When it comes to making more money or saving on taxes, providing pertinent information to your tax preparer is important. The following are examples of important events that your tax preparer should be aware of and, if not, should be provided during the tax preparation process.
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“I bought a new (or another) truck.” This is vital to know, as the amount of your depreciation deduction may have an impact on your tax liability.
“I changed carriers.” We know it is a pain to gather together all of your Form 1099’s, but it’s a red flag to potential IRS auditors if you don’t report all of your income. ATBS also uses this information to make sure we capture every available deduction.
“I renegotiated or signed a new lease.” Entering into any new legal documents or renegotiating the terms of previous legal documents may impact your tax situation. It is crucial for ATBS to know this to consult with you on any tax matters that need to be considered.
“I took another part-time job to supplement my trucking income.” It’s essential that ATBS is aware of this during the year to make sure your estimated tax payments are properly calculated, and all income is accurately reported to the IRS.
“I made a nondeductible contribution to my traditional IRA.” Nondeductible IRA contributions don’t have an impact on your tax liability in the year they are made. However, if these contributions are not reported on your return, it is much more difficult to claim these amounts as they are not taxable when you withdraw them from your IRA years later.
“I converted my IRA to a Roth IRA.” Traditional IRA distributions are not taxed until after you take them out of the account. But if you convert an IRA to a Roth IRA, this may trigger a taxable event in the year of the conversion.
“I had debt forgiven by a creditor.” If you’ve negotiated with collectors to settle debts for an amount less than what you owe, that is a smart way to dig yourself out of a hole. The IRS considers debt that you incurred and do not have to pay back as income. The canceled debt must be included in your gross income unless you qualify for an exclusion or exemption. If a creditor forgives $600 or more in debt, they are required to file Form 1099-C with the IRS. If the IRS knows about this, your tax preparer needs to know about it also.
“We have a new baby in the family.” If you have a new addition to your family or if your tax filing status changes due to marriage or divorce, please let your tax preparer know about these types of events. They have an impact on the calculation of your tax exemptions and rates.