December 31
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DEC06/JAN07 ISSUE

 

IT’S TAX TIME AGAIN

Happy New Year!

 

Once again we should start preparing for income taxes.  We now have some time to update our paperwork and organize our files before the 1099’s, W-2’s, and various other notices start arriving.  If the prospect of dealing with a year’s worth of settlements, receipts, credit card statements and the like is just too overwhelming, fear not, you can send them to your tax professional to summarize.

 

The best way to get started is by getting together all your income and expense records for the year.  Break down your expenses by category.  Be sure to include all checks written, credit card charges, cash expenses and any expenses reflected on your settlement statements.  The categories should include repairs, parts, truck insurance, tires, tolls/scales, cell phone, etc.  You can request an income tax organizer from a trucking specialist if you have not already received one.  For a free tax organizer, you are welcome to contact our office.

 

If you’re self-employed in an unincorporated business, your income will be reported to the IRS on 1099’s and mailed out to you by January 31.  It’s always a good idea to double check the amount reported on the 1099 against your own records.  You’d be surprised at how many times these totals don’t match, and they should.  You will need to contact your tax preparer for advice on how to handle discrepancies.

 

WHAT DO YOU NEED?

Listed below are items you will need for your income tax preparation and are required to be mailed to you no later than January 31.  If you have not received these items by the first week in February, you should contact your employers or financial institutions to find out where they are or to request duplicates.

Items you should received by early February:

  1. W-2’s from employers
  2. 1099’s from all companies and/or individuals you’ve done work for – brokers, motor carriers, independent businesses, etc.
  3. 1099’s or end of year statements from banks for interest and dividend income, brokers for stock information, mutual funds, 401K and IRA distributions, and mortgage interest statements.
  4. Schedule K1 if you are involved in any partnerships or s-corporations.
  5. W-2P or 1099R for pension and annuity income.
  6. 1099’s and year end statements for unemployment compensation, social security income and state income tax refund.
  7. 1098’s for mortgage interest paid
  8. Compute the nights you are away from home on the job.  Since we normally use nights away to compute meal expense, you don’t need to save meal receipts.  Your logbook will suffice.
  9. Company drivers need to gather their W-2’s and compute the number of nights they were gone on the road.  Also, you need to compile any business expenses incurred such as union dues, telephone, clothing and laundry. You will need to deduct any reimbursement received.
  10. Determine if you have or are going to make any contributions to an IRA, SEP, Simple IRA, Keogh and/or UNI 401K plans.
  11. Indicate any estimated taxes paid with corresponding dates paid.

 

Here are a few other things you’ll need to get together:

  1. Contracts for the purchase and/or sale of equipment
  2. Escrow statements for the purchase, sale or refinance of property
  3. Confirmations from charities for donations in excess of $250
  4. Number of business miles on personal vehicle

 

Remember, if you have employees or independent contractors, you are also required to send out your W-2’s and 1099’s by January 31 as well.  This includes self-employed individuals who have hired their children to do work for their business.  You must issue W-2’s to your children to get the deduction.

 

 

TAX TIPS

            Transportation Worker’s Meal Allowance

            The per diem amount is $52 per day for all of 2006.  For 2006 & 2007 per diem

            is 75% deductible.

 

There is still time to plan for your 2006 taxes. If need be, you can accelerate your expenses, put new equipment into services before January 1, 2007, and open a Keogh or “UNI” 401K Self-Employed Retirement Plan.   If you are 50 or older, there are catch up contribution limits that can also increase your contributions.  The UNI 401K as well as the Keogh Plan must be opened prior to January 1, 2006, but can be funded by the due date of your income tax return including extensions.  If you don’t open these plans, you can contribute to an SEP-IRA (Simplified Employee Pension) up to the time you file your tax returns including extensions.  You can contribute to an IRA for you and your spouse up to $4,000 each per tax year until April 15, 2007.  Age 50 or older can contribute an additional $1,000 each.  Discuss with your tax preparer whether you should have a Roth or traditional IRA.  The limits above are subject to change.

 

IMPORTANT EXPIRATION OF TAX LAW DATES.  WATCH FOR FURTHER CHANGES.

 

  1. Reduced capital gain/dividend rates through 2010
  2. For equipment purchased the $100,000 (indexed by inflation) Section 179 deduction is due to expire after 2009
  3. For offers-in-compromise, taxpayers must make partial payments to the IRS while their offer is being considered.

 

 

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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