Dollars & Sense
Preparing for taxes
Even though you haven't yet received your W-2's and 1099's, it's time to start preparing for income taxes. If you're nervous about taxes and your records are not together, put yourself at ease by getting organized.
What should you do?
In addition to various 1099's, W-2's and year-end interest statements, you need to gather your business income and expense records together. Here is what information you're going to need:
A. Income Information
1. Settlement sheets showing income and charge backs
2. Actual amounts received if no settlement sheets
B. Expense Information
1. Check stubs or check register
2. Charge slips or monthly credit card statements
3. Receipts for all cash expenses
4. All expenses deducted from settlements
5. Com Data Statement
Once you have all your information gathered you can either prepare a spreadsheet reflecting your business income and expense totals, or you can hire a bookkeeper or your tax preparer tocompile a summary for you. Just be sure to get it done soon.
A lot of truckers decide to do their own bookkeeping to save money. In truth, many end up missing deductions theyweren't aware of or they end up paying late penalties and interest becausethey simply don't have the time to get the paperwork done.
These individuals would be much better off to pay a little extra for some help from a bookkeeper. Even if you decide to do your own bookkeeping be smart and hire a professional tax preparer to handle the income tax preparation.
In order to compile the information needed for your tax return, here is a quick review:
1. Make sure that you have totaled all your income and compare your figures with what is reported on your earnings statements, 1099's, W-2's, and K-1's.
2. Have a breakdown for all business expenses by category with totals for fuel, maintenance, repairs, tires, tolls, scales, insurance, etc. This
should include checks written,cash expenses, credit card purchases and deductions from settlements.
3. Gather all contracts/agreements on any equipment bought, sold, traded or leased and make copies. Be sure to have all the financial details of the transaction.
4. Verify income and withholdings reported on W-2's if you're a company driver. If you claim employee business expenses be sure to total all your expenses for the year by category.
5. Keep together all tax documents as they come in such as 1099's and 1098's for information on mortgage interest, property taxes, interest income, dividend income, stock sales, and rental property information.
6. Total information for meal expenses. If you deduct actual expenses total all meal receipts. If you use the per diem allowance total your overnights for the year.
7. If you declared bankruptcy or had equipment repossessed gather together dates and financial details.
8. If you were married or divorced during the prior year you will need to know the exact date.
9. If you moved you will need the old and new address and exact date of move. If the move was work related and you were not reimbursed by your employer compile a breakdown of all moving expenses.
10. If you plan on going to a new tax preparer this year be sure to have a copy of your tax return for the prior year, both federal and state including all schedules.
The per diem rate for the 2004 and 2005 is $41.00 with the allowable deduction of 70%.
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. Contributions to this article were made by Shasta May, Director Business Development for PBS. If you would like further information, please contact us at 800-697-5153. Visit our Web Site 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.