July is 🧨 poppin'!
This first full month of summer begins with fireworks and the tax-related pyrotechnics continue through the month. In fact, they started before the official Independence Day celebrations.

Click on the image for some fireworks safety tips and warnings from the U.S. Consumer Product Safety Commission.
I know, you're feeling like the youngster above, not quite ready yet to talk taxes. But take your hands off your ears to hear — or rather keep scrolling to read — some tax moves to make in July. July 1: Today is the beginning the new fiscal year for many states, meaning some
new tax laws take effect today across the country.
July 1: Today also is the start of some of the various state
sales tax holidays happening this summer and early fall in 18 states. Attention Florida shoppers, most of them are in the Sunshine State.
July 4: Happy 246th Birthday, America!
July 4th actually falls on Monday this year, so there's no need to shift it to accommodate the federal Monday holiday law. That also means there's no confusion about what jurisdictions are closed across the United States. It's also a good time to note how official
federal holidays often do affect tax deadlines.
July 8: A tropical system organized enough last week to give us the
second named storm of 2022. U.S. residents didn't have to worry about Tropical Storm Bonnie making landfall but she's a good reminder that the tropics are heating up. Be prepared physically, financially, and tax wise to cope with what storm watchers expect to be another active Atlantic/Gulf of Mexico
hurricane season.

Uncle Sam's official forecasters at the National Oceanic and Atmospheric Administration (NOAA) Climate Prediction Center
expect 2022 to bring as many as 21 named storms, with six to 10 possibly becoming hurricanes. Three to six of those could reach major status, which is category 3, 4 or 5 with winds of 111 mph or higher. Regardless of the count, it only takes one to wreak havoc. The countdown clock below can help you keep track of how many more days you have to worry about tracking any size or type of tropical storms.
You also might want to check out the ol' blog's special
Storm Warnings.
These multi-page collections of posts offer tax advice on preparing for, recovering from and helping those who sustain damages from the many ways that that weather goes wild. That includes
claiming uninsured losses from a major natural disaster as an itemized tax deduction.
July 11: Eateries are still recovering from the challenges of operating during a national health crisis. Restaurants closed, then opened, then closed again. Others relied on and have stuck with take-out and deliveries. Whether you're dining in or still getting food brought to your house because of the latest Omicron coronavirus variants, remember to tip your server or delivery person.

If a tip isn't included in your food delivery charge, click the image above to calculate how much to tip the person who brought it to you.
As for servers who now are back on the job, remember that your
tips are taxable income. If you worked at least some of May at a job where you got gratuities, you need to account for them today if they came to at least $20 last month. Use
Form 4070 to report your tips today to your employer.
July 18: We're not officially into the last half of the year. Time really does speed by when you're having summer fun! But if you've had some changes in your life, now is a good time to make related tax accommodations. Specifically, conduct a
paycheck checkup to determine if the amount of taxes taken out of your wages is still correct. You might need to
adjust your payroll withholding.
July 25: If you got an
extension back in April to file your 2021 tax return, you have until
Oct. 17 to do that. But you don't have to wait until that deadline. You can get to work on that tax paperwork now and be done with it so it won't be hanging over your head while you're trying to enjoy summer.
Whenever you do get around to finishing your tax return, the IRS recommends you do so electronically. Check out ways to e-file at no cost, including via Free File, which is, as its name says, free. The official electronic filing webpage is
Free File on IRS.gov is available to qualifying taxpayers through Oct. 17.

Free File this year is available for taxpayers whose adjusted gross income is $73,000 or less. That income level applies to all
filing statuses. This year,
8 software programs are available to eligible filers. Spoiler: The two biggies, Intuit's TurboTax and H&R Block, are not among the choices. The two leading tax prep programs decided to
end their participation in the program.
July 31: Again, too much tax fun getting us to July's end in no time. But you can keep the festivities going, and possibly save some money, by taking care of these July tax moves.

