Act now to save on April 15

Per diem stays flat
Nothing appears to be changing on the per diem for next year, says owner-operator accountant Doug Kozeny of Truckers Professional Services in Omaha, Neb. “It’s still 52 bucks a day,” he says. “If you’re running in states with a higher per diem, you can use that rate.”

The amount of the per diem that can be deducted, which rose to 75 percent (or $39 a day) in 2006, stays at that level in 2007. It increases to 80 percent (or $41.60 a day) in 2008, completing a progressive escalation of rates approved years ago.

It’s that time of year when freight is about to slow down. You’d probably like to as well, now that the holidays are here. But before you downshift, consider some steps that could save you a bundle. that could save you a bundle.

ACCELERATE SPENDING. On the verge of buying tires, an on-board generator or other equipment? Do it before Dec. 31, and you can deduct the cost for your 2006 taxes. Use a credit card, and you can delay payment until the new year; this doesn’t apply, though, to purchases on a store’s credit card.

DELAY INCOME. If you’re independent and can afford to wait a week or two longer for payment, postpone certain invoices until late in the month so that payment comes in 2007. That will reduce 2006 taxable income.

SAVE FOR RETIREMENT. If you or your spouse has a 401(k) plan, kick in a little extra before year’s end to reduce your taxable income. Assuming you or your spouse receives a pay raise around Jan. 1, consider boosting the 401(k) contribution for 2007 by part, if not all, of the raise amount. For IRA contributions, you still can wait until April 15 for your 2006 taxes.

GIVE TO CHARITY. It’s another way to bring that taxable income down – and shuffle at least a little of what would have gone to Washington to a group you feel is more deserving.

PAY INTEREST NOW. Homeowners can make their January mortgage payment early and claim that extra interest deduction.

AVOID A TAX SURPRISE. Those who’ve been paying estimated quarterly taxes, as is legally required, have a good idea of what their Jan. 15 and April 15 payments will be. Those who haven’t face penalties, and perhaps a whopper of a tax bill, depending on income, depreciation and other factors. Check with your accountant when in doubt.

SELL STOCK. The stock market, at this writing, is finishing the year on a high note. If you’ve sold investments and made a healthy return, see whether you have any losers to sell to offset your capital gains tax.

BUDGET FOR THE HOLIDAYS. If credit cards are the only way to deliver that truckload of gift-wrapped freight to your living room, your household could use some spending limits. Keep things simple. And remember that your presence with loved ones can be more of a gift that you realize.


Smooth moves
Here’s an example of how much could be saved on 2006 taxes by taking certain action by Dec. 31. It assumes a 15 percent tax bracket, which applies to many married owner-operators. You save even more if a state income tax applies or if you’re in a higher bracket.

DEDUCTIONS
Buy an in-cab heater $1,200
Make charitable donations $1,000
Pre-pay mortgage interest $300
TOTAL $2,500

TAX BREAK
Self-employment tax* (14% of $2,500) $350
Income tax (15% of $2,500) $375
TOTAL SAVINGS $725

The Business Manual for Owner-Operators
Overdrive editors and ATBS present the industry’s best manual for prospective and committed owner-operators. You’ll find exceptional depth on many issues in the 2021 edition of Partners in Business.
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