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TAX FACTS

Check out these changes before filing this year

By David Weckerle

There are several changes to the tax laws that will affect the average owner/operator and company driver this filing season. These include the standard and dependent deductions, mileage rate for business travel and an increase in the per-diem rate.

Here are some changes to be aware of:

• The standard deduction has gone up in every category, along with the deduction for each dependent. Tip: Be sure to figure your taxes using both the standard and itemized deductions then use the most beneficial method.
• Be sure the social security number you enter for yourself and each dependent is correct. Incorrect social security numbers or ineligible dependents will result in the deduction being disallowed, and a delay in the processing of your return. These two errors account for a great majority of delayed refunds.
• The Child Tax Credit remains unchanged at $1,000 for each qualifying child, and the Additional Child Tax Credit is available again this year. Much like the Earned Income Credit, the Additional Child Tax Credit may yield you a refund even though you paid nothing toward withholding. Your tax preparer will automatically figure both of these credits for you. If you compile your own tax return, be sure to follow the instructions. Use the worksheets to see if you qualify and to determine the amount of each credit.
• The Earned Income Credit is a credit that may give you a refund even if you do not owe any tax. You may be eligible even if you do not have any dependent children. Your tax preparer will automatically figure the credit for you. Here again, If you compile your own tax return, follow the instructions carefully, using the appropriate worksheets to see if you qualify and to determine the amount of the credit. If you take the EIC even though you are not eligible, and it is determined that your error is due to reckless or intentional disregard of the EIC rules, you will not be allowed to take the credit for two years.

Tip: If you are married filing a separate return, you are not eligible for the EIC. Married taxpayers have only two ways they may file: Married filing jointly, or married filing separately. Neither spouse may file as head of household in order to claim the EIC.

• The mileage rate for business travel in 2004 was 37.5 cents per mile, up from 36 cents the year before. This means you can deduct 37.5 cents for each mile that you drive your personal vehicle for business reasons. Tip: Keep a log book in the glove compartment of your personal vehicle for recording business miles. Your tax preparer will want to see it at the end of the year.
• The per-diem rate for Over-The-Road Truckers is set at $40 per day. This amount is reduced by 30 percent for transportation workers, yielding a net deduction of $28 per day. Tip: Most tax preparers figure this deduction by using your log book. If you haven't been saving them, start now. The average per-diem deduction can amount to well over $9,000.
• Good record keeping is a must in the trucking industry. In the unlikely event of an audit, records become your life preserver. Take the time to keep good records, or hire a tax preparing service that will take care of this chore for you. Keep your records for at least three years after the filing date of your tax return. That's the law.