The biggest tax mistake fleet drivers make

truckwriters.com

Article thanks to Larry Kahaner and Fleetowner.com. Links provided:

March, 2016  Most fleet drivers are leaving hundreds, perhaps thousands of dollars in tax deductions on the table because they've been given wrong information by their companies.

While owner-operators are usually savvy about taking deductions – and lowering their tax bill – most fleet drivers believe they're not entitled to similar tax-cutting deductions. "That's a costly mistake," says Jim O'Donnell, CEO and Founder of Trucker Tax Service.  "Most fleet drivers do not realize that they’re entitled to pretty much everything that an owner operator is entitled to. The only difference is that the owner-operator is going to have some major expenses," he says.

One of the main problems is confusion over per diem payments. "Many drivers have been told by their companies that it’s not worthwhile for them to get an itemized tax return done, because they don’t qualify for enough deductions. If they get paid per diem, they’re told to do a standard deduction and they'll be fine. It’s absolutely wrong."

O'Donnell explains: "There’s two different classifications of per diem. There’s a per diem that a driver receives as a portion of his or her income, and there’s a per diem that they’re entitled to as a daily deduction for every night that they spend on the road. Let's say a driver is paid 35 cents a mile. Ten cents of that can be paid in what’s called per diem. It flows through to their paycheck.  If a driver covers 450 miles a day, that comes out to $45 a day. Let's say a driver is out 300 nights a year, that per diem is $13,500 in annual income that never gets reported. The company just writes it off as an expense. Well, that $13,500 never gets reported and the driver is told don’t do it; just do a standard return."

He continues: "With 300 nights on the road – and I realize that's an aggressive number - a driver would qualify for $14,000 in per diem deductions. So now, he’s already offset the $13,500. He already has an additional $500 in standard deductions that’s he’s entitled to and he hasn’t started to account for everything else that he’s entitled to deduct."

O'Donnell admits that this can be confusing for drivers, which is why he encourages them to seek professional tax preparation from a company that understands trucking. He says, however, that many drivers are reluctant to pay a preparer several hundred dollars for their services because they don't believe it will be cost effective. He counters: "First of all, if a fleet driver just has a W-2, our rate is only $270 to start with. If you’re an owner-operator, it does jump up to $465, but it’s a much more complicated tax return. Drivers can easily make back that $270 with the deductions that we’re going to find for them. Their cell phone deduction alone – their phone bill could easily be $1,000 a year – would more than cover the cost."

CDL Life Infographic

O'Donnell stresses the importance of never throwing out a receipt. "The big items like satellite radio, a GPS or CB radio were probably paid for by a credit card, so you'll have a record, but keep a receipt for all cash payments like laundry, small batteries and showers. The only receipt you can ever throw away is if it’s 100 percent for food, because we’re going to capture that with the per diem [See List of Deductions]."

The general rule is if you’ve purchased something to go on the road with you or if you purchased it while on the road, most likely, it’s a deduction that you’re entitled to.

He concludes: "Drivers have never been educated on the fact that they are at the same level, in the eyes of the IRS, as an owner-operator or lease operator, in what they get to deduct while on the road. Anything they buy, like linens for the sleeper, pillow, whatever… I don’t care if they’ve purchased an air freshener. It's deductible."

http://fleetowner.com/driver-management-resource-center/biggest-tax-mistake-fleet-drivers-make

Have Obamacare? You May Need It to Navigate Tax-Filing Headache

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Article thanks to accountingtoday.com, and Richard Rubin of Bloomburg. Links provided:

Jan, 2015  (Bloomberg) Obamacare is about to collide with the U.S. tax-filing season, adding frustration for millions of taxpayers trying to figure out how to comply and how much they will owe the government.

Tax filing for 2014 opens Jan. 20. The biggest change for most taxpayers is on Line 61 of Form 1040: a box to check if you have health insurance and a tax to pay if you don’t. Millions who received insurance through Obamacare’s exchanges will have a more complicated set of calculations to complete.

“There’s going to be tons of questions and confusion and uncertainty and complexity,” said Kathy Pickering, executive director of the Tax Institute, the research and analysis division of H&R Block Inc. “We still have a lot of questions.”

The added strain on taxpayers will increase burdens on the Internal Revenue Service at its busiest time of the year. The IRS is already warning that about half the people who call its toll-free phone lines won’t be able to get through.

“Because it’s never happened before, it’s a learning experience for everybody,” said Roberton Williams of the Tax Policy Center, a Washington research group. “This will be the hard year. Next year will be easier. Five years down the road, nobody will remember this was anything strange.”

