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Trucking and taxes go hand-in-hand. But trucking companies and owner operators in trucking who have an ICC number or who are leased to a carrier that has an ICC number can save on sales tax in some states.

Some states, like Oregon, Montana and New Hampshire, have no sales tax at all for any retail purchases.

Other states, like Ohio, Indiana, Illinois and Pennsylvania, will provide a form to fill out and sign. If a trucking owner operator or the trucking company he is leased to have an ICC number, the owner operator (or trucking company) does not have to pay sales tax in those states for the items bought for their trucks.

Good luck trying to get out of paying sales tax at Wal-Mart, but at the truck stop shop, they’ll know what you’re talking about. Consider that if you are buying a full set of drives you may be paying retail prices in the $3,000 range. At 6% sales tax, you will save $180. That is certainly worth the time to fill out a tax form.

Most retailers in the trucking industry won’t suggest to owner operators that they may be tax exempt. The owner operator will have to ask if the shop or supply store will honor that provision. Tax exemption forms create more paperwork for the retailers, so they tend to keep the uninformed truckers in the dark about it.

An owner operator who wants to save on sales tax would be wise to buy his supplies in one of these states. Whatever state you are in, if you get repairs, maintenance or supplies, always ask if they have a tax exempt form you can fill out. They may or they may not, but it is certainly worth enduring an occasional blank stare in order to double check.

States that should allow tax exempt status in addition to those already mentioned are Kansas, Missouri, and Washington. PDFs for many state sales tax exemption forms can be found online.

By: Suzanne Roquemore

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Don’t be in the dark about your taxes. If you are not very good with numbers but would like to get a clear estimate of how much you have to fork over to the government, then use a tax and tax refund estimator. This easy-to-use software will not only make managing your taxes a lot easier, but possibly also save you a lot of money.

Tax refund estimators can help forecast your tax situation for the upcoming year, and notify you of refunds if you are qualified. They are usually very intuitive and easy-to-use, so that you can print a comprehensive tax report within minutes. Choose the software that has tools and tips to help you minimize taxes and maximize your refund!

Most of this software requires you to connect to an online portal. You need to create an account and log in to use web-based peripherals, such as accessing your bank account or estimating the values of your property. It is therefore important that you only buy from trusted software brands, because while poorly developed software is cheaper, it is also more likely to compromise the security of your data.

Tax refund estimator software programs are just estimation tools, so your actual tax and tax refund will vary slightly from what you will initially generate from the software. The reports produced by such software programs are not valid for use in a federal income tax return. You still need the help of a licensed accountant for official taxation matters.

It may also take a while to set up the first time you use the software, because you need to detail your taxes in the past (the software uses this as a benchmark for your current tax situation). Prepare all the papers and references you may need so that the information you input is accurate. A simple mistake on your part can cause the software to churn out incorrect estimations.

By: Eddie Tobey

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There are tax benefits to owning a second home. With the decline of real estate sales during the recession, the federal government continues to uphold breaks for those who can afford to purchase a second home. There are several ways to benefit from such ownership.

First of all, you only have to prove that you will stay in your second home for fourteen days a year. The second home needs all the working amenities of your primary residence like a fully functioning kitchen and plumbing throughout. For tax reasons, your second home will be termed your “vacation home”, while your first home is your primary residence. The owner can rent out vacation homes for periods of the year, as long as certain conditions are met.

If you rent the house, do not do so for the entire year, as it will then fall into the category of a rental property and you will lose the “vacation home” tax breaks. Be absolutely certain to stay at this home no fewer than fourteen days a year, to maintain its tax status. Otherwise, rent it out, if you wish.

There are several tax benefits the Internal Revenue Service allows for such homes. Mortgage interest on your vacation home is tax-free. So, it is a complete credit when filing your income tax returns. Mortgage interest can amount to a hefty sum of money, so this is a great incentive to those considering the purchase of a vacation home. Use the savings any way that makes sense, like up keep of the property or payment of utility bills for this home.

Your second home also comes with an Internal Revenue Service tax break on the payment of mortgage insurance. Maintenance and home improvement costs on your vacation home earn tax incentives, as well. Any taxes you paid in settlement on the vacation home property will earn you deductions on your income tax return. You can also depreciate the value of the property when using it as a rental unit for part of the year. Just be certain that the depreciation amount never exceeds the total revenue you earn from renting your vacation property.

Before purchasing your vacation home, make sure that you are fully aware of all the tax benefits that come with such an investment. Be certain, as well, that you familiarize yourself with all applicable restrictions and qualifiers you will need to observe to reap the tax liability benefits of owning a second home.

By: Chintamani Abhyankar

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Hopefully, before selling a business, you meet with a CPA or tax accountant and get an estimate on how much of your proceeds will be going directly to Uncle Sam if you pay them in a lump sum at time of sale. You don’t want to save this surprise for after all is said and done, because not only will it most likely be a shock, but you will have given up your chance to do anything about it.

