Tax Planning for Truckers
Making the Most of Every Deduction
Whether you are an independent rig owner or head of a transportation company, you work hard for every penny earned on the road. So, while tax planning may not be on the top you your mind, it should be given some honest attention, especially when dealing with the IRS and State revenue agencies.
As an independent contractor, you probably receive a form 1099-MISC at the end of the year from the company or companies you worked for during the year. If you are operating as an unincorporated sole proprietor (not a partnership or S-Corp or C-Corp) you probably will be deducting your expenses on Schedule C when you have your taxes prepared.
Deductions You Probably Know
The tax code is complex, but luckily it provides opportunity to deduct many of the costs of running your business. Here are a few of the most common items:
- Tools
- Supplies (like gloves, tarps, and chains)
- Vehicle repairs
- Home office expenses
- A percentage of your meals
- Overnight travel expenses
- Vehicle insurance premiums.
Deductions You May Not Know About
Your profession has unique requirements to perform your job. Some of your job expenses may also be deductible on your annual tax return. For example, any training you may have paid for to successfully pass your CDL exam or improve your business skills. Or the cost of dues for any association you are a member of that is related to your business. There are other items that you may not be aware are legitimate deductible expenses you may take advantage of to reduce your tax obligation, including:
- Depreciation on your truck
- Tolls and parking fees
- Fuel Costs
- Technology, including laptops, cell phones, software and printers
- Certain medical expenses.
Even if you lease your vehicle, or perhaps rent a trailer periodically, you may be able to deduct this expense on your tax filing. Record keeping is critically important for justifying many of these deductions, especially reimbursement for fuel expenses, as well as small items such as supplies and repair costs, tires, etc. If you don’t already use a software tool, consider investing in one. Utilizing Quickbooks or a similar program will make your life so much more organized and prepared in the event your accountant or the IRS have questions down the road.
Being in your own business has many challenges as well as a few perks. The limitless opportunities of being your own boss may be tempered by the everyday challenges of making your customers happy, however the rewards are real. By taking every advantage the tax code provides your small business, you can realize greater profitability and maybe even find opportunities to grow that you never knew existed. If you are interested in discovering more, feel free to reach out to our professionals for a no-obligation conversation about your needs, goals and plans.