Bottom Line
Tax Tips
Tax-related issues

By Howard Abrams
PBS Tax & Bookeeping

 

Q: I had problems filing my income tax returns and paying the balance due. What should I do?

A: You should assess how painful it was, and what can be done to alleviate the problems you had to deal with.

If you owed income taxes and were surprised at the amount, take corrective measures by having income tax projections done throughout the year. This analysis will make you aware of any potential tax liability.

If done periodically, such as after six months and nine months of operating, you still have plenty of time to prepare for the worst, to make your estimates to eliminate potential penalties, and to reduce taxes by planning.

If you have problems gathering all your materials, perhaps you should do bookkeeping throughout the year, which would also solve the problems stated above.

The key is to look at the past and identify good and bad areas, which will allow you to understand your needs and enable you to move forward.

Q: How important is it to make quarterly estimated tax payments? I hear a lot of people say they wait until the end of the year to pay the taxes.

A: It is very important to make your estimated tax payments. If you don’t, you may pay an underpayment penalty in addition to your taxes at the end of the year. It’s better business to make payments on time.

Q: How much of my income should I set aside for taxes?

A: Keeping in mind that everyone’s tax situation is different, we recommend at least 15 percent to 25 percent of your net income.

Your tax preparer should do projections for you during the year. Why give extra money to the IRS by being in a large overpayment situation? Why be underpaid and therefore pay unnecessary penalties?

Q: How long do I need to keep my records?

A: Records such as receipts, canceled checks, and other documents that prove an item of income or a deduction appearing on your return should be kept until the statute of limitations expires for that return.

Usually this is three years from the date the return was due or filed, or two years from the date the tax was paid, whichever is later. There is no period of limitations when a return is false or fraudulent or when no return is filed.

You should keep some records indefinitely, such as property records, because you may need them to prove the amount of gain or loss if the property is sold. If you are an employer, you must keep all your employment tax records for at least four years after the tax is due or paid.

Q: How much can I claim for meals while on the road?

A: Transportation workers can claim $52 per day for meals while away from home.

If you are subject to the hours-of-service limitations, you can deduct 80 percent of the $52. Otherwise, the deduction is limited to 50 percent.

You may have to prorate the first and last day of your trip. If you choose the standard $52 per day, you need to use that method entirely.

You cannot mix and match some days where you might spend more than $52.

The per diem rates are usually announced Oct. 1 and have remained the same for 2008 and 2009. 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.

March/April
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