Owner Operators - Tax Tips
What's not deductible? Every year we get the same questions about these nondeductible items.
Do-It-Yourself Repair and Maintenance
You cannot deduct your own time for working on your equipment. The benefit of doing your own repairs and maintenance is the money you save by not having to pay someone to do it for you.
Deadhead and Unpaid Miles
Another misconception concerns deadhead and unpaid miles. Many truckers think that income lost as a result of deadhead and unpaid miles is a deductible item. Unfortunately, that is not the case. Only the cost to operate the truck during that time is deductible, such as fuel, tolls and scales.
You cannot deduct for downtime. Even though you may be waiting for a load, and can prove you're empty and away from home, it is not an allowable deduction.
You may hear that someone has been taking these nondeductible expenses on their tax return, but the truth is they simply have not been caught. If these items appear on a tax return that gets audited they will be disallowed and the taxpayer will be charged interest and penalty on the disallowed amounts.
MOST COMMONLY FORGOTTEN DEDUCTIONS
Many truckers forget the small stuff either because they are not aware of the deduction or because they don't thing the deduction is big enough to matter. Generally speaking, all money spent to realize your income and to operate your truck is deductible. A good accountant specializing in the trucking industry will help guide you through the income tax process, but being aware of all your deductions is a major key in reducing your taxes. Every little bit helps and you'd be surprised how fast the little things add up. Here are a few commonly missed deductions:
- Access Fees: AOL/Earthlink, Qualcomm, Satellite
- Administrative Fees: Bank Account Charges, ATM Fees, Check Reorder Fees
- Annual Credit Card Fees
- Association Dues
- ComData/ComCheck Fees
- Computer Software/Software Support
- Cleaning Supplies: Windex, Paper Towels
- Fax Charges
- Interest (Business loans/credit card)
- Office Supplies: Pens, Pencils, Paperclips, Envelopes, Folders, Rubber Bands
- Postage & Delivery Fees
- Safety Gear
- Security Costs
- Trucking/Business Related Subscriptions
- Weather Gear
- XM Radio
If the 1099 you received shows the wrong amount of income, report the incorrect 1099 information as it appears on the form. Then add or subtract the amount of the error when computing your total. Be sure to include a letter of explanation with your return.
Always double check your Social Security number on your tax return. The IRS will disallow personal exemptions and other tax benefits (such as the earned income credit) claimed for any person whose name does not match his/her Social Security number on a tax return.
Review and copy your tax return. It is important that you review your entire return for possible errors. Any error may delay the processing of your tax return. Always make a copy of the completed tax return including all schedules.