If you work but your overall income is low you may qualify for the Earned Income Tax Credit, which can give you as much as $4716 for the 2007 tax returns. You do not need to have qualifying children to get the credit, but if you do, the credit will be on the higher side. You must file an income tax return to get the credit.

Can I deduct deadhead miles?

A common misconception concerns deadhead miles. There are many owner-operators and tax preparers who think that income lost as a result of deadhead miles is a deductible item. That is not the case. Only the cost to operate the truck, i.e. fuel, repairs, and maintenance covering those deadhead miles is deductible. Additionally, many truckers often ask whether doing their own maintenance is a deduction. You cannot deduct your time for working on the equipment. Even though you’re not able to deduct your time, the benefit is that you are saving the cost of having someone else do the work. Also, you cannot deduct your time for waiting in line to load or unload.

Live in dependent

If you provide the majority of the support for a live in friend and the friend’s children you may claim the friend and the children as exemptions, but cannot claim Head of Household, the earned income tax credit nor the child tax credit.

Per diem deductions

If you are claiming per diem expenses as an itemized deduction on your Form 1040 (Individual income tax return) use Form 2106. This pertains to company drivers and some S-Corporation share holders.

Owe tax dollars

If you owe taxes but cannot pay, file the return and attach a Form 9465 installment agreement request. The IRS will accept all requests covering no more than 60 months, if the balance due is $10,000 or less. If you owe more, the IRS does not have to accept but most likely will.

If you owe more than $25,000, you will also need to file a 433-F, collection information statement which includes substantial financial information.

Important
To the best of our knowledge, as long as you do not default on the agreement, your credit rating will not be affected. The IRS does not report an installment agreement.

Missing a 1099

If you received a 1099 that is not correct, request a copy of a corrected one. If you are unable to get a corrected 1099, report the incorrect 1099 on your income tax return then add or subtract the difference so that your total reflects the correct amount. Include an explanation of your adjustment.

Child and Dependent Care Credit

If you and your spouse work or if you are a single parent, and pay someone to take care of a child under age 13, you may claim the child and dependant care credit. You may also qualify for the credit if your spouse, children age 13 or older, and other dependants are physically or mentally incapable of self-care.

You also may be eligible to claim the child tax credit for qualifying children under age 17. The credit is $1000 per child with income limitations.

The above credit can reduce your income tax but are not refundable.

Tapping your 401K's

Try to avoid “Hardship withdrawals” from your 401k. They are taxable and can be subject to a 10% federal tax penalty. There may be waiting periods to get you reinstated in your employers plan.

Option: You can borrow generally up to 50 percent of your vested interest, but you must begin monthly payback payments. Check out all options before deciding what path to take. Keep in mind you don’t want to jeopardize your retirement savings.

Fake IRS calls and emails

Tax scams are on the rise. The object is for you to reveal your Social Security and Bank Account numbers.

Tip for Safety: The IRS will NEVER ask for your Social Security or Bank Account numbers in this unsolicited manner.

Claiming tax credits

There are various credits which can reduce or result in a refund of your federal income taxes. You should consider the following:

1. The Earned Income tax credit for low income working individuals and families: see Tax Tip 1/31/08 2. The Child and Dependent Care Credit : see Tax Tip 3/7/08 3. The Child Tax Credit : see Tax Tip 3/7/08 4. The Adoption Credit 5. Credit for the elderly or the disabled 6. The Savers Credit

Please be aware there are other credits also. Qualifications and Limitations will apply to all credits.

What if I can't file on time?

If you are not going to be able to gather your information in time to have your taxes filed by April 15, 2008, you may choose to file an Application for Automatic Extension of Time, Form 4868, which will extend the time you have to file your return until October 15, 2008. By filing the extension, you will eliminate a late filing penalty. However, an extension is not an extension of time to pay taxes due. So if you are going to owe taxes, you should send in the money along with your extension. There are various ways to avoid or reduce underpayment penalties and your tax preparer can help you estimate the amount of tax due so you can do so.

TRUCKERS “BE AWARE”

Some carriers are not passing on to you the full amount of the fuel surcharge you may be entitled to. In some cases, you may be receiving 5% to 10% of what you are entitled to. Check it out, especially if you are going to work for a company for the first time.

FUEL AND THE IRS

If you are questioned by the IRS or your state as to why your fuel is so high compared to your gross income, obviously cost is the main factor. In addition, uncollected accounts, which are on the increase, would also be a major factor since you paid for the fuel but did not realize the income.

APPEAL PROPERTY TAX

There is a very good chance you are paying too much property tax. Home values are down. You can appeal to the county to reflect a lower value and save dollars.

Instructions should be on the websites of your county assessor’s office.

EQUIPMENT EXPENSING

The Economic Stimulus Package increased the Sec. 179 limit for expensing equipment placed in service in 2008 to $250,000 versus $128,000 that was scheduled before for 2008. The deduction phases out after purchases exceed $800,000 and is eliminated once total purchases exceed $1,050,000 for 2008. In addition to the sec 179 deduction you may qualify for bonus depreciation.