We have prepared a review of what’s needed for the preparation of your income tax return. 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 that accurately reflects what occurred during the year. Instead of procrastinating, this will ensure the tax return gets done on time and saves you the cost of needless penalties, which can exceed the cost of the tax preparation.

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 various tax preparers (including us) to get one. 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.

In order to compile the information needed for your tax preparer, or yourself if you are preparing your own return, you need to gather the following:

1. Make sure you have totaled all your income and compare your figures with what is reported on your earnings statements, 1099, W-2s and K-1s.

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. Don’t forget ATM and bank charges.

3. Gather all contracts on purchases and/or leases and make copies for your tax preparer.

4. Compile your 1099s if you’re an independent 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 and stock sales.

5. Total the number of nights away from home to get the per-diem meal allowance of $38 per day. In 2002, the $38 per day is 65 percent deductible.

Don’t overlook the accelerated depreciation from Section 179. If you acquired a tractor, trailer or rig during 2001, you get an immediate $24,000 write-off. Faster depreciation means more cash in your pocket by paying less income tax.

Company Drivers Only
If you file an itemized tax return, you can deduct employee business expenses you incur but are not reimbursed. You can deduct any expenses necessary or required in the performance of your job and/or operation of the truck but are not reimbursed by your employer, such as uniforms, gloves, logbook, maps, cell phone, CB, tools, etc. These deductions are available only if you itemize and are not available if you take the standard deduction. Remember, you also are entitled to the per-diem allowance for overnights to cover the cost of meals and incidentals while on the road. Again, this deduction is only available if you itemize and are not reimbursed for meals.

To determine if you will benefit from itemizing, the total of all your individual deductions must be greater than the standard deduction.

Example: If you are a single company driver and your only deduction is your per diem for overnights, your deduction for overnights must total more than the standard deduction.

Let’s say your overnights for the year total 250. Those 250 overnights multiplied by the $38 per diem rate equals $9,500. The allowable per diem deduction is 60 percent of the total, therefore 60 percent of $9,500 is $5,700. The standard deduction for a single company driver is $4,550, however, with 250 overnights, you qualify to itemize with $5,700 in deductions. By itemizing you will have $1,150 more in deductions than if you had used the standard deduction.n

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.