Be on the lookout for tax-related scams

February 2020

Howard Abrams

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Q. A trucker called wanting to know about worker classification. “I am a team driver with my wife and we were hired by a company that classified us as independent drivers when we should have been classified as employees which made us ineligible for the company’s fringe benefits. What should we do?”

A. This has become a big problem in the trucking industry because per diem is no longer deductible for company drivers under federal tax law. Being treated as an independent contractor versus an employee can have its benefits. If you are in a lease-purchase program, there may be tax advantages to being an independent driver. The main advantages are depreciation or lease write-offs, per diem deductions and the qualified business deduction.


Q. What is a qualified business income deduction?

A. QBI is the net amount of qualified items of income, gain, deduction and loss from any qualified trade or business, including income from partnerships, S corporations, sole proprietorships and certain trusts. The deductions allow eligible taxpayers to deduct up to 20% of their qualified business income, plus 20% of qualified real estate investment trust dividends and qualified publicly traded partnership income.


Q. I received calls from Social Security that don’t seem authentic. What are these?

A. Taxpayers should be on the lookout for new variations of tax-related scams. A scam related to Social Security numbers, scammers claim to be able to suspend or cancel the victim’s SSN. It is another attempt by con artists to frighten people into returning robocall voicemails.

Scammers may mention overdue taxes in addition to threatening to cancel the person’s SSN.

If taxpayers receive a call threatening to suspend their SSN for an unpaid tax bill, they should just hang up. Taxpayers should never give out sensitive information over the phone unless they are positive they know the caller is legitimate.


Q. How can the earned income credit put money back into taxpayer’s pocket?

A. The earned income tax credit benefits working people with low-to-moderate income. The credit not only reduces the amount of tax someone owes, but may also give them a refund, even if they don’t owe any tax at all. To qualify, people must meet certain requirements and file a federal tax return. They must file even if they don’t owe any taxes or aren’t otherwise required to file. Taxpayers qualify based on their income, the number of children they have, and the filing status they use on their tax return. For a child to qualify, they must live with the taxpayers for more than six months of the year. Taxpayers who file using the status married filing separately cannot claim the credit. LL

This article has been presented by PBS Tax and Bookkeeping Service, a company that has been providing income tax and bookkeeping services to the trucking industry for more than a quarter century. If you would like further information, please contact us at 800-697-5153. Visit our website at PBSTax.com.

Everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult with your own tax or accounting professional.

Read more of Land Line’s Tax Tips columns here.

 

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