Planning is everything. For this article I will assume you are not doing a 1031 business exchange, that is selling your business and buying another similar business taking into consideration all the IRS guidelines and timelines. It’s pretty rare to see this, but it can defer all of your capital gains tax if done correctly. A 1031 Exchange is more commonly implemented with real estate.

Depending on how the business is sold, the gains may be taxed as long term capital gain, short term capital gain, ordinary income, etc. and if you are selling an asset in a C-Corp you may face double taxation. So, the idea is to minimize your tax bill and maximize your proceeds no matter what situation you are in.

One option is with a Self Directed Installment Sale. The structure must be in place before the buy/sell agreement is signed. The gist is to receive the sale proceeds in installments and only pay capital gains tax as you receive the income. This has the effect of allowing the majority of money you would have paid immediately in taxes to continue earning compounded interest for you for many years, thus increasing your bottom line by a significant amount.

The details are a bit too complex to fully outline in a short article, but both an LLC and a Trust are created for you and set up meet IRS criteria for favorable taxation of installment sales. Your asset gets transferred to the LLC prior to sale, and your buyer purchases from your LLC. The trust buys the shares of your LLC from you via an installment agreement and you pay taxes on your gain only as you receive the payments.

You, the seller, are able to control when the payments begin and how long they will be spread out. This allows for maximum flexibility to control your income, and plan for future tax savings as well. Since your buyer paid cash in exchange for your property, you are not dependent on them to make the installment payments and you have transferred the risk of refinance or default. This is done by using an independent third party administrator and your money is safely invested in a principle protected insurance product to be used solely for the purpose of paying the installments.

If you pass on before receiving all of the payments due, the remainder of the installment payments pass to the beneficiaries of your choice.

Seeing an example of a taxed sale vs. a Self Directed Installment Sale side by side will show you how much of a difference in overall return this strategy will provide. This can make the process of the sale more palatable and provide a dependable income stream for retirement.

The tax benefit of this approach is similar to your 401K or IRA account. You reduce your current income by the amount of your annual contribution and thus defer the tax you would have paid on that income amount. Those funds are invested in stocks and bonds and grow in value, sometimes dramatically, for the period before you retire and start taking distributions. When you start distributions, the amount is treated as ordinary income and you are taxed at your much lower (you are no longer working and earning a big salary) income tax rate at the time.

The Self Directed Installment Sale allows you to similarly defer your capital gains tax from the sale of your business. Instead of paying all of your capital gains at time of sale, you set up your SDIS to pay out your sale proceeds over time. If you pay all of your capital gains tax at time of sale, that money is gone forever. However, with this vehicle, you spread your receipt of the sales proceeds out over, 15 years for example. When you receive your distribution, you are then taxed for the portion of that distribution that is attributed to the capital gains – generally about 15%.

The difference in after tax proceeds are dramatic and are demonstrated by a complex analysis called an illustration. I will try in an abbreviated fashion, however, to demonstrate the potential impact. If you sold your business and you had a capital gain of $3.46 million, your lump sum capital gains tax payment at a 15% rate would be $519,000. In the SDIS you would keep the entire sale proceeds of $3.46 million and take distributions over a 20 year period or whatever period you chose. You receive an annual payment over 20 years, that would consist of 1/20 of the principal, 1/20 of the capital gains, plus investment returns.

If we did an illustration of this case and compared selling the business and paying all the capital gains up front and invested the remaining proceeds in a 6.85% compound growth portfolio versus the SDIS paying 1/20 of the capital gains annually, you would gain an $831,000 advantage in after tax proceeds. Not to bad for a little advanced planning.

By: Dave Kauppi

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Have you recently sold any of your rental property? Are the taxes on your capital gains are a burden for you? Are you looking for some way out to reduce these taxes and keep most of the profits you made from this transaction?

Then you need to know some intricacies of capital gains tax rules.

If you had purchased rental property at a lower price and now sold it with a respectable margin on it, this difference you could get is the capital gain and the same is taxable.

Remember, IRS gives preference to home owners. An average home owner will be charged leniently as compared to a property investor. So the capital gains tax varies as per different types on property owners.

One good thing about the capital gains tax is that it is lower than the income tax. It is convenient if you buy the property and wait for one year before you sell it. This way you will have to pay taxes at an average rate of 10 to 25 %. But if you plan to sell your rental property before one year, then your earning is considered as short term capital gains and you have to pay heavy taxes on it which may be same as the ordinary income tax.

If you have your rental property overseas, you need to check the capital gains taxes rules over there. As in some countries like United Kingdom to encourage foreign investors, they do not charge any tax from them for their capital gains.

Some useful tips for saving on this tax:

You can avail the benefits on tax savings by becoming a home owner than a property investor.

To qualify to the criteria of home owner, you have to stay in your rental property for a minimum of 2 years. You may have rented it in past