The tax agency also says it will complete fewer audits this year because of a smaller enforcement staff.
Insurance Requirement

Congress passed Obamacare in 2010 to expand health- insurance coverage, and the law relies on the tax system for two important functions.

First, the IRS polices the requirement that individuals have health insurance, which can be satisfied with an employer- provided plan, a government program such as Medicaid or insurance purchased on the exchanges established under the law.

Failure to have health insurance in 2014 generates a penalty of $95 per person or 1 percent of household income, whichever is greater. Those thresholds will increase to $325 and 2 percent for 2015.

The second major intersection between Obamacare and the tax system applies to about 8 million people who purchased policies through the exchanges. About 85 percent of the people who initially enrolled received subsidies, which went directly to insurance companies during 2014.

Those subsidies were typically based on 2012 income and now must be reconciled with the taxpayers’ actual 2014 income and household size. Some taxpayers will owe the government money, with caps on the amount they have to repay. Others will get money back.

Fresh Complications
Both the individual mandate and the subsidies present complications for tax filing.

One issue with the mandate is that workers won’t get statements from employers that say whether their insurance met the law’s requirements for minimum coverage. The IRS delayed that requirement until the 2016 tax-filing year, and the lack of information will limit the government’s ability to enforce the law.

The other complication is figuring out whether any of the exemptions to the penalty apply. They include the unavailability of affordable coverage, membership in a religious sect with objections to insurance, or a long list of circumstances under which the government can issue a hardship exemption, such as domestic violence and homelessness.

Absolutely ’Blindsided’
The subsidies affect substantially fewer people than the mandate—and could be trickier to navigate.
People who didn’t update their family status and income during 2014 will have particular difficulty. A bonus or a move to a higher-paying job could cause some to owe the government money that they never actually received—because it was sent straight to the insurance company.

“People are going to absolutely be blindsided,” said Steve Mankowski, a partner at EP Caine & Associates in Bryn Mawr, Pennsylvania, who is chairman of the National Conference of CPA Practitioners’ tax-policy committee. “It can take someone from getting a refund to owing money.”

One plus for taxpayers is that the IRS doesn’t have some of its usual tools to enforce the law. Congress prohibited the tax agency from using liens and levies to make people pay the individual mandate. The IRS can still reduce refunds.

The IRS is also going to be shorthanded this year, which will mean less customer service and less enforcement.

The administration says the Obamacare changes shouldn’t complicate things for most taxpayers and is directing people to the IRS and Health and Human Services websites for information.

“For the vast majority of Americans, tax filing under the Affordable Care Act will be as simple as checking a box to show they had health coverage all year,” Treasury Secretary Jacob J. Lew said in a statement. “We are working to ensure that whatever their experience, consumers can easily access clear information since this is the first year they will see certain changes to their tax returns.”

Budget Cuts
The IRS budget is $10.9 billion this year, down 3 percent from last year and 12 percent below what the administration requested.

The tax agency also must continue working on a problem it has struggled with for several years —criminals who steal others’ refunds through identity theft.

That’s especially an issue early in the tax season, when criminals can file tax returns and get refunds before legitimate taxpayers even know what happened.

The IRS has taken steps to address identity fraud, including on the number of refunds that can be sent to a single bank account or prepaid debit card.

“They have a much better handle on it, but it is still a problem,” said Edward Karl, vice president for taxes at the American Institute of Certified Public Accountants.

—With assistance from Alex Wayne in Washington.

http://www.accountingtoday.com/news/irs-watch/obamacare-navigate-tax-filing-headache-73328-1.html?utm_campaign=tax%20pro%20today-jan%2016%202015&utm_medium=email&utm_source=newsletter&taxpro=1&ET=webcpa%3Ae3662969%3A2357314a%3A&st=email

IRS Tax Tips - How to Get Tax Help

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I know the IRS and taxes are not a popular subject, but I pass this along in the hope that I can save some people of a lot of grief.  As a young, self-employed franchised gasoline dealer, I learned a hard lesson back in the 1970’s.  My bookkeeper had furnished me with the tax forms I needed to file, but neglected one form that I was required to include.  About a year later, after I had changed careers, I got a letter from them telling me they needed to hear from me.  I had a hard time locating my records and ignored them for a while.  The amount I actually owed them was less than 100 dollars. About 6 or 8 weeks later, I received notice that they had filed the form for me and I now owed them more than $600.00!  That was a lot of money back then and before I knew it, they forced my bank to take the money out of my account and give it to them!  It took me a year and a half, and a disgusting amount of time and effort to get most of it back.  I learned the hard way, don’t ignore the IRS!  They have the POWER! Read the following, you can get help, if you ask for it. Dan

Issue Number:    IRS Tax Tip 2012-66

Inside This Issue

---

How to Get Tax Help from the IRS 

When tax season is in full swing, the Internal Revenue Service receives millions of calls and thousands of taxpayer visits daily. For faster service, avoid peak times like Monday and Friday mornings when wait times are usually longest. Better yet, get the help you need online 24/7 without delay at IRS.gov.

