Tax Tips
It's income tax time. Are you ready?

By Howard Abrams, PBS Tax & Bookkeeping

Is it too late for tax planning?

No, there is still time to plan for your 2016 taxes. If need be, you can accelerate your expenses; put new equipment into service before Jan. 1, 2017; and open a Solo 401(k), also called a one-participant 401(k) or Uni-k.

That 401(k) plan allows an elective salary deferral of up to $18,000, or up to $24,000 if you are 50 or older, to be contributed and deducted on your 2016 income taxes. That deferral can be in addition to 25 percent of all self-employment net income up to a combined $53,000. If you are 50 or older, it can be up to $59,000.

The Solo 401(k) must be opened before Jan. 1, 2017, but can be funded by the due date of your income tax return including extensions. You should note that while the contribution limits are very high amounts, you can contribute much less. The important thing here is to open the plan by Dec. 31, 2016, and you can decide later whether to use it or not.

What paperwork and information should I put together to prepare my 2016 income taxes?

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 list what is needed. (You can download one at PBSTax.com.)

  • W-2s
  • 1099s from all companies and/or individuals you’ve done work for – brokers, motor carriers, independent businesses, etc. You must report all income regardless of whether you receive a 1099 or not.
  • Weekly or monthly settlements if we are summarizing.
  • 1099s or end of year statements from banks for interest and dividend income; stock and mutual funds; and mortgage interest statements.
  • Schedule K-1 if you are involved in any partnerships or corporations.
  • W-2P or 1099-R for pension and annuity income and distribution.
  • 1099s and year-end statements for unemployment compensation, social security income and state income tax refund.
  • Nights away from home for per diem.
  • Determine whether you have made or are going to make any contributions to an IRA, SEP-IRA, and 401(k) plans.
  • Indicate any estimated taxes paid with corresponding dates.
  • 1098s for mortgage interest paid along with property taxes paid.
  • Contracts for the purchase and/or sale of equipment or property including refinancing.
  • Confirmations from charities for donations in excess of $250 each.

I understand it’s time to start gathering my tax information for 2016. Can you tell me what the per diem rate will be for 2017?

Good question. Not only are we discussing 2016 income taxes, it also is a good time to start planning for 2017.

The per diem daily rate of $63 was not changed on Oct. 1, 2016, the normal change date. Therefore, the per diem remains $63 for 2016 and into 2017. Transportation workers can deduct 80 percent of their per diem.

Are there any tax changes I should be aware of?

Yes. There are two to keep in mind:

  • The Affordable Care Act penalties for non-coverage for 2016 and beyond keep increasing. Open enrollment for next year began Nov. 1, 2016, and ends Jan. 31, 2017.
  • Business standard miles are now deductible at 54 cents per mile, down from 57.5 cents in 2015.

Remember, if you have employees or independent contractors, you are also required to send out your W-2s and 1099s by Jan. 31, 2017. 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.

This article has been presented by PBS Tax & Bookkeeping Service, a company which has been providing income tax and bookkeeping services to the trucking industry for over a quarter century. If you would like further information, please contact us at 800-697-5153. Visit our website at www.pbstax.com.

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.