Dollars & Sense
Gearing Up For Tax Time
Happy New Year! Before long, it's going to be time to do income taxes again. Now is the best time to get all your paperwork together.
Start by gathering all income and expense records for 2003. When gathering expense information be sure to include all checks written, all credit card charges, all cash expenses and all expenses reflected on your settlement sheets.
Expenses should then be broken down by category, such as, fuel, maintenance/repairs, tires, tolls/scales, cell phone, etc. Once you have everything gathered and separated you will need to total each category for the year.
For income you will total all earnings from your settlement statements. If you operate with your own authority you will total all income received for the year from deposits made. Be careful not to include deposits from loans, tax or insurance refunds.
It's important to total your income so that you can compare your totals with the amounts reported to the IRS on 1099's. You will need to contact your tax preparer for guidance on how to handle discrepancies.
Other items needed for income tax preparation, listed below, are usually received in the mail. Most tax preparers have an income tax organizer that outlines everything which is needed for the preparation of an income tax return.
The items that hold most people up are the end of the year statements. Listed below are the items that you should received no later than January 31. If you still have not received them by February 1, you should contact your employers or financial institutions to find out where they are or to request duplicates.
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 tax refund.
7. Contracts for the purchase and sale of equipment.
8. Escrow statements for the purchase, sale or refinance of property.
9. Confirmations from charities for donations in excess of $250.
In general, you must have receipts and back up information for everything that appears on your tax returns. If getting all this information collected and totaled proves to be too time consuming or just plain overwhelming you can hire a bookkeeper or your tax preparer to handle it for you.
Common Forgotten Deductions
Many truckers forget the small stuff either because they are not aware of the deduction or because they don't think the deduction is big enough to matter. Every little bit helps and you'd be surprised how fast the little things add up. Don't forget to include the following:
Administrative Fees: Bank Account Charges, ATM Fees, Check Reorder Fees
Annual Credit Card Fees & Interest (Business only credit card)
Computer Software/Software Support
Cleaning Supplies: Windex, Paper Towels
Internet Fees: AOL/Earthlink
Office Supplies: Pens, Pencils, Paperclips, Envelopes, Folders, Rubber Bands
Postage & Delivery Fees
Trucking/Business Related Subscriptions
Things Not Deductible
There is always a lot of confusion about what is and is not deductible. These are the most common misunderstood nondeductible items.
Deadhead miles, unpaid miles, downtime, and labor on do-it-yourself repairs and maintenance. If someone tells you they are taking these deductions be aware they are not legitimate deductions. If the IRS catches these deductions they will be disallowed.
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.