All over but the accounting

| February 15, 2009

Medical coverage is tougher to find if your carrier doesn’t offer a plan. If you’re an owner-operator, you might join the National Federation of Independent Business or the National Association for the Self-Employed, two groups with relatively low-cost options for getting medical coverage. The Owner-Operator Independent Drivers Association also has a plan for both owner-operators and company driver members. If your spouse is employed, see if you can get coverage through that plan, even if you have to pay a premium, Fullingim says. Your state of residence may offer a plan for those not covered elsewhere.

Fullingim has even counseled several of his owner-operator clients to forgo their independent status and hire on with a carrier that has good retirement and health care benefits. If you can’t put anything aside for your future or your current health, you, too, might want to sign on with a carrier. Those opportunities may be thinning, but it could be worth a look.

If you’re nearing retirement, Fullingim suggests visiting the Social Security website to see how much you’ll receive at different ages. If you’re an owner-operator, you have to put money into the system to get money back when you retire. If you’re a company driver, it will tell you how much you’ve earned and how much you’re likely to get. “I have one client who retired from a company with over $300,000 in his 401(k) [because he wanted] to become a truck driver,” Fullingim says. “When he’s ready to retire, he’ll have a good retirement. I’m trying to convince him to pay more money into his retirement plan [to increase what he has]. I also have a couple of clients who are over 70. They should not be driving.”

This time of year also is good for evaluating your business structure. If you’re a sole proprietor, you might want to consider incorporating. The paperwork is less and the tax filing is easier as a sole proprietor, but you may face legal implications if you mingle your personal and business assets. Incorporating separates those assets but is more expensive because of higher banking costs, tax fees and payroll expenses. A corporation also is more complicated at tax time and requires greater business awareness on your part.

For those who have a Section 125 flexible spending account, check if you’ve spent all of the funds in the account before the year closes. IRS regulations say you will forfeit anything not spent and it will go to the plan’s administrator for expenses. “You don’t want to be stuck with money in your account,” says Kevin Rutherford, ATBS tax consultant and radio commentator.

Owner-operators, take this time to inspect your insurance coverage. “One of the big areas drivers don’t understand is physical damage insurance on their truck,” Rutherford says. “Physical damage insurance is priced to the value of your truck. If your truck is damaged, you’re not going to get the amount you had it insured for when you bought it. I recommend every six months you review the truck value and insurance. At the same time, ask your agent to review all of your coverages.”

For company drivers and owner-operators, use the end of the year to whittle down credit card debt. By paring down your debt, you will save money on interest and enhance your credit score. Many credit-card companies are raising rates and slicing lines of credit. By freeing up card balances, you will be in a better position if you need to use a card in an emergency.

If you don’t have an organized system for keeping receipts, especially work-related ones, now’s an ideal time to set one up. Buy a file box or expanding folder or manila folders and labels for your briefcase – these are deductible – for keeping your receipts in your truck. When you get home, transfer the receipts to your permanent files.

ATBS’ Miller emphasizes that every receipt or report is important to keep. “For every dollar in expenses you find, it’s 25 cents less in taxes you have to pay,” he says.

If you’re an owner-operator, most of what you spend on the job is deductible. That includes the $550 heavy-duty vehicle excise tax, which many truckers overlook each year, Fullingim says. Keep a record of how many days you’re on the road to calculate your per-diem and oil changes and other maintenance expenses, he says.

That refrigerator and microwave you put in your truck this year to prepare meals is deductible, Miller says. If you don’t have one, he adds, buy one: You’ll save money and eat healthier.

Peak’s Cook says company drivers can take business deductions, too. “Make sure you keep receipts for any expenses you weren’t reimbursed for by your employer, such as work boots or a uniform,” he says.

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