Q: What do I need to file my income taxes? And what do you need to prepare them?
A: Start gathering information as early as possible to give you time to tackle problem areas or missing information. You won’t be receiving your W-2s and 1099s for a while, but you need to categorize all your income and expenses to make sure nothing is missing.
Pay special attention to the following:
- Total your income received from deposits made or from your settlement sheets. When your 1099s do come, compare the total with what appears on your 1099s. If they are different, find out why. It could have to do with fuel surcharges.
- Separate all your business expenses by category such as fuel, parts, repairs, tires, insurance, telephone, tolls, supplies and lumping. Your expenses should come from checks written, ATM statements, receipts for cash spent, credit/debit card statements and deductions from settlements. Since we normally use nights away to compute your meal expenses, you don’t need to save meal receipts. Your logbook will suffice for that.
- Have copies of all contracts for purchases and/or leases of equipment acquired during the year, including loan information. You will need dates for any equipment sold along with the sales price and loan balance unless the equipment was traded in on a new purchase.
- Compute the nights you were away from home on the job.
- Compile your personal information, 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, how much you paid for it, and the date and amount of sale. If you sold real property, you will need to know the date acquired, the cost, and cost of any improvements you made.
- Company drivers need to gather their W-2s and compute the number of nights they were gone on the road. Also, they need to compile any business expenses incurred such as union dues, telephone fees, clothing and laundry. Deduct any reimbursement received for these.
- Determine if you have or are going to make any contributions to IRA, SEP, Simple IRA, Keogh or 401(k) plans. Typically, this can be determined at the time of your income tax preparation.
- Indicate any estimated taxes paid with corresponding dates
Here are a few other things you will need to get together:
- Escrow statements for the purchase, sale or refinance of property;
- Confirmations from charities for donations in excess of $250; and
- Number of business miles on personal vehicles.
Remember, if you have employees or independent contractors, you are also required to send out their W-2s and 1099s by Jan. 31. 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.
Q: Is it too late to plan for tax savings?
A: There is still time to plan for your 2008 taxes. If need be, you can accelerate your expenses, put new equipment into service before Jan. 1, 2009, or open a Keogh Self-Employed Retirement Plan.
You can also take advantage of the solo 401(k). It allows 100 percent of the first $15,500 ($20,000 if you are 50 or older) of income to be sheltered for 2008 and 25 percent of all self-employment income, up to a combined $45,000. If you are 50 or older, the combined amount is $50,000.
Solo 401(k) plans as well as Keogh plans must be opened prior to Jan. 1, 2009, but can be funded by the due date of your income tax return, including extensions. LL
Everyone’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 professional.
This article is written 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. If you would like further information, please contact PBS at 800-697-5153 or see their Web site at www.pbstax.com.