3 tips to score big on your tax return
We’ve all heard that common saying – you know, the one about that thing you can’t avoid. Yes, our old friend – taxes. The season is upon us where we either pay what is due or get back what is owed from our old friend, Uncle Sam. Many are confused this tax season as the recently passed tax reform act is making heads spin everywhere. Luckily, we have Jim O’Donnell, tax aficionado and owner and CEO of Trucker Tax Service here to help us out.
Let’s untangle this confusing tax web together, shall we?
1. The recent tax reform will not come into play this filing period.
Now, before you let out a huge sigh of relief, keep in mind that although the recently passed reform does not need to be taken into account for the April 2018 filing period – it should still be in the forefront of your mind while navigating 2018.
The new tax laws provide a great opportunity for owner operators and small trucking companies. Preparation is key to capitalizing on these opportunities according to O’Donnell, “Starting in 2018, take full advantage of the new 20% break in taxes, by keeping accurate records of every expense incurred while on the road”.
Try taking the headache out of record keeping by using a tool like TAP App, an app that loads right on your phone where you can enter in your daily expenses. You also have unlimited access to a staff of accountants and CPAs to discuss any business or tax related issues.
What this means for you: Although you won’t need to take the tax reform into account in the 2018 filing period, it should still be in the forefront of your mind while navigating 2018. Read up and stay educated on the reform and utilize technology like TAP app to stay on top of your record keeping so you don’t miss out on a single tax break.
2. Owner operators can stand to save anywhere from $2,000 to upwards of $7,000.
Owner operators and small businesses in general stand to make huge savings when filing in April of 2019. Section 199A in the new tax reform, allows the qualified business income deduction to now reach 20% of net qualified business income which will be huge for small business owners.
According to O’Donnell, “The new tax law should put more money in every OTR driver’s pocket. Assuming an owner operator is grossing $150,000 and nets about $50,000 on his schedule C (the profit and loss statement) he will get a 20% break and only $40,000 of it will get taxed. Depending on his tax bracket, he can save about $2,000. That will be a big savings for the owner operator, lease operator, or a small trucking company”. Ultimately, all of this all boils down to the more net earnings, (after all expenses) – the more breaks on your taxes. To really capitalize on this tax break, drivers should keep daily accounts of their expenses while on the road. If you don’t, you could be missing out on huge savings.
What this means for you: Small business owners should be able to capitalize on the 20% tax break thanks to the new tax reform. Be sure to study up to see if you qualify for this huge tax break and keep track of your expenses in the meanwhile so you don’t miss out on any savings.
3. Know when to turn to the professionals.
While doing your taxes yourself is always nice as it offers savings – it’s important to know when to turn to a professional. You may think that you are saving cash by preparing your own taxes but it may not add up to the cash that you could be saving by turning to a tax preparer that thoroughly understands the trucking industry.
According to O’Donnell, “Unfortunately, a very large percentage of OTR drivers don’t seek out that expert, and in turn, end up paying a great deal more in taxes each year than they actually owe”. In 2018, drivers should be especially aware of their tax breaks as the new tax laws are designed to help out the small business owner. Which is great for most owner operators, “In the eyes of the IRS, any driver that receives a 1099, is considered a small business owner”. So, while on the upside, many drivers should see a lower tax bill for 2018 there is some bad news, “The new tax laws have created a huge amount of confusion and concern throughout the trucking industry”, says O’Donnell. Don’t let that confusion get in the way of any tax savings, the professionals are there to help whenever you need!
What this means for you: If you have any uncertainty in filing your taxes, turn to a professional! The peace of mind knowing that you are not leaving money on the table is well worth the investment of a tax professional. Not to mention, working with a tax specialist will let you take the weight of stressful tax prep off your shoulder and allow you to focus on driving your business.
Finally, prepare for tax season by partnering up with a factoring company like eCapital. We accelerate invoice payment to just 24 hours, so you’ll be prepared no matter what comes your way. Plus, we offer perks like free fuel cards and access to an extended broker network and load board!