LANDLINE

MAY  2009

 

TAX RELATED ISSUES

 

I had problems filing my income tax returns and paying the balance due.  What should I do?

 

You should assess how painful it was and what can be done to alleviate the problems you had to deal with such as:

 

1)  If you owed income taxes and were surprised at the amount:

      This can be alleviated by having income tax projections done throughout the year. 

      This will make you aware of any potential tax liability.  If done periodically, such

      as after six and nine months of operating, you still have plenty of time to prepare for

      the worst, make your estimates to eliminate potential penalties, and to reduce taxes

      by planning.

 

2)   If you have problems gathering all your materials, maybe you should have book-

      keeping done throughout the year which would also solve the problems stated above.

 

3)   The key is to look at the past and identify good and bad areas.  This will allow you to understand your needs enabling you to move forward.

 

How much of my income should I set aside for taxes?

 

 Keeping in mind that everyone’s tax situation id different; we recommend at least 15-25% of your net income.  Your tax preparer should set up and do projections for you during the year.  Why give extra money to the IRS; i.e. being in a large overpayment situation?  Why be underpaid and therefore pay unnecessary penalties?

 

How important is it to make quarterly estimated tax payments?  I hear a lot of guys say they wait until the end of the year to pay the taxes.  

 

 It is very important to make your estimated tax payments.  If you don’t, you may pay an underpayment penalty in addition to your taxes at the end of the year.  It’s better business to make payments on time.

 

How long do I need to keep my records?

 

Records such as receipts, canceled checks, and other documents that prove an item of income or a deduction appearing on your return should be kept until the statute of limitations expires for that return.  Usually this is three years from the date the return was due or filed, or two years from the date the tax was paid, whichever is later.  There is no period of limitations when a return is false or fraudulent or when no return is filed.  You should keep some records indefinitely, such as property records, since you may need them to prove the amount of gain or loss if the property is sold.  If you are an employer, you must keep all your employment tax records for at least four years after the tax is due or paid.

 

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.  If you would like further information, please contact at 800-697-5153.   

 

“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.