Dollars & Sense
Income tax time
Weâ€™re now well into tax-filing season, and if you are not ready, itâ€™s time to get moving.
For those of you who donâ€™t have a problem gathering paperwork, you should follow the income tax organizer you received from your tax preparer. If you did not receive an organizer, you can call various tax preparers, including us, to get one. You can also download one from our Web site at www.pbstax.com.
A tax organizer simplifies the information-gathering procedure and goes a long way in preventing the omission of important deductions. It is best to get a tax organizer from a preparer who specializes in the trucking industry.
For some of you, it is an extreme hardship to gather tax information. If you are one of these people, you should box all the paperwork you have and send it to your tax preparer so they can compile the proper records to prepare a return.
Instead of procrastinating, this will ensure the tax return gets done on time and save you the cost of needless penalties, which are not tax deductible and can exceed the cost of the tax preparation.
Common forgotten deductions
Many truckers forget the small stuff either because they are not aware of the deduction or because they donâ€™t think the deduction is big enough to matter. Every little bit helps, and youâ€™d be surprised how fast the little things add up. Donâ€™t forget to include the following:
â€¢ Administrative fees: bank account charges, ATM fees, check reorder fees
â€¢ Annual credit card fees and interest (business-only
â€¢ Association dues
â€¢ ComData/ComCheck fees
â€¢ Computer software/software support
â€¢ Cleaning supplies: Windex, paper towels
â€¢ Fax charges
â€¢ Internet fees: AOL/Earthlink, Qualcomm, satellite
â€¢ Office supplies: pens, pencils, paperclips, envelopes, folders, rubber bands, postage and delivery fees
â€¢ Security fees
â€¢ Trucking/business related subscriptions
How much of my income should I set aside for taxes?
Keeping in mind everyoneâ€™s tax situation is different, we recommend at least 20 percent to 30 percent of your net income.
If the 1099 you received shows the wrong amount of income, report the incorrect 1099 information as it appears on the form. Then add or subtract the amount of the error when computing your total. Be sure to include a letter of explanation with your return.
Protect your financial privacy
Identity theft is a growing problem worldwide. Itâ€™s estimated that as many as 750,000 Americans are the victims of identity theft every year. Protecting your financial privacy is more important now than ever.
With just a small bit of information, namely your Social Security number, identity thieves can open phony bank accounts, qualifying them for credit card accounts, even expensive purchases like cars, boats and jewelry.
Guard your Social Security number. Donâ€™t carry your Social Security card with you and donâ€™t have your Social Security number or driverâ€™s license number printed on your checks.
If you are from one of the 19 states where your driverâ€™s license number is your Social Security number, you must be extra cautious. Always tear or shred documents with private financial information, including old bank and credit card statements and solicitations for credit cards or loans. Never leave credit card, ATM or gas station receipts behind.
It is recommended that you check your credit report at least once a year. Verify all account information. Subscribe to a credit monitoring service such as Privacy Guard or Credit Watch that will alert you any time credit is applied for or checked in your name.
It is estimated that victims of identity theft spend on average 175 hours cleaning up their credit reports and resolving the numerous problems caused by identity theft. Guard your privacy and your private information as much as possible.
This article has been presented by PBS Tax & Bookkeeping Service, a company that has been providing income tax and bookkeeping services to the trucking industry for more than a quarter century. Contributions to this article were made by Shasta May, director of business development for PBS.
If you would like further information, please contact us at 1-800-697-5153. Visit our Web site at www.pbstax.com.
This article has been presented by PBS Tax & Bookkeeping Service, a company that has been providing income tax and bookkeeping services to the trucking industry for more than a quarter century. Contributions to this article were made by Shasta May, director of business development for PBS. If you would like further information, please contact us at 1-800-697-5153. Visit our Web site at www.pbstax.com.
â€œEveryoneâ€™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.â€
What you need to prepare your tax return
1. Make sure you have totaled all your income and compared your figures with what is reported on your earning statements, 1099s, W-2s and K-1s. Be sure you do not include your W-2 income in the total of your self-employed income.
2. Have a breakdown and total for all business expenses by category, such as fuel, phone, insurance, repairs, parts and tires. This should include checks written, cash, credit card purchases and deductions from settlements. Donâ€™t forget ATM and bank charges.
3. Obtain all contracts on purchases and/or leases and make copies for your tax preparer.
4. Compile your 1099s if youâ€™re an independent contractor or owner- operator and Wage and Earning Statements (W-2s) if youâ€™re a company driver. You will receive tax statements on mortgage interest, property taxes, interest income, dividend income and stock sales.
5. Total the number of nights away from home to get the per-diem meal allowance of $40 per day. For 2003, the $40 per diem is 65 percent deductible. Beginning Nov. 1, 2003, use $41 per day with 70 percent deductible in 2004.