The IRS website has a wealth of information, including hundreds of publications and guides on almost any tax-related topic. The instructions for a particular form can often provide the answers you need. The Interactive Tax Assistant can also help. It's a tax law resource that asks a series of questions and provides you with responses to common tax law questions.

Many taxpayers call the IRS's main help line when they could easily help themselves at www.irs.gov

 or get services more directly from automated or specialized phone lines.

• Check on your refund Use the "Where's My Refund?" tool atwww.irs.gov

 or the automated system at 1-800-829-1954. IRS Phone representatives don't have any additional information beyond what these tools provide.

• Get forms and publications If all you need is forms or publications, download and print them at www.irs.gov

 or call 1-800-TAX-FORM (800-829-3676) to have them mailed, for free, to your home.

• Get previous years' tax info You can order a transcript of your account at www.irs.gov

.

• Payment plans If you can't pay the tax you owe, you can apply for an installment agreement using the Online Payment Agreement application, or you can print the Form 9465, Installment Agreement Request fromwww.irs.gov

, then complete and mail it.

• Business taxpayers Taxpayers with small business-related questions should call 1-800-829-4933.

• Understanding a notice If you received a notice, call the number on your notice, not the main help line, to reach the IRS staff trained to help with that issue.

• Specialized reasons If you're calling for a very specific reason, there may be a direct phone number you should call instead of the main IRS help line. Visit the "Contact IRS" link at www.irs.gov

 to get more information on contacting the IRS about reporting identity theft or fraud, reaching the Taxpayer Advocate Service, voluntarily disclosing offshore accounts, information on the Health Coverage Tax Credit, or if you're calling from outside the United States.

Some taxpayers prefer face-to-face tax help. The IRS sponsors Volunteer Income Tax Assistance and Tax Counseling for the Elderly sites in local communities. To find the closest site, search “VITA” on www.irs.gov

 or call1-800-906-9887. Call 1-888-227-7669 to find TCE sites through AARP, an IRS partner. The IRS also has Taxpayer Assistance Centers located throughout the country. To find IRS offices, use the locator tool found through “Contact Your Local IRS Office” on www.irs.gov

. Be sure to check office hours and services offered before visiting your local IRS office.

There may be some circumstances when you need to call the IRS main taxpayer assistance line, which is 1-800-829-1040. Here are a couple of tips on when to call:

• Call if you have questions about your tax account such as a high dollar balance due or the balance due on your installment agreement.

• Call the IRS if you can’t figure out how or if certain tax laws apply to your situation. IRS representatives can discus your individual circumstances and help you understand your tax obligations or benefits.

Links:

• Interactive Tax Assistant
   
• Where's My Refund?   English
   | Spanish
   
• Order Tax Transcript
   
• Online Payment Agreement
   
• Form 9465, Installment Agreement Request (PDF
  )
• Contact IRS
   
• Find a Volunteer-Staffed Help Site
   

Don't Mess with the I.R.S.!

 gulagbound.com

Tax due date time is almost here!  I've had a tax preparation business for 17 years.  One thing I've learned is, you do not want the IRS on your back for not paying or filing on time.  See the notice below, the penalties are stiff! 

Dan

Collection Procedural Questions 

Question:   What kind of interest and penalties will I be charged for filing and paying my taxes late?

Answer:   Interest is compounded daily and charged on any unpaid tax from the due date of the return (without regard to any extension of time to file) until the date of payment. The interest rate is the federal short-term rate plus 3 percent. That rate is determined every three months. For current interest rates, go to News Releases and Fact Sheets and find the most recent Internal Revenue release entitled Quarterly Interest Rates. In addition, if you didn't pay on time, you'll generally have to pay a late payment penalty. The late payment penalty is one-half of one percent of the tax (0.5%) owed for each month, or part of a month, that the tax remains unpaid after the due date, not exceeding 25 percent. You will not have to pay the penalty if you can show reasonable cause for the failure. The one-half of one percent rate increases to one percent if the tax remains unpaid after several bills have been sent to you and the IRS issues a notice of intent to levy. Currently, if you filed a timely return and are paying your tax via an installment agreement, the penalty is one-quarter of one percent for each month, or part of a month, that the installment agreement is in effect. If you did not file on time and owe tax, you may owe an additional penalty for failure to file unless you can show reasonable cause. The combined penalty is 5 percent (4.5% late filing, 0.5% late payment) for each month, or part of a month, that your return was late, up to 25%. The late filing penalty applies to the net amount due, which is the tax shown on your return and any additional tax found to be due, as reduced by any credits for withholding and estimated tax payments. After five months, if you still have not paid, the 0.5% failure-to-pay penalty continues to run, up to 25%, until the tax is paid. The total penalty for failure to file and pay can be 47.5% (22.5% late filing, 25% late payment) of the tax owed. If your return was over 60 days late, the minimum failure-to-file penalty is the smaller of $135 ($100 for returns required to be filed before January 1, 2009) or 100% of the tax required to be shown on the return. Note: If you feel a penalty or interest is assessed in error, you may refer to Publication 1, Your Rights as a Taxpayer.

