Bottom Line
Tax Tips
Get ahead of the tax reporting game

By Howard Abrams
PBS Tax & Bookkeeping

 

In our rapidly changing society, whether we're raising or lowering our tax rates, eliminating certain credits or allowing the Bush tax cuts to expire, one thing remains constant: organizing the information necessary for the preparation of your income tax returns. Though the uniform numbers and players may change, the game remains the same.

Q: What paperwork and information do I put together to prepare my income taxes?

A: Listed below are items you will need for your income tax preparation. Most tax preparers should have income tax organizers, which list what would be needed.

Items you should receive by early February:
  • W-2s from employers.
  • 1099s from all companies and/or individuals you've done work for – brokers, motor carriers, independent businesses, etc.
  • 1099s or end-of-year statements from banks for interest and dividend income; brokers for stock information, mutual funds.
  • 401(k) and IRA distributions; and mortgage interest statements.
  • Schedule K1 if you are involved in any partnerships or S-corporations.
  • W-2P or 1099R for pension and annuity income.
  • 1099s and year-end statements for unemployment compensation, Social Security income and state income tax refund.
  • 1098s for mortgage interest paid.
  • Nights away from home.
  • 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 business expenses incurred such as union dues, telephone, clothing and laundry. You will need to deduct any reimbursement received.
  • Determine whether you have or are going to make any contributions to an IRA, SEP, Simple IRA, Keogh and/or Uni-401(k) plan.
  • Indicate any estimated taxes paid with corresponding dates.
Here are a few other things you'll need:
  • Contracts for the purchase and/or sale of equipment.
  • Escrow statements for the purchase, sale or refinance of property.
  • Confirmations from charities for donations in excess of $250.

Remember, if you have employees or independent contractors, you are also required to send
out your W-2s and 1099s by Jan. 31, 2011, as well. 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.

There is still time to plan for your 2010 taxes. You should have a projection done. Although you must open a Keogh or Uni-401(k) Self-Employed Retirement Plan before Jan. 1, 2011, these can be funded by the due date of your income tax return, including extensions.

If you don't open these plans, you can contribute to an SEP-IRA (simplified employee pension) up to the time you file your tax returns including extensions. You can contribute to an IRA for you and your spouse by April 15, 2011. Discuss with your tax preparer whether you should have a Roth or traditional IRA.

Q: I keep hearing about tax changes for 2010. Do any affect me?

A: There are changes already signed into law but apparently more to come.

A few changes signed as of Sept. 30, 2010:
  • The Hire Act, which gives you a payroll tax exemption from the employers' 6.2 percent Social Security tax and a general business tax credit if you hired a qualified employee.
  • The Small Business Tax Bill, which does the following:
      1. Doubles the expensing of Sec 179 property to $500,000.
      2. Reinstates 50 percent bonus depreciation for 2010 acquisition.
      3. Increases first-year depreciation limit by $8,000 for passenger autos that are "qualified property."
      4. Doubles startup cost write-offs to $10,000.
      5. Allows self-employed individuals to deduct health insurance costs in paying their 2010 self-employment tax.
      6. Allows for the carryback of general business tax credits against taxes paid the previous five years.
      7. Raises the adoption credit from $12,150 to $13,170 per child.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 visit their Web site at www.pbstax.com.

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