesting losses for tax purposes usually occurs near year-end, but you don't have to wait. If you've already collected short-term capital gains this year, sell securities this summer at a loss to offset those gains, plus up to $3,000 of ordinary income. Otherwise, you might have to pay tax on short-term gains at rates up to 39.6%, as well as owing the 3.8% Medicare tax.
3. Fire up the barbecue. Generally, you can only deduct 50% of the cost of your business meals if you discuss business before, during or after the meal. But you can write off 100% of the cost of a barbecue or other get-together for your staff this summer, as long as you don't exclude rankand-file workers. Best of all, you don't even have to mention business.
4. Tour the country in an RV. This might just be the year you finally indulge and buy an RV to take the family on an exciting long-distance trip. In lieu of deducting state and local income tax, you can choose to write off sales tax, including the tax on this big-ticket item. Extra benefit: The sales tax for an RV can be added to the standard sales tax allowed by the standard IRS table based on where you live and other factors.
5. Reward your college grad. If your child graduated from college this spring, he or she may have already landed a job. Nevertheless, you can generally claim a $4,050 dependency exemption deduction for the child in 2017 if you provide more than half of his or her support for the year. Being generous with your graduation gift could help you clear the half-support mark.
6. Hire young summertime workers. If your business hires disadvantaged youths age 16 or 17 residing in an empowerment zone or enterprise community, it can claim a special jobs credit this summer. This credit is only available for wages paid from May 1 through Sept. 15. It equals 25% of the wages up to $3,000 for a maximum $750 credit per qualified worker.
7. Navigate entertainment rules. You can deduct 50% of your entertainment expenses for clients if the entertainment precedes or follows a substantial business discussion. Go outdoors this summer and write off expenses relating to recreational activities. For example, you can deduct the cost of a deep sea fishing trip, but not depreciation for an entertainment facility like a boat.
8. Scout out a day camp. If your under-age 13 child goes to day camp this summer while you and your spouse work, the cost is eligible for the dependent care credit. But the cost of overnight camp doesn't qualify. The maximum credit is usually $600 for one child or $1,200 for two or more children.
9. Take a refresher course. Summer doesn't have to be all play and no work. If you decide to take a course at a local school that helps you brush up on your skills or presents the latest developments in your field, the cost is generally deductible.