Frequently Asked Questions
We get a lot of questions from readers so this month we thought we’d tackle some of the most common.
Q: My credit is really bad but I desperately need a credit card to take on the road with me so I don’t have to carry cash. Any suggestions?
A: With the economy what it is lenders are extremely cautious about issuing credit cards, especially to those with less than great credit. A good option in your situation would be a Secured Card. This is a credit card that requires a cash deposit by the cardholder, these cards are available to those with poor credit but the terms are usually extreme. However, Citi Secured MasterCard isn’t so bad. The annual fee is $29 (low by secured card standards), as is the recent 13.4 percent variable interest rate. There is no income requirement and no co-signer required. Citi secured cardholders become eligible for an unsecured card in as little as 18 months. Contact Citi Cards at www.CitiCards.com or call (800) 726-2109 for specific details.
Q: Is it important to make quarterly estimated tax payments? I hear so many guys say they wait until the end of the year to pay.
A: By paying your estimated taxes on time you can avoid the underpayment penalties. If you are unable to pay the full amount due for the quarter pay as much as you can afford to reduce the penalties.
Q: How much income should I set aside for estimated taxes each quarter?
A: We recommend setting aside between 25 percent to 30 percent of your profit (net income) for estimated tax payments. Although everyone’s tax situation is different and your particular situation may require more or less tax, if you pay in based on this formula the bulk of your tax liability for the current year should be covered. For exact calculations talk with your tax professional.
Q: Can I deduct the miles I put on my car for business?
A: Yes. Many self-employed individuals do not realize they can deduct business related car expenses. Be sure to keep track of all the business mileage you put on your personal vehicle, take an odometer reading when you first start tracking miles (beginning of the year is optimum) and then again at the end of the year. Keep a notebook in the glove box for noting dates and miles of each business trip. Business mileage would include business banking, picking up truck parts, office supplies, postage, etc. Keep track of mileage when out shopping for new equipment also.
Q: How long do I need to keep my records?
A: Records such as receipts, canceled checks, and other documents that back-up an item of income or a deduction appearing on your return should be kept until the statute of limitations expires for that tax return. Usually this is three years from the date the return was due or filed, or two years from the date the tax was paid, whichever is later. Some records should be kept indefinitely, such as property records, since you may need them to prove the amount of gain or loss if the property is sold. If you are an employer, you must keep all your employment tax records for at least four years after the tax is due or paid, whichever is later.
Q: What is the current per diem rate for truckers?
A: For 2010, the deduction for meals is 80 percent for workers subject to DOT hours of service rules. You may deduct 80 percent of actual costs with receipts or 80 percent of the $59 per diem allowance with log books as the substantiation for the deduction. Note: If you operate as a corporation you must pay for meals out-of-pocket, keep your receipts, and then submit receipts to the corporation for reimbursement.
Q: What should I do if I’m worried about identity theft?
A: You can measure your risk for identity theft by going to www.MyIDScore.com for a free, confidential service from a leading identity theft intelligence firm.
This article has been presented by MBA Tax & Bookkeeping Service, a company proud to provide Corporate/LLC filings, income tax, bookkeeping and IRS problem resolution services to truckers in all states. If you would like additional information or have questions, calls are always welcome. Contact us at 888-407-1669 or visit our website at www.mbataxhelp.com or www.mbabizservices.com.
This article is provided for informational purposes only and is not intended as legal or tax advice. Each individual business situation is different and the information contained herein is meant for general information purposes only. Specific tax and legal recommendations can only be made after an individual has consulted his or her qualified tax or legal professional.
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