This year’s tax deadline of April 15, 2013 is fast approaching. For those in the trucking industry, we have a lot to manage to ensure we get the maximum tax deductions to help lower our tax liability. Getting started sooner than later helps ensure you keep every dollar you deserve.
Here are some recent tax law changes that will affect you and tips to get you prepared for this tax season:
- Section 179 and Bonus Depreciation. Good news for small business owners that made capital purchases in 2012! The limit for writing off qualified property has been increased to $500,000 for 2012. Additionally, Bonus Depreciation of up to 50% of capital investments is allowable in 2012. The Section 179 deduction is available for most new and used capital equipment, and also includes certain software. Bonus Depreciation can be taken on new equipment only (no used equipment and no software). Watch this video to learn more on the Section 179 changes for 2013.
- Payroll Tax Holiday Eliminated. This change in tax legislation affects all households that pay either Social Security or Self-Employment Tax because it eliminates the 2% Social Security “tax holiday” that started in 2011 to help stimulate the economy. If you are either a W-2 employee paying FICA or a 1099 Contractor that pays Self-Employment Tax, your Social Security taxes just increased to pre-2011 levels on January 1st. This means you will be paying 2% more tax on your earned income (up to a maximum of $113,700 of earned income). For an Owner-Operator who makes $50,000 net income, it’s important to know your Self-Employment Tax just went up $1,000 for 2013. That probably means it will take another 4-5 days of driving to make up for the increased Self-Employment Tax. Company drivers will feel a 2% reduction in net pay, as well.
- IRS Delays for the 2012 Tax Season. The IRS did not process any tax returns, paper filed or electronically filed, before January 30, 2013. Using efile is the best way to file an accurate return and direct deposit is the safest and fastest way to get your refund. Please keep in mind many IRS forms are not yet available to the public or preparers, notably Form 4562 (used by truckers to depreciate capital assets like tractors and trailers). This means even though the IRS efile opened January 30, 2013 many returns will not be eligible for filing until the IRS forms are released. The IRS projects the release date for many of these delayed forms to be sometime in March 2013. This is important for taxpayers to be aware of since there may be delays in getting refunds.
- Refund Update. The IRS has a helpful website to track the progress of a current year refund. It is called “Where’s My Refund?” and is available on the IRS website: IRS.gov. Instead of an estimated date for the return, tax payers will receive a personalized refund date. Information will generally be available within 24 hours after the IRS receives the return electronically. With this website there will be no need to contact the IRS unless the website instructs a taxpayer to do so. To access the information on “Where’s My Refund?” a taxpayer will need their Social Security number, filing status, and the exact amount of the refund.
- Per Diem. The 2012 per diem deduction rate remains the same at 80% of $59.00 per day. There are many deductions available to owner-operators, and company drivers, so be sure to speak with an experienced tax preparation company that knows the transportation industry. ATBS, for example, makes the complicated process of preparing a tax return easy for their clients. ATBS' proprietary Trucker Tax Organizer ensures their clients receive every legitimate deduction they deserve. Call ATBS to get started on your 2012 federal and state tax return at 1-866-920-2827 [ATBS].
Tax laws are always changing. As a business owner, getting every tax deduction you deserve can help bring long-term business success. Don’t let Uncle Sam take more of your hard earned cash than is necessary this year.