Tax Tips
Late filings, levies and deductions

By Howard Abrams, PBS Tax & Bookkeeping

A potential client comes to the office because he failed to file returns for 2013 or 2014. He is due a $1,000 refund for 2013 from federal income tax withholding on Form W-2 even though his income was below the filing level. He owes $1,000 for 2014. He asks, “Can I offset the two years to break even?”

No. The fact you delayed filing your tax returns has cost you dearly. The tax year 2013 refund is barred by the Statute of Limitations for filing claims for refunds. Therefore, the two years cannot be offset. The lesson here is not to delay filing of your income taxes. It can cost you a potential refund.

Since I’m an over-the-road trucker and my community has a large festival every year, I’m thinking of renting out my home. I can arrange to be on the road during the festival and thought I can pick up some extra money. If I do this, is the rental money taxable?

No. Since you use your home as a residence for more than 14 days during the year and you rent your residence less than 15 days a year, your rental income would not be taxable. Expenses incurred in renting your home cannot be deducted; however, you can deduct on Schedule A the interest and taxes that are allowed for a non-rental property.

I work as an independent contractor, but I do not own a business and do not perform services in the name of a business. I was told I had to pay self-employment taxes. Is that true?

Yes. The income you earn as an independent contractor will be considered self-employed income – and as such you will need to file Form 1040, Schedule C, Profit or Loss from business. You will also need to use Form 1040, Schedule SE to pay your Self-Employment Taxes. Since there is no withholding tax from your self-employed income, you may need to make quarterly estimated tax payments.

As a trucker who has covered many areas at different times of year, I have developed asthma and allergies. Another trucker I know was told by his doctor to install a swimming pool to alleviate his arthritis. Can these additions to a home actually be deducted as medical expenses?

Yes. As we age and are beset with more and more ailments (especially those that can affect us in our line of work), there are some solutions that can make us feel better. Unfortunately, some of these solutions are quite expensive. But, fortunately, our tax laws recognize this and allow us to deduct certain capital improvements to our homes as medical expenses.

We would suggest you get a written prescription from your doctor before embarking on major medical improvements to your home. There are limitations and special rules in determining the actual deductible amount, but you can get a deduction.

Please speak with your tax adviser for more information. Other programs that are deductible, provided a doctor prescribes them (though not necessarily a home improvement), are a weight loss program, smoking treatments, and the cost of a rehabilitation treatment center for drug or alcohol addiction, etc.

I received an IRS Notice of Intent to Levy Wages. The notice is asking for money on tax years I thought I did not need to file but did so anyway. I worked sporadically for my friend’s trucking business. I did file a Form 1040 Schedule C for those years. I now work and receive a W-2. What should I do?

We need to get copies of the transcripts for the years in question. We would then be able to determine if what the IRS is claiming is correct or in error. If it’s correct, and you don’t have enough money to pay them off, then you can request an installment agreement to pay the balance due. That should stop the levy. If the IRS is wrong, then amended returns can be filed using your and the IRS Transcript information. The important thing here is to contact the IRS immediately to either delay the levy or come to an agreement with the IRS as fast as possible so the levy does not cause you financial harm. LL

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.