LANDLINE
PUBLICATION DATE 02/02
ARTICLE 0202LL
INCOME TAX TIME
We have prepared a review of what’s needed for the preparation of your income tax return. For some of you it is an extreme hardship to gather tax information. If you are one of these people, you should box all the paperwork you have and send it to your tax preparer so they can compile the proper records to prepare a return that accurately reflects what occurred during the year. Instead of procrastinating, this will insure the tax return gets done on time and save you the cost of needless penalties, which can exceed the cost of the tax preparation.
For those of you who don’t have a problem gathering paperwork, you should be able to follow the income tax organizer you received from your tax preparer. If you did not receive an organizer, you can call various tax preparers, including us, to get one. A tax organizer simplifies the information gathering procedure and goes a long way in preventing the omission of important deductions. It is best to get a tax organizer from a preparer who specializes in the trucking industry.
In order to compile the information needed for your tax preparer or yourself if you are preparing your own return, you need to gather the following:
1. Make sure that you have totaled all your income and compare your figures with what is reported on your earnings statements, 1099, W-2’s, and K-1’s.
2. Have a breakdown and total for all business expenses by category, such as fuel, phone, insurance, repairs, parts and tires. This should include checks written, cash, credit card purchases and deductions from settlements. Don’t forget ATM and bank charges.
3. Gather all contracts on purchases and/or leases and make copies for your tax preparer.
4. Compile your 1099’s if you’re an independent or owner-operator and Wage and Earning Statements (W-2’s) if you’re a company driver. You will receive tax statements on mortgage interest, property taxes, interest income, dividend income, stock sales.
5. Total the number of nights away form home to get the per diem meal allowance of $38 per day. For 2002, the $38 per day is 65% deductible.
Don’t overlook the accelerated depreciation from Section 179. If you acquired a tractor, trailer or rig during 2001, you get an immediate $24,000 write off. Faster depreciation means more cash in your pocket by having to pay less income tax.
If you file an itemized tax return, you can deduct employee business expenses you incur but are not reimbursed for. You can deduct any expenses that are necessary or required in the performance of your job and/or operation of the truck but are not reimbursed by your employer, such as, uniforms, gloves, logbooks, maps, cell phone, CB, tools, etc. These deductions are only available if you itemize and are not available if you take the standard deduction. Remember, you are also entitled to the per diem allowance for overnights to cover the cost of meals and incidentals while on the road. Again, this deduction is only available if you are not reimbursed for meals and you itemize.
To determine if you will benefit from itemizing, the total of all your individual deductions must be greater than the Standard Deduction.
Standard Deduction – Tax Year 2001
Married filing Jointly & Qualifying Widow(er)…………$7,600
Single…………………………………………………….$4,550
Head of Household………………………………………$6,650
Married Filing Separately………………………………..$3,800
Example: If you are a single company driver and your only deduction is your per diem for overnights, your deduction for overnights must total more than the standard deduction.
Let’s say your overnights for the year total 250
250 overnights multiplied by the $38.00 per diem rate = $9,500
The allowable per diem deduction is 60% of the total, therefore 60% of $9,500 = $5,700
The Standard Deduction for a single company driver is $4,550 – However, with 250 overnights, you qualify to itemize with $5,700 in deductions
By itemizing you will have $1,150 more in deductions than if you had used the Standard Deduction
Most do-it-yourself tax programs are adequate and acceptable. However, for those who do their own returns, are you doing yourself a favor? You may be using all your expenses, but are you getting all the deductions you are entitled to? Did you handle the depreciation on equipment to your best advantage? Have you utilized new changes in the tax law? Many feel they save money by doing their own returns when in fact it may be costing them much more than they realize.
Marriage, divorce, financial support of a parent, cohabitation, birth of a child, adoption, death of a loved one – each of these changes has an impact on your taxes. Consult your tax professional if you have experienced any of these life-changing events in the past year.
This article has been presented by PBS Tax & Bookkeeping Service, a company which has been providing income tax and bookkeeping services to the trucking industry for over a quarter century. Contributions to this article were made by Shasta May, Director Business Development for PBS. If you would like further information, please contact us at 800-697-5153. Visit our Web Site at www.pbstax.com.
“Everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult with your own tax or accounting professional.
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