Overdrive Magazine | Trucking Business News & Owner Operator Info
Issue link: https://read.dmtmag.com/i/107898
Voices Safety suffers when greed reigns I worked for a company whose president was told by our larger parent company that if profits didn't increase, he would be fired and replaced. The result was a lot of middle-ofthe-night lone-truck carnage. Two died in separate accidents. One narrowly escaped with his life from another early a.m. crash and said a deer ran in front of him. While I was at the company, I was only assigned loads that required me to drive tired, usually overnight, to make an on-time delivery. The dispatch and load planning department displayed a total disregard for my activities prior to driving and my natural and unpredictable need for rest. I decided to escape with my life. There are people in positions of power in the trucking industry who consider loss of life an acceptable risk in the pursuit of money. – Ron Lappreau, commenting at OverdriveOnline.com 6 | Overdrive | February 2013 PULSE Two shades of 'taxpayer relief ' As you talk with your accountant about 2012 income taxes, be prepared to hear about some good news and bad news that came out of the "fiscal cliff " compromise, the American Taxpayer Relief Act of 2012. The bad side: elimination of the so-called "payroll tax holiday" that had been in place since 2011. This means a 2 percent hike in Social Security taxes – self-employment tax for owneroperators, FICA for company drivers. For an owner-operator running about 110,000 miles a year and netting $50,000, his tax bill will rise about $1,000, estimates ATBS, the nation's largest owner-operator financial services provider. To make up the difference, the average driver will need to drive an additional 2,500 miles. So much for "taxpayer relief." On the plus side, Congress improved depreciation tax breaks. Had no action been taken, the limits would have reverted to levels that would have left little flexibility in using depreciation to manage income taxes. Brett Ohlen, senior tax accountant with ATBS, explained how this works. Under Section 179 of the tax code, business owners were able to depreciate up to $125,000 of equipment investments in 2012. The fiscal cliff legislation retroactively changed the 2012 amount to $500,000 (the cap for 2010 and 2011), and it also set that level for 2013. If Congress hadn't made this change for 2013, it would have defaulted to an older limit of $25,000 per year. What the recent legislation did, Ohlen says, "was give us back the tools for manipulating depreciation to help us out so we can try and adjust income as best as possible over multiple years." However, you can have too much of a good thing, and that includes depreciation. A singletruck owner-operator usually doesn't need to take advantage of the much higher levels and accelerate most or all of the cost of an expensive Higher depreciation levels give you more flexibility in managing your equipment spending and income taxes. truck in the first year or two. Depreciation that aggressive would leave nothing left to write off for the next few years, meaning some high tax bills. One benefit of the Section 179 provision is that the equipment does not have to be new. What is restricted to new equipment is another part of the fiscal cliff legislation – the 50 percent bonus depreciation, which was extended. It allows writing off half of a purchase of new equipment in one tax year. This could help fleets, even small ones, when truck spending exceeds the $500,000 limit of Section 179. If you're unsure about the tax consequences of a major 2012 or 2013 equipment purchase, get with your tax adviser to plan a sensible depreciation strategy. By Max Heine Editorial director mheine@randallreilly.com