Small Business Tax Calendar: Important filing, deposit and record keeping dates throughout the year that your company needs to know. You can get more tax calendar information at the IRS' online calendar page and view the full year's important business and individual tax dates in IRS Pub. 509.
Thanks, Joe, for letting us know the Roth resolution and kudos to you for making good money management habits real to your daughter! I still remember my first savings account and the little fake leather passbook where the teller entered all my deposits and tallied interest. Times and savings vehicles have changed (although interest rates today are about what they were when I was a kid) but the lessons remain. Kay
Posted by: Kay | Sunday, June 06, 2010 at 12:57 PM
To wrap this up -
I went back into my daughter's tax return in Turbo Tax. It offers a worksheet "Wages, salaries, & tips" which has a line for "other earned income." This flows nicely to the 1040 only on the 1040 it loads to line 7, which asks to attach the W2 (as part of the form itself).
Schwab has a nice IRA form for minors, no issue there, it doesn't ask any more than the usual account info needed. No proof of income, etc.
In the end, I agree with the ROI thought. They'd get no return at all, as there's no deduction for the Roth. Their only result would be to disallow the account. I will tell Jane2.0 I'd like her to keep a notebook she can get signed by her customers to verify the income.
I've already told her that by starting this at 11, she will have more in her account by college graduation than the average American has saved up.
Posted by: joetaxpayer | Sunday, June 06, 2010 at 10:08 AM
Joe,
That was my understanding of your original question. Again, I believe it comes down to some sort of acceptable documentation. I would start with the company/bank/etc. where your daughter (you!) would like to open the Roth and ask what they require in her situation. I doubt you'll have much to worry about from an IRS audit standpoint; young Roth account holders probably don't offer much audit ROI! The key here as I see it is what the IRA company/fiduciary wants from you/your child to confirm eligibility.
Kay
Posted by: Kay | Friday, June 04, 2010 at 02:43 PM
I'm still following this. My understanding is that if we had a nanny there was a trigger amount $1700/yr or so, that required full reporting. Since her wage was a full salary, I had to comply, and did. SS, Insurance, etc.
When the neighbor shovels my walk for $20, it doesn't occur to me to 1099 him. In my 11yr old's case, she sits for a number of people none of whom will exceed more than a few hundred dollars over the year. But all combined will be enough that a Roth may make sense.
I thought that when earning less than her own standard deduction, no tax return was even due (so long as unearned income was low enough). My reason to want to report the income is only to justify the Roth.
Posted by: joetaxpayer | Friday, June 04, 2010 at 02:14 PM
To me, neither Kay nor Garran answered the question that wasn't asked by Joe. That should have been answered. But Joe is obviously misled. He stated: "a household employee who is younger..."
The teen is not subject to the social security tax if he is under only if he parents are paying him the monies. If anyone else pays a 15 yr old monies the teen is subject to social security taxes albeit self-employment or withholding.
Even if the teen is being paid by a grandparent the social security taxes are due.
Posted by: Jeff Day EA | Friday, June 04, 2010 at 06:46 AM
If the household "employee" is in fact an employee he or she would receive a Form W-2 at year end, in which case this income would be reported on the front page of the employee's Form 1040. The Form W-2 would substantiate the their income.
IF the household worker is deemed to be an independent contractor he or she would typically report the gross revenue earned on Form 1040, Schedule C. In this case the contractor's books, invoices, and sales/excise tax returns would be used to substantiate their income.
Posted by: Garran | Thursday, June 03, 2010 at 03:30 PM
Joe,
Great question! As best I can tell, the IRS and Roth fiduciaries will accept the contributions as from earned income if proper receipts and records are maintained.
So the young sitters, etc., should create a standard receipt form for the hiring/paying families to sign.
Welcome to the world of tax record-keeping young entrepreneurs!
Any other tax folks out there have recommendations?
Kay
Posted by: Kay | Thursday, June 03, 2010 at 02:46 PM
"a household employee who is younger than 18 at any time during the tax year the work was performed is not subject to Social Security and Medicare taxes"
This means that as long as they are under the $5700 earned income, no tax due.
Where would this income be claimed to enable the minor to show it for purposes of opening a Roth? And since families don't 1099 their sitters, what proof would the IRS expect, if any, in an audit?
Thanks, Kay.
Joe
Posted by: joetaxpayer | Thursday, June 03, 2010 at 11:39 AM