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While you may not be thinking about tax time as you enjoy summer fun, there are some tax moves that cannot wait until the end of the year. If you don't want to get hit with penalties or have to come up with a lot of cash when tax season rolls around, you should consider taking a few simple steps now during mid-year to stay on top of your tax situation.

Under the U.S. tax code, there are several refundable tax credits, including the Child Tax Credit and the Earned Income Tax Credit. A tax credit is not the same as a deduction. A deduction allows you to reduce your taxable income so, for example, a $1,000 deduction if you have a $20,000 income would mean you were taxed only on $19,000 in income instead of $20,000.  A tax credit reduces your tax bill so if you owed $1000 in taxes and got a $500 tax credit, you'd only owe $500.

The Internal Revenue Service audits less than one percent of all of the tax returns that it receives.  While the percentage of audits is small, the threat of being audited looms large in every taxpayer's mind. Receiving notice that you're being audited can be frightening and you may be unsure of what your best course of action is if you find out that the IRS wants to take a closer look at your tax return.  

The IRS requires taxpayers to file tax returns each year which include extensive information about income and about deductions.  Filing tax returns can be complicated, as there are a lot of details to include. Mistakes are not uncommon, and if you make an error, you may need to alert the IRS and fix the error by amending your return.

The Offshore Voluntary Disclosure Process (OVDP) provides an opportunity to limit penalties for a failure to properly disclose offshore accounts as required by U.S. law. If you do not participate in OVDP and undeclared offshore accounts are discovered, it is possible you will face substantial civil penalties. The financial loss has, in some cases, exceeded the value of the undeclared accounts. Potential criminal prosecution is also a possibility if it is determined that you were evading your reporting and tax obligations for offshore accounts.