When tax season rolls around each year, most people are usually busy getting ready to do their taxes, which can often lead to frustration because of various issues. Tax professionals encourage people to file their taxes early to prevent penalties or setbacks.
It’s true what Benjamin Franklin said – there’s nothing certain in life except death and taxes. Paying the right amount of taxes is part of every individual’s social responsibility. It’s a legal obligation, so you can go to jail for evading tax payments. However, you should also protect your income by understanding your tax options.
If you’re a trucker, you may be wondering what your tax options are. Read on to learn the common tax options you can avail from the get-go.
- Why Should You Need A Tax Home?
Considering the fact that most truck drivers obtain significant amounts of business expenses, the Internal Revenue Service provides them with several tax deductions for their uses. While most of these deduction options are available to self-employed drivers, these can also be applicable to drivers working for a company, depending on the circumstances. But before a truck driver can claim the deductions, they should maintain what the IRS is called a “tax home.”
Typically, a tax home refers to the general area or city in which the driver works. While it may have nothing to do with the place they live, it usually refers to a base, dispatch center, or any permanent location in which they receive mails and use for the payment of their taxes. Thus, if you’re a truck driver, you need to keep a tax home for tax purposes.
As you can see, having a tax home plays a crucial role in your tax obligations as a truck driver. But in case you’re not able to establish a tax home for your needs and can’t claim for any deductibles, you may qualify for a tax debt relief. Qualifying for tax debt relief means that you have too much money owed to the IRS or other state tax agencies and are unable to pay what you owe. To be eligible for tax debt relief, you will have to be advised by a tax expert or tax attorney.
- What Are The Tax Deductions You Can Avail Of As A Truck Driver?
Now that you know the importance of tax home to your tax-related needs, it’s time to get familiar with the ordinary and necessary business expenses that are generally accepted as tax deductibles by the IRS. These can include:
- Internet or mobile phone access fees – The Internal Revenue Service is aware of the importance of mobile phones and Internet for truck drivers like you. But, since they’re also used for personal purposes, it only allows a 50% deduction of the total costs of access fees.
- Truck maintenance – If you use your personal money for truck maintenance, you can avail of a deduction from these costs. These can include new tires, oil changes, cleaning supplies, and many more. However, in case your employer reimburses you for these expenses, you can include them in your tax deductibles.
- Personal necessities – You can also claim tax deductions for any personal items you need for your work on the road. These can include binders, logbook papers, luggage, flashlights, and many others.
- Travel Expenses – As long as you have a tax home, the IRS will allow you to deduct travel costs, including overnight stays in the hotel and per diem expenses. When it comes to the meal allowance costs, make sure you know the rules by location so you can deduct the proper amount for your taxes.
- Licensing fees – Any expenses incurred in getting and maintaining a commercial driver’s license are completely deductible. This deduction policy also applies to the costs of having a continuing education necessary for keeping a license with an employer as well as state and federal agencies.
- Uniforms – These are also deductible as long as they’re required by your employer, and they don’t shoulder the costs by themselves. These items can include goggles, boots, and protective gloves.
- Association dues – Most truck drivers should be affiliated with unions and other trucking groups. As such, the dues and other costs required for the membership are completely deductible.
- What Are The Available Deductions For Owner-Drivers?
If you’re a truck owner-driver, you should know that there are additional deductions available to you. These can include:
- Costs of insurance premium payments
- Leasing fees for the truck
- Interest payments on the loan being used for a truck’s purchase
- Depreciation amount the truck suffered over the year, which is an available deduction every year the truck is owned and used.
Tips To Consider When Filing Truck Driver Taxes?
The tax options available above will put to waste if you’re not familiar with some tips for filing truck driver taxes. These tips can include:
- You’re unable to claim deductions for costs your employer decides to reimburse.
- Keep track of actual expenses for tax purposes.
- If you have any receipts, hold on to them as the IRS might audit tax returns for up to five to seven years.
- While tax software can help you with the computation of your taxes, consider hiring a tax professional to come up with accurate figures.
When you’re filing for taxes, you should learn all the rules so you can successfully claim allowable deductions from hefty tax payments. But, to avoid any problems in the future, you shouldn’t miss out or over-claim your deductions.
Just like other individuals, truck drivers like you have tax obligations that need to be fulfilled to avoid incurring penalties and other legal consequences. Fortunately, by keeping the information mentioned above, you’ll know the potential tax options available for your situation. As a result, you can have peace of mind knowing your taxes are filed properly.