Personal Taxes

Out with the outdated: plan any changes to your personal tax legal responsibility earlier than the tip of the yr

The last two weeks of the year can be a merry time of Christmas cheer, creating new memories with family, and making plans for the New Year.

If you own a freight forwarding company, it is also time to close the current year and prepare for the next.

One of the most important things to do is your year-end tax preparation. You will, of course, have to pay income tax on your profits – but remember that the profit is what is left after you subtract business expenses from your earnings. Any money you spend on your business before the end of the year will reduce the profit you owe taxes on.

A good example is buying new tires. A set of steering tires, assembled and balanced, can cost $ 1,000 or more. If you make the purchase before January 1st, you can deduct the cost from this year’s taxes.

But first … do you HAVE to cut this year’s taxes? To answer that, you need to know how your business is doing. If you have had a great 2021 and are expecting high profits, then you should claim as much business expense as possible. On the other hand, if 2021 was a difficult year and you expect little to no profit (or even a loss), your income tax liability for the year must be low. You can choose to withhold large expenses so that they can be offset against next year’s tax liability.

Of course, a professional accountant or tax advisor can help you make informed business decisions. Dennis Bridges from eTruckerTax gave some tips on spending.

“If you are considering buying a new or replacement tractor or trailer, or other large equipment, do your best to get it under contract at least until December 31st,” he advised.

One reason for following this timeframe is depreciation.

“Current liberal depreciation rules allow an owner-operator to deduct the full cost of heavy equipment,” he said. “So if you’ve had a very good year and have a high net income, you and your tax advisor can deduct the full purchase price of your new equipment.”

Bridges points out that buying used equipment is also an option – regardless of how much of the purchase price you finance. The decisive factor is the cost, not the payment deadline.

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