Owner Operators - Tax Tips
We are officially into income tax season and if you are not ready, it's time to get moving. For those of you who don't have a problem gathering paperwork, you should be able to follow the income tax organizer you received from your tax preparer. If you did not receive an organizer, you can call us and get one free or you can download one from our website 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.
We have prepared a quick review of what's needed for the preparation of your income tax return.
- Make sure that you have totaled all your income and compare your figures with what is reported on your earning statements, 1099s, W-2s, and K-1s. Be sure you do not include any W-2 income in the total of your self-employed income.
- 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. Don't forget ATM and bank charges.
- Obtain all contracts on equipment purchases and/or leases and make copies for your tax preparer.
- Compile tax documents such as your 1099s if you're an independent contractor or owner-operator and W-2s if you're a company driver. You will receive tax statements on mortgage interest, property taxes, interest income, dividend income, stock sales.
- Total the number of nights away from home to get the per diem meal allowance of $52 per day.
If the 1099 you received shows the wrong amount of income, first request a corrected 1099. If you are unable to obtain a corrected 1099, 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.
If you are the type that just doesn't have the time or maybe the desire to spend possibly hours sorting and totaling your business receipts in your "spare time" we recommend you gather all the paperwork you have and send it to your tax preparer so they can compile the proper records to prepare a return. Otherwise it may never get done. Instead of procrastinating, this will insure the tax return gets done on time and save you the cost of needless penalties, which are not tax deductible and can actually exceed the cost of the tax preparation.
SMART TAX PLANNING
When your tax returns are prepared it is a great time to have an analysis done to see if incorporating will save you taxes. Your tax preparer will know if incorporating would be beneficial based on your profit level for the year. The higher your profit, the more likely incorporating will save you tax dollars.