By Howard Abrams, PBS Tax & Bookkeeping
Q. What will the per diem rate be for 2012?
A. Not only are we discussing 2011 income taxes, it also is a good time to start planning for 2012. The per diem daily rate of $59 was not changed on Oct. 1, 2011, the normal change date.
The IRS allows you to deduct 80 percent of your total per diem through at least Sept. 30, 2012.
Q. I am a company driver and have nights away from home. What is the per diem I can deduct?
A. The same rules apply for company drivers as for owner-operators, but company drivers must subtract any reimbursements they received.
Q. Is it too late for tax planning?
A. No, there is still time to plan for your 2011 taxes. If need be, you can accelerate your expenses, put new equipment into service before Jan. 1, 2012, and open a 401(k) Solo Retirement Plan.
The plan allows a contribution and deduction up to $16,500 ($22,000 if you are 50 or older) of income to be contributed for 2011 as well as 25 percent of all self-employment net income up to a combined $49,000. If you are 50 or older, it is $54,500. The Solo 401(k) must be opened before
Jan. 1, 2012, but can be funded by the due date of your income tax return including extensions.
The contribution limits are high amounts, but you can contribute much less. The important thing is to open the plan by Dec. 31. You can decide later whether to use it or not.
Q. What paperwork and information do I put together to prepare my income taxes?
A. Listed below is what you will need for your income tax preparation. Most tax preparers have income tax organizers to help you organize your information and lists for what is needed. You can download ours at pbstax.com.
Items you should receive by early February:
- 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, stock and mutual funds 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;
- Nights away from home for per diem;
- 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 if you have made or are going to make any contributions to an IRA, SEP-IRA, or UNI 401(k) plans;
- Indicate any estimated taxes paid with corresponding dates;
- 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. 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.
If you don't open the 401(k), you can contribute to SEP-IRA (Simplified Employee Pension) up to the time you file your tax returns including extensions. You can also contribute to an IRA
for you and your spouse by
April 17, 2012. Discuss with your tax preparer whether you should have a Roth or traditional IRA.LL
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 website at pbstax.com.
Please remember 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 or accounting professional.