All over but the accounting
When it comes to tax planning for owner-operators, Rutherford says the most important action you can take is to do a “tax review.” He says most people think of tax season as January 1 to April 15, but a year-end review will tell you where you stand now so you’ll know whether an operational or purchasing decision needs to be made before the end of the year.
Collect your reports and receipts from the first half of the year and go over them with your tax preparer, who will have more time to meet with you now than early next year. “If the second half of the year will be similar to the first half, you’ll be able to come up with a number [tax you might owe],” Rutherford says. “Problem with most owner-operators is that the amount of tax they pay from year to year varies wildly. I’ve had a client owe $25,000 in tax one year and zero the next.”
If your review tells you that you’re going to have a hefty tax bill, you’ll want to move up deductions. Take a look at purchases you’ll need in the next few months, and if you’ve got the cash on hand, make them this month. If you’ll be ready for new tires in the first quarter of 2009, buy them now and ask your dealer to store them until changeover, Rutherford recommends. If you’ve been thinking about getting an auxiliary power unit to save on fuel, buy it now for the deduction.
Fullingim points out that you’ll get a full year’s depreciation if you buy a new truck or trailer in December. The same goes for repairs. If you’re going to need to replace a clutch or a transmission soon, you might want to take care of it this month. Extensive repairs normally can be depreciated over several years, or they can be accelerated into a tax year. That’s especially true this year with the federal Economic Stimulus Act of 2008, which increases the first-year depreciation of new equipment to 50 percent from 30 percent and the amount of the one-time expense you can deduct to $250,000 from $128,000, ATBS’ Miller says.
Be smart, however. Miller says to make purchases you need but “don’t spend money just to buy tax