By Mark Sipos, Director, LFG Tax
As summer heats up, the IRS is reminding taxpayers that tax planning should not take a vacation. Mid-year is an ideal time to review your financial situation, adjust for recent life changes, and take advantage of new tax legislation before year-end surprises arise. The IRS recently released formal summer tax planning guidance aimed at helping taxpayers avoid underpayment penalties, maximize deductions, and stay organized throughout the year. Here are several important areas taxpayers should review this summer.
Perform a Mid-Year Paycheck Check-Up
One of the most important summer tax planning steps is reviewing your paycheck withholding. Many taxpayers wait until tax season to discover they either owed significantly more than expected or overpaid throughout the year.
The IRS recommends using its Tax Withholding Estimator to determine whether your current Form W-4 withholding aligns with your anticipated 2026 tax liability. This is particularly important for taxpayers who changed jobs, received raises or bonuses, started retirement distributions, added side income or who owed taxes last year.
This year’s review is even more important due to recent tax law changes under the “One Big Beautiful Bill Act.” Certain deductions and adjustments related to tips, overtime pay, passenger vehicle interest, and expanded senior benefits may affect overall tax liability and withholding needs.
Taxpayers with fluctuating income should also confirm they are meeting IRS safe harbor requirements to avoid underpayment penalties.
Don’t Overlook Summer Life Events
Major life changes often happen during the summer months, and many carry important tax implications.
Newly Married Couples
Marriage can significantly change a household’s tax situation. The IRS recommends newlyweds take the following steps promptly:
- Report legal name changes to the Social Security Administration
- File IRS Form 8822 for address changes
- Recalculate withholding based on combined household income
Summer Day Camps
Parents paying for summer day camps for children under age 13 may qualify for the Child and Dependent Care Credit. To qualify, the camp must enable parents to work or seek employment. It is important to note that overnight camps do not qualify for this credit.
If you do qualify, it’s important to retain registration invoices, payment receipts, and provider tax identification information.
Organize Records and Review Investments
Good organization can simplify tax filing and reduce missed deductions.
Keep Clean Documentation
Taxpayers should establish organized folders—digital or physical—for:
- Overtime pay records
- Tip income logs
- Vehicle interest documentation
- Charitable receipts
- Estimated tax payments
Charitable Contributions
Summer often inspires household clean-outs and charitable giving. Donations of clothing, furniture, and household items to qualified 501(c)(3) organizations may provide deductible contributions for taxpayers who itemize deductions. Remember, it’s important to obtain written receipts, document fair market values, and track volunteer mileage, currently deductible at 14 cents per mile
Tax-Loss Harvesting
Mid-year is also a good time to review investment portfolios. Tax-loss harvesting strategies may help offset capital gains and potentially deduct up to $3,000 of ordinary income annually. This strategy can be particularly valuable following periods of market volatility.
Bringing it All Together
Proactive summer tax planning can help taxpayers avoid surprises, improve cash flow, and maximize available tax benefits before year-end. Whether you are experiencing a major life event, earning seasonal income, or simply reviewing your overall financial picture, a mid-year tax review can create meaningful savings opportunities.
If you have questions about how recent tax law changes or summer life events may affect your personal tax situation, contact our office to discuss planning opportunities tailored to your needs.
