To Save Money on Taxes – Get Organized!

Are you one of those people who is highly disciplined and well organized so that your recordkeeping is always up to date and all of your receipts, invoices and settlement sheets are neatly filed away? Or are you (like the rest of us) someone who shudders at the thought of sorting and filing your records so you put it off until the last possible minute? If you fall into that last category, you may now be facing a task you have been dreading for months: getting organized. Many people don’t realize that by putting this task off until after the end of the year rather than having a tax planning conversation with their tax preparer before year-end may be costing them money. But, in order for your tax professional to be in a position to give you good tax planning advice, you will need to provide them with an estimate of where you stand.


If you’re like me, one of the hardest things to do when faced with a difficult task is getting started. So here are some practical steps on how to get organized. First, gather all of your tax related documents: receipts, invoices, settlement sheets, lease agreements, bank statements, etc. Then sort receipts and invoices for truck expenses by categories. For instance, put all of the fuel receipts in one pile, all toll receipts in another stack, and so on. (Hint: If you use the per diem method for deducting meals, you don’t need the receipts for meals or food purchases, but you will need to keep your logbooks.) If you are not sure if something is deductible, put it in a separate pile. Later, when talk to your tax preparer, you can ask about the deductibility of that particular item.


Next, on a sheet of paper or in an electronic spreadsheet, make a list of what you are calling each category: fuel, repairs, truck wash, truck supplies, etc. Then, add the total of each category separately and list the amount next to the category.


If you are using the per diem method for deducting meals, go through your logbooks and add up all of the days you were away from home and record it on your category summary sheet. If you drove outside the United States, you will need to separate those days into those driven inside the U.S. and those driven outside the country.


Now total up the settlement sheets or paycheck stubs or look at the year-to-date amount on the last settlement sheet or paycheck stub that you received. If you are doing this after the first of the year, compare the total to the W-2 or Form 1099 and, if these amounts don’t match, contact the company that issued them to ask for a corrected copy since that is what the IRS is going to use to see if you have reported your income correctly.


Finally, make legible copies of the sheet of paper where you totaled your deductions and recorded your days away from home for per diem purposes to give to your tax preparer. When you receive them in January or February of next year, gather your W-2’s or Form 1099, the copy of your deduction/per diem sheet, the stack of documents that you set aside to ask your tax preparer about and other tax information (like mortgage company statements, tuition statements, student loan interest statements) and send them to your tax preparer.


The sooner you get your information to your tax preparer the sooner you can get an idea of how to make those tax saving moves before year-end the sooner you can get your taxes prepared. If you have overpaid, the sooner you will get your refund. If you have underpaid, then you have a little longer to save the money you will need to pay by April 15th.


John Turner is a Certified Public Accountant (CPA) in Houston, Texas with extensive trucking industry experience.  He can be contacted at (281) 464-9443 or www.truckcpa.com.