Friday, May 10, 2013
Tax Tips for 2013
Hello to all of our Independent Contractors. It is that time of year again where we all here at Sammons thought you all might like a few tax tips to make next year’s tax time that much easier on you. Well here it goes:
1) Quarterly Estimated Tax Payments. I don’t know how many of you utilize these payments, but making quarterly payments is mandatory says the IRS if you want to avoid paying a tax under-payment penalty just for having a tax bill due, year after year. These payment due dates are approximately April 15, June 15, September 15, and January 15 every year. The accountant you use to prepare your taxes should be able to set you up with quarterly estimated tax payments or the form can be found on www.irs.gov and it is called 1040-ES.
2) Cash Payments. Save your receipts for any cash payments you make while on the road, because most likely, those expenses are qualified business expenses. These often overlooked expenses, such as food, tolls, etc., do add up over time and can reduce your overall tax bill every year. A good strategy is to use an 8 ½’ by 11’ envelope for each month of the year, have it riding in the cab with you at all times, and put these receipts in the envelope as you get them so you don’t lose the receipts. If you find some downtime, pull the receipts for a prior month out and summarize them, trust me, this will save you from having to do them all at once during the next Tax Season.
3) Monthly Statements. For Lease Purchase folks, save all of your monthly settlement statements and for the Owner Operators, save all of your weekly settlement statements. If possible, summarize this data in a spreadsheet on an on-going basis. Don’t wholly rely on the yearly tax information that Sammons gives you because having the settlement statements available for backup will help your accountant immensely. Also, the only expenses that show up on the settlement statements are Sammons-related expenditures that we paid on your behalf.
4) Personally Paid Business Expenses. Regardless if you pay by cash, check, or credit card, if Sammons doesn’t make the payment for you, we won’t know about it and won’t include it in any summary that we provide to you. Keep a close track of these personally paid business expenses as every business expense helps in reducing your overall tax bill.
5) Partners in Business. This is a business manual that Sammons gave to each Independent Contractor many months back. Please do use this manual for more than a paper weight. It is a very helpful guide on best practices for all aspects of trucking, but especially gives a new viewpoint and hints on financial matters. The perspectives shared in this book will help you run your business more profitably.