How much to save for taxes

[ATeam]

I do plan on making quarterly payments but even then I would need to reserve cash to make them. So I simply am asking is there a percentage that the experienced have found to put them in a ball park.

For a simple beginning, start with 33% of your gross revenue and dial it in from there as your bookkeeping and tax practices improve. Example: If you are paid $500 for a run, put away 1/3 of that amount:

$500
x.33
_______
$165

Formula: Gross Revenue x .33 = amount to put away for taxes.

This is the simplified answer you seek but it is not adequate. Your next step is to learn how to keep books and file accurate estimated tax payments, or hire a firm or accountant who can help you with it.

As your business develops, you will likely find that 33% of the gross is high. This is because taxes are paid on profits only and many deductions apply. But until you know what your true revenue, expenses and profits are, putting away 1/3 of the gross is a good practice.

It is a good practice for other reasons, even if it exceeds the amount of tax due. Putting away part of the gross builds important reserve funds. Putting away part of the gross is also the difference between expediters who retire from this business with enough money to have made the career worth the trouble and those who retire with nothing.

 

[Fkatz]

Hi All,

Normally, any person first starting out for the first year, would pay no taxes at all, it basically mainly depends on his net income before being taxed.

If he figures his net taxable income property(profit), and would have to pay estimated taxes, then he can download form 1040-ES (Estimated Taxes)from the IRS website: www.irs.gov. or give your accountant a call.

Or you can give us a call to help you

FranklinKatz, ATP, PA, PB
Frank'sTax & Business Service
315E. King St
Kings Mountain, NC 28086
(704)739-4039
Fax 704) 739-3934
E-mail:[email protected]
Website: www.frankstaxbusiness.com

 

[ATeam]

Normally, any person first starting out for the first year, would pay no taxes at all, it basically mainly depends on his net income before being taxed.

If you are going to dedicate a year of your life to enter a business in which you have no net income at all, you would be wise to consider another line of work. While it is true that many expediters drive broke year after year, it is also true that others prosper nicely and for some of those it begins the very first day they enter the business.

What kind of expediter do you want to be? The choice is yours. If you choose prosperity over poverty, structure your business and develop your skills accordingly.

 

[robertbarnes62]

Why not use the IRS calculator I linked earlier in this thread? There are so many variables it is difficult to give you an amount. For your first year much of it will be guess work. How much do you expect to gross? How many days (per diem) do you expect to be out this year? What other tax deductible expenditures do you expect like hotels etc.?

This is my first year and I am only about 3 months in with this company so it is all guess work for me. As far as gross I am guessing 25,000. I am guessing 160 days of per diem. No other deductions other than my phone which is $100 a month and insurance which is $36 a week.

 

[robertbarnes62]

Evening Robert,

You have to figure the net income taxable at either 10% if your net income is under$8,925.00
if your net income is over $8925.00 and Under would 15% tax to $36,250,000 and Over $36,250.00, to $ 87,850.00 the tax rate is 25%.
Most fall into the 15% bracket

If you make a profit you are taxed at 15.3% Self employment tax that will be added to you total taxable income on the profit,
So to play It safe 25% is a good percentage to withhold from your weekly.
settlements
You really cannot figure your tax until you have a minimum of 6 month of settlements, and expenses, do not forget to figure your per Diem, is 80% of $59.00 per Day.
It is a reimbursement of your food only, not a refund

FranklinKatz, ATP, PA, PB
Frank'sTax & Business Service
315E. King St
KingsMountain, NC 28086
(704)739-4039
Fax704) 739-3934
E-mail:[email protected]
Website: www.frankstaxbusiness.com

Thanks for the reply. That is about what I was thinking. So since I don't own the truck or pay for fuel them my weekly settlement is considered all profit right?

 

[robertbarnes62]

Thank for this. I have been saving 40% so I should be good to go. Also with me not owning the truck and not paying for fuel I don't have a lot of deductions that I know of. If you can think of some other than my cell phone and weekly insurance please reply with those. Thanks

 

[robertbarnes62]

Thanks when I go home I wi call you and we can talk more. Thank you for your help this far.

 

[robertbarnes62]

Any tips and knowledge are well respected and needed by myself. I am driving someone else's truck right now but do plan on buying a truck next year hopefully. All info is welcomed. Thanks

 

[Fkatz]

Afternoon Robert,

Even though you drive for someone else there are deductions that allowable to you. not only your cell phone here are the other items,

1. If you purchased any items for the truck

Office supplies: computer, printer, ink cartridges, paper, pens, postage, faxes, trip-pak, etc
naturally your Cell hone
your Occupational Insurance (workmen Comp)
Per Diem this is a food allowance as a deduction $59.00 per day subject to 80% of the total
Your Log book is your proof of this deduction Must Keep Log books for a period of 3 yrs from date tax return is filed, If they are electronic, get the web site to download and print them
if you do not have them the IR will disallow the deduction.
DOT drug Screen and Physicals
Your CD"L License
Professional Associations, ATA-American Trucking Association, OOIDA, Owner/Operaters Independent Drivers ASSociat\ion, Pre Paid Legal Services.
Cleaning supplies
Showers paid for

