Bottom Line
Tax Tips
It’s income tax time

As the year draws to a close, it's time to get your records and paperwork organized for the preparation of your year 2000 income tax return. You won't be receiving your W-2s and 1099s for awhile, but you need to categorize all your expenses to make sure nothing is missing. You should pay special attention to the following:

  • Total your income received from deposits made or from your settlement sheets. When your 1099s do come, you can compare the total with what appears on your 1099s. If they are different, try to find out why.

  • Gather all your business expenses by category such as fuel, parts, repairs, tires, insurance, telephone, tolls, supplies and loading and unloading expenses. Your expenses should come from checks written, cash spent, credit card statements and deductions from settlements.

  • Gather all contracts on purchases and/or leases for equipment acquired during the year including loan information if financing was used. You will need dates for any equipment sold along with the sales price unless the equipment was traded in on a new purchase contract.

  • Compute the nights you were away from home on the job.

  • Compile your personal information if it applies such as mortgage interest, property taxes, interest and dividend income, income from sales from stock and rental property information. Remember, if you sold stock, you will need to know when it was originally purchased and how much you paid for it.

  • Company drivers need to gather their

  • W-2s and compute the number of nights they were gone on the road. Also, you need to compile any expenses incurred such as union dues, telephone, clothing and laundry as well as your personal income tax information.

  • Indicate if you have or are going to make any contributions to an IRA, SEP and/or a Keogh retirement plan.

Some truckers will compile the information, total it and input it into the computer. Others will make a schedule of all the expenses by category. Still others will total each pile and attach their adding machine tape to the receipts. There are those who will gather everything, throw it into a box (the shoe box method) and send it to their tax preparer for computation.

If you do use a tax preparer, remember that the more you do the less cost you incur in the preparation of your return. If you can summarize all your expenses by category and get it on paper, it will cost less than if your tax preparer has to do it.

Whether you summarize or just send it off to your tax preparer, get your tax returns done early. By doing this, it gives you a chance to correct any errors and spot any omissions.

Tax tips for truckers

1. Don't overlook the accelerated depreciation from Section 179. If you acquired a tractor, trailer or rig during 2000, you get an immediate $20,000 write-off. In addition, faster depreciation means more cash in your pocket by paying less income tax.

2. If you operate your business from your home (using a room or other space as an office), you may be able to deduct expenses such as depreciation, insurance, utilities and repairs. To get the deduction, you must use the home area exclusively and on a regular basis either as:

  • A place of business to deal with customers in the normal course of business or;

  • Your principal place of business that you use regularly and exclusively for administrative activities. A trucker will qualify for the home office deduction even if he drives the truck. If you do depreciate your home office and deduct it, upon sale of your home, you will have to recapture the past depreciation and pay taxes on it. The deduction for the business use of the home is considered by some as a red flag for the IRS to look at your tax return. You need to discuss that with your tax preparer to decide if the deduction is worth the risk, or if it makes sense to pick up the income upon the sale of your home. If you do operate your business from your home, you may qualify for a higher deduction for the use of a vehicle other than your rig, even if you don't claim the business use of home deduction.

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 Business Development for PBS. If you would like further information, please contact Barry, Howard or Shasta at 800-697-5153. Visit our web site at www.pbstax.com.

March/April
Digital Edition