LANDLINE
OCTOBER 2011
Article1011LL
TAX PLANNING
Every year at this time we bring up the importance of having an income tax projection done to use as a guide through the balance of the year.
Q. What is an Income Tax Projection?
A. Think of income tax projection as a mini tax return done during the year using year to date results.
Q. How is it done?
A. First you need to know your year to date net income as of a certain date (ex-September30) and using September 30, add to that the projected net income for the next three months. That will give you the projected net income from operations for the year. Then make your adjustments such as depreciation and per diem to arrive at a projected business income for tax purposes. Using that income project your income taxes much as you would at tax time.
Q. What is the purpose?
A. To find out whether you will owe or get a refund and to adjust your estimated taxes accordingly. You may have to adjust your projection based on actual results going forward.
The benefits from the tax projection are as follows:
Note- Although we feel an income tax projection is a must, you should also have the results of operations throughout the year to enhance your planning and spot potential problem areas occurring. All expenses should be percent aged against the gross receipts so you can spot your problem areas. Learn the percentage of gross receipts for each expense, and for those that vary, find out why. Also, knowing and understanding the percentages will help you figure the profitability of future jobs.
CRAMMING OF PHONE BILLS
Q. I heard about cramming of phone bills. What does that mean?
A. Cramming is someone who places an unauthorized charge on your phone bill. The charges could be for education courses, spas, diet related items, long distance/services etc. They don’t even need your social security number, all they need is your phone number from a phone directory.
Q. How do I know if this is happening to me?
A. Examine each line of your phone bill and make sure you know what the charges are for. Cramming charges are labeled with hard to decipher descriptions and can be for minor amounts. But they add up over months.
Q. Is there anything I can do to avoid this?
A. Don’t answer any online inquiries that ask for your phone number or sign up for any free trials that also ask for your phone number.
Note – If you find you are a victim call your phone company to get past charges refunded and the monthly charge removed. You can complain online to the Federal Communications Commission (FCC) at FCC (dot) gov/guides/howfile-complaint or call 888-225-5322.
Tax Tip- Garnishment
If you are having your wages garnished, the amount of the garnishment is not supposed to exceed 25% of your disposable income. (Example – Income $10,000 less living expenses of $7500 equals $2500 or 25% of disposable income).
If it does, for instance, in the example above your garnishment is $3000 or 30%, notify the IRS and get it changed.
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 us 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.”