These are most of the deductions that you can take
FRANK'S TAX & BUSINESS SERVICE
[h=1]315 E. King St.[/h][h=1]Kings Mountain, NC 28086[/h][h=1]Local # 704-739-4039 Toll Free# 877-857-1040[/h][h=1]E-Mail: [email protected])[/h][h=1]Web: Kings Mountain, NC Accounting Firm | Home Page | Frank's Tax & Business Services[/h]

 

[usafk9]

Per Diem this is a food allowance as a deduction $59.00 per day subject to 80% of the total
Your Log book is your proof of this deduction Must Keep Log books for a period of 3 yrs from date tax return is filed, If they are electronic, get the web site to download and print them
if you do not have them the IR will disallow the deduction.

Got to challenge you on that one, Frank. Log books are not the only way to prove you're away from home on business in this profession.

Sent from my DROID RAZR using EO Forums mobile app

 

[Fkatz]

I know that logbooks are not the only item to prove your per diem, I was referring to a D, and E Unit, Straight trucks and Tractors/trailers. which is the best way of proving your per diem deduction,
As far as cargo van driver, Since the DOT does not require Logbook, I used the Bill of ladings, and written proof using he following format.

I myself drove a Cargo an, and used a Steno Pad, with Shipper/receiver, date, Pic-up time Delivery time on he left side, and your start, any stops. and ending mileage at the layover destination after the load was delivered. And then started again for each load, including Deadhead.

So if there are any other questions, please do not hesitate to ask

We thank you,

FranklinKatz, ATP, PA, PB
Frank'sTax & Business Service
315 E. King St
KingsMountain, NC 28086

(704)739-4039
Fax:704) 739-3934
E-mail:[email protected]
Website: www.frankstaxbusiness.com

 

[Highlander]

Did I read correctly that fuel is not detectable in a sprinter van?

 

[BobWolf]

I hire an accountant, that's his specialty.
Ive been using 30% as a safe number for the past twenty three years We always get a nice tax refund because, my wife gets most of what she pays in taxes back. Yes my accountant tells me I over pay but he also agrees the tax bill, plus the penalties are not worth it.
$150.00 / year for filings, well worth the money.
Also its another write off.

Bob Wolf.

 

[BobWolf]

BTW the 30% rule also factors in the Socialist Security.

 

[Fkatz]

To Highlander and others that think fuel is deductible.

Fuel is only deductible if you use the actual expenses, which includes
Liability/Collision/Bobtail Insurance, Repairs, Maintenance, Parts, & Tires,

If you do your own Labor for repairs is not Deductible no matter what it is.

If you use the Standard Mileage Rate, None of the above items are deductible

But, all other expenses that are use on, in, out for the truck are.

If you have any other questions please do not hesitate to ask

Thank you,

Franklin Katz, ATP, PA, PB
Frank's Tax & Business Service
315 E. King St.
Kings Mountain, NC 28086
(704) 739-4039
Fax: (704) 739-3934
E-mail: [email protected]
Website: Kings Mountain, NC Accounting Firm | Home Page | Frank's Tax & Business Services

 

[wesaypop]

I'm so glad I found this forum and this thread. Abetted a lot of questions for me. I'm brand new to this too, so I'm absorbing everything right now lol.

 

[EASYTRADER]

Warren Buffet only pays 16% in actual taxes. So I not sure the point of all this advice, most of it is bad. As a self employed person, your tax table % looks higher, but the reality is after rightoffs and income adjustments it works out to be lower.

Every expense you have on the road can be deducted as a business expense, you can even take per diem on meals or save reciepts and use the actual cost. Unfortunately, when your done with all those deductions you won't qualify for a mortage.

Taxwise I make around 15k a year, yet my house is paid off my vehicles are paid off, ETC. Taxes re the last thing you need to worry about.

Educate yourself on what the tax code actually sais, gt a Income Tax for Dummies book or JK Lassers how to py no taxes.

Don't forget to fund your retirement!!!
Open up a mutual fund account NOW and every week put 100 bucks in it, (assuming 1k take home). The DON'T TOUCH IT.

Then worry about taxes. Tax worries are mostly over done. I didn't file once for 6 years. I at the end of it I finally filed all the back returns and owed like 26k, only about 900 of it was fines. The Irs put me on. Payment plan, big deal I lived. Now I know what my taxes will be and plan accordinly. I don't file quarterlies, its a pain. Not really even required unless you have employees.

At the very worst saving 15% for income taxs will be enough.

 

[Fkatz]

Its not totally true, but if you use the Standard mileage deduction it is definitely not deductible as an expense, you cannot use both,

Remember if you use mileage you cannot deduct any of the following:
Depreciation of vehicle
Fuel
Repairs
Maintenance
Liability/ collision/ bobtail insurance
IRP Registration Renewals ( CDL Renewals are deductible)

Frank
Frank's Tax Business Service