federal tax help

I sincerely appreciate it Roadmedic. I have been focusing on the aspects of just driving the truck as a I/O and all that mess... I know how to file at the end of the year so thats covered. To make it simple I guess I just start putting away 30% of each NET settlement and send that in on 06/15/2013 Do the same thing each and every week until the end of the year and than file my taxes and see what I owe or get back. My question is; how do you pay the IRS the 30% on 06/15? Do you send a a check with the 1040 ES form? Please try to keep it simple,,,I have a GED for Gods sake...lol

 

I suggested the 30% based on generic terms.

Things to consider for the first estimate.

All the income expected for the year on the return.

When did the business start?

What was done before.

Business income will be affected by costs.
Per diem
Depreciation
Fuel
Showers
Maintenance
Just showing some

All of this is figured to get an annual amount, then tax calculation for the quarter share.

 

How do you estimate on something you have never done? I have heard the numbers 20% to 30% from many sources and I can deal with that. How do you estimate what your yearly income will be when you have never even done this before? I am planning on paying myself 35,000 but that don't mean it will happen. I know what the fixed and variable costs are but only God knows what will happen. So again, do I just take out 30% of the settlement, after fixed, variable, fuel and so on, each and every week? Than use that to pay the quarterly tax on 06/15/13? and than again the next quarter?

"All the income expected for the year on the return". what do you mean "return"?
"When did the business start?" April 17th
"What was done before". Company driver...lol

I just claim per diem at the end of the year like normal, right?
Can I depreciate the used trailer I just bought?

I apologize for being ignorant but, never done this before. I know it is easier than it sounds so bare with me, please.

and THANKS a LOT

 

Essentially when you do the estimate, you are projecting your return. It is always a guess or guesstimate as we always called them.

You have earnings as a company driver for the first few months.
You will have gross salary, withholding and etc.

On the day you become a I/O you will have new figures.

I suggest getting a program or something up and running so you can track expenses, and income as earned. I tend to avoid it since I left the business for the reason of the numbers. It is better to control this as you do it.

The numbers for April will show you made say 2,000.00 net profit for the month.
An estimate for the year would be to consider this as 9 months at 2,000.00 per month. 18,000 for the year. Then adjust for personal deductions an etc.

If you are a sole proprietor, your pay is immaterial.

 

What business structure are you using as an O-O? In my opinion it would be a mistake to run the business as a Sole Proprietorship you must protect your personal assets against any claims against your truck driving. To protect your personal assets as well as provide for a more favorable tax situation I strongly recommend forming a LLC or S Corp - the LLC is easier can be done for the filing fee with the state usually about $100. Then you are a company getting paid to provide a service to another company. Corporate tax rules are VERY different from personal tax rules. You can pay yourself a wage so your personal life is completely separate from the trucking business and BONUS the wage you pay yourself is tax deductible for the trucking company - the company you OWN. How much better can it get.. you have no idea the kinds of things companies can deduct to reduce their taxable profits. Ever wonder why Apple Computer pays no tax? Or GE? Or WalMart?

I am not a tax person nor for that matter a trucker - yet. I know a little about taxes so I would recommend paying a couple hundred bucks to an accountant - doesn't have to be a CPA simply an accountant that has experience keeping books and / or setting up companies. You might also want to try to Google S.C.O.R.E. it is an organization of retired business executives that volunteer to provide free business advice. Also, check with the SBA (SBA.gov) to get some free advice / assistance. If all else fails call your state or county business development office they exist to help businesses within their jurisdictions.

Hope this helps.

Ron