Additional Information: Tax Topic 653 - IRS Notices and Bills, Penalty and Interest Charges Publication 1, Your Rights as a Taxpayer News Releases and Fact Sheets

Category: IRS Procedures

8 Common Mistakes Filing Tax Returns

theblaze.com

Issue Number: Tax Tip 2012-58
Inside This Issue
Eight Tax-Time Errors To Avoid

IRS Tax Tip 2012-58, March 26, 2012
If you make a mistake on your tax return, it can take longer to process, which in turn, may delay your refund. Here are eight common errors to avoid .
1. Incorrect or missing Social Security numbers When entering SSNs for anyone listed on your tax return, be sure to enter them exactly as they appear on the Social Security cards.
2. Incorrect or misspelling of dependent’s last name When entering a dependent’s last name on your tax return, make sure to enter it exactly as it appears on their Social Security card.
3. Filing status errors Choose the correct filing status for your situation. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) With Dependent Child. See Publication 501, Exemptions, Standard Deduction and Filing Information, to determine the filing status that best fits your situation.
4. Math errors When preparing paper returns, review all math for accuracy. Or file electronically; the software does the math for you!
5. Computation errors Take your time. Many taxpayers make mistakes when figuring their taxable income, withholding and estimated tax payments, Earned Income Tax Credit, Standard Deduction for age 65 or over or blind, the taxable amount of Social Security benefits and the Child and Dependent Care Credit.
6. Incorrect bank account numbers for direct deposit Double check your bank routing and account numbers if you are using direct deposit for your refund.
7. Forgetting to sign and date the return An unsigned tax return is like an unsigned check – it is invalid. Also, both spouses must sign a joint return.
8. Incorrect adjusted gross income If you file electronically, you must sign the return electronically using a Personal Identification Number. To verify your identity, the software will prompt you to enter your AGI from your originally filed 2010 federal income tax return or last year's PIN if you e-filed. Taxpayers should not use an AGI amount from an amended return, Form 1040X, or a math-error correction made by IRS.

Links:
• Publication 501, Exemptions, Standard Deductions and Filing Information

YouTube Videos:
• Tax Return Errors English | Spanish | ASL

IRS Tax Tips - Reduce Your Stress

plymouthincometax.wordpress.com

(Note for Truck Drivers: There are many deductions available for over-the-road drivers, including meal deductions, job expenses, etc. If you are not very familiar with all of this, you would more than likely be much better off using a paid preparer with experience in the trucking industry. Dan)

Issue Number: IRS Tax Tip 2012-50
Inside This Issue
Six Tips for Reducing Tax-Time Stress
Tax preparation doesn't need to give you a headache. There are several ways to make it easier on yourself. The IRS offers six tips to help make your tax-filing experience a breeze this year.
1. Don’t procrastinate. Resist the temptation to put off your taxes until the very last minute. Rushing to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error.

Trucker Tax Deductions

taxstopllc.com

The tax season is upon us and the middle of April (tax filing deadline) is fast approaching.  I’m sure most all veteran truck drivers out there are aware of the tax deductions available for over the road drivers.  If you are required to be gone long enough to mandate a layover before returning home, you qualify for meal deductions.

Unfortunately, you need to itemize deductions in order to claim them and you give up the first 2% of miscellaneous deductions (of which, travel expenses are).  You are also only allowed to write off 80% of your actual expenses for meals or 80% of the per diem rate, if you choose this (most use the per diem).

In addition to meal expenses, all job related expense that you are not reimbursed for and pay out of your pocket are deductible as a miscellaneous deduction.

I will not go into all the details here. If you newbies are not familiar with all of this, I would really recommend consulting a professional tax preparer.  If you are an over the road trucker, the available deductions can make a huge difference in your tax liability.  Make sure to use a preparer that has familiarity with trucker deductions.  Ask them first!  I have had a sideline income tax preparation business for the past 17 years (Bridger’s Income Tax Service).  If anyone has any specific questions, send me an email and I’ll be glad to respond.