Owner Operators - Tax Tips
It's Tax Time Again
Happy New Year!
It's tax time again. It isn't exactly everybody's favorite time of year, but here it is again. Time to get started on all that boring paperwork so you can file a tax return by April 15.
If the prospect of dealing with a year's worth of settlements, receipts, credit card statements and the like is just too overwhelming, fear not; you can send it to your accountant to summarize. Don't have an accountant? Well, then, you can send it to us.
If you're self-employed in an unincorporated business your income will be reported to the IRS on 1099s and mailed out to you by January 31. It's always a good idea to double check the amount reported on the 1099 against your own records. You'd be surprised at how many times these totals don't match and they should. You will need to contact your tax preparer for advice on how to handle discrepancies.
The best way to get started is by getting together all your income and expense records for 2006 for your accountant. If you're handling it yourself, add up the totals for the year, breaking down your expenses by category. When gathering expense information be sure to include all: checks written, credit card charges, cash expenses and any expenses reflected on your settlement statements.
Expenses should then be broken down by category, such as, fuel, maintenance/repairs, tires, tolls/scales, cell phone, etc. Total all the expenses for each category for the year. Most accountants send out some type of tax worksheet or tax organizer to help you gather and sort your tax information. For a free tax organizer you are welcome to contact our office.
WHAT DO YOU NEED?
Listed below are items needed for income tax preparation and are required to be mailed no later than January 31. If you have not received these items by the first week in February, you should contact your employers or financial institutions to find out where they are or to request duplicates.
Items you should receive by early February:
- W-2s from employers
- 1099s from all companies and/or individuals you've done work for: brokers, motor carriers, independent businesses, etc.
- 1099s 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.
- Schedule K1 if you are involved in any partnerships or s-corporations.
- W-2P or 1099R for pension and annuity income.
- 1099s and year-end statements for unemployment compensation, Social Security income and state tax refund.
Here are a few other things you'll need to get together:
- Contracts for the purchase and/or sale of equipment.
- Escrow statements for the purchase, sale or refinance of property.
- Confirmations from charities for donations in excess of $250.
- Number of overnights for per diem.
- Number of business miles on personal vehicle.
Remember, if you have employees or independent contractors you are also required to send out your W-2s and 1099s by January 31 as well. This includes self-employed individuals who have hired their children to do work for their business. You must issue W-2s to your children to get the deduction.