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Understand your tax filing responsibilities.


Morning thoughts ☕️

Truck business responsibilities.

Every year during the 1st quarter I have many conversations with individuals about managing records and how to get one’s taxes completed accurately and on time.

My background in business is very diverse. And when I listen to truck drivers and owners I hear a common theme.

“I need a truck tax person!”

I’m not out to offend anyone with my thoughts on this subject or question. But the fact is owners need a qualified tax preparer that can provide the services you need.


I suggest to certain of the information and deadlines you need to meet with your tax services provider.


* disclaimer - these comments are from 50 years of business experience I’m not a certified tax preparer.

Point #1

All truck income or losses flow directly to your personal tax calculations. We do not pay taxes based only on our truck business income.

Point #2

Had a conversation with a new owner just yesterday reviewing their year end profits.

I did a quick estimate and explained deducting the “Standard deduction”

This owner did not realize every owner still can receive their standard deductions. Based on your marital and dependents status.

Point #3

You are the owner should learn some of the basics so you can have some confidence asking questions. If you don’t understand something ask again and as for it in writing.

Point #4

Always ask about your depreciation options.

Trucks vs trailers have different rules

Equipment improvements I.e. an inframe, transmission, painting your truck these expenses are to be entered in your depreciation schedule then you gave the option to accelerate the deduction if it is to your benefit. There can be long term benefits to not accelerating as well.

Point #5

Becareful changing service too often

Point #6

Timely communication is vital throughout the year. I suggest at minimum if you keep your own records forward your P&L to your preparer. So, if you need to adjust your quarterly estimated taxes.

Point #7

Try to avoid over payment of quaterly taxes but if we’ve found you did applying any refund if there is one ti the current 1st quarter taxes to be the best way to help manage cash flow as well.

Point #8

You can find a lot of useful information by searching the IRS.GOV site.

Point #9

For years I’ve have dozens of owners tell me they stop working to stay in a lower tax bracket. Learn that your earned and taxable income rates are incremental.

If you have income in a higher bracket? You do not pay this higher % rate on all taxable income.

Example 1:

You are unmarried, and you had $30,000 of taxable income in 2022. This means you are in the 12% tax bracket. But that does not mean you pay 12% on all your income. Instead, you would pay 10% on the first $10,275 (or $1,027.50) plus 12% on the remaining $19,725 (or $2,367)

In total, you would pay $3,394.5 in income tax, before deductions.

Example 2:

You are a head of household (meaning you pay more than half the costs to maintain your home and have a qualifying dependent (such as a child or relative)) and you made $70,000 of taxable income in 2022. This means you are in the 22% tax bracket. The first $14,650 of your income will be taxed at 10% (or $1,465). You would pay 12% on the chunk of income between $14,651 and $55,900 (so, $4,950). Finally, you would pay 22% on the income you made over $55,900, which comes out to $3,102.

Finally recognize you need to pay SS Medicare for 40 quarters 10 years to receive Medicare benefits. There’s more to this as well.

Gary

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