Truckers nowadays have a lot more to worry about than heavy traffic and the high cost of fuel. Whether you're an owner operator, an independent contractor, or a commercial company driver, you should load up on your knowledge of tax issues to avoid making costly wrong turns.
In any line of work these days, it's essential to understand the ins and outs of complicated tax regulations and filing requirements if you want to end the year with more money in your pocket. But for drivers of big rigs, who could face IRS audits or even permit suspension due to faulty tax reporting, dealing with difficult tax issues is not just about saving dollars, it's about protecting your livelihood.
As a trucker, you incur a multitude of charges during your long hours on the road, from lodging bills to Internet access fees to interstate highway tolls. Knowing which of these expenses is deductible is absolutely vital to achieving some much-needed tax relief and ensuring the profitability of your business. Even more important, though, is recognizing which costs the IRS does not consider to be qualified deductions, such as student loan interest (if your income is over a certain level) and home phone lines. Otherwise, like a lot of today's independent truck operators and commercial company drivers, you could end up trying to claim too many of your day-to-day expenses as deductions and soon find yourself facing an IRS tax audit.
In addition to knowing what is and is not deductible, you have to be able to back up the costs you're claiming with meticulous record keeping. That means itemizing each business expense in detail and holding on to all pertinent documentation, including printed receipts and credit card statements. Whether it's a lengthy, state-by-state report on your fuel usage and mileage or a short listing of your dry cleaning fees for uniforms, it's imperative that all charges paid during the course of your duties be fully documented and filed in complete accordance with IRS requirements and deadlines. That's the only way to avoid costly tax problems and safeguard the ongoing success of your trucking operation.
Like any other taxpayer filing as an independent contractor, you're responsible for setting aside an appropriate portion of the income you earn from trucking throughout the year. In general, tax consultants recommend putting 40% of the money you net into a business tax account. Depending on the level of your annual earnings, you may also want to think about incorporating your trucking business in order to better protect your interests. Switching from a sole proprietorship to an LLC would allow you to keep more of the profits you earn. It could also provide you with a greater degree of economic security by enabling you to separate your business expenses from your personal finances.
After all, you log a lot of miles to bring home those paychecks. By understanding the intricate state and federal tax requirements specific to your trucking business, you can take advantage of all the deductions you deserve, and lessen your chances of having to contend with an IRS tax audit.
In any line of work these days, it's essential to understand the ins and outs of complicated tax regulations and filing requirements if you want to end the year with more money in your pocket. But for drivers of big rigs, who could face IRS audits or even permit suspension due to faulty tax reporting, dealing with difficult tax issues is not just about saving dollars, it's about protecting your livelihood.
As a trucker, you incur a multitude of charges during your long hours on the road, from lodging bills to Internet access fees to interstate highway tolls. Knowing which of these expenses is deductible is absolutely vital to achieving some much-needed tax relief and ensuring the profitability of your business. Even more important, though, is recognizing which costs the IRS does not consider to be qualified deductions, such as student loan interest (if your income is over a certain level) and home phone lines. Otherwise, like a lot of today's independent truck operators and commercial company drivers, you could end up trying to claim too many of your day-to-day expenses as deductions and soon find yourself facing an IRS tax audit.
In addition to knowing what is and is not deductible, you have to be able to back up the costs you're claiming with meticulous record keeping. That means itemizing each business expense in detail and holding on to all pertinent documentation, including printed receipts and credit card statements. Whether it's a lengthy, state-by-state report on your fuel usage and mileage or a short listing of your dry cleaning fees for uniforms, it's imperative that all charges paid during the course of your duties be fully documented and filed in complete accordance with IRS requirements and deadlines. That's the only way to avoid costly tax problems and safeguard the ongoing success of your trucking operation.
Like any other taxpayer filing as an independent contractor, you're responsible for setting aside an appropriate portion of the income you earn from trucking throughout the year. In general, tax consultants recommend putting 40% of the money you net into a business tax account. Depending on the level of your annual earnings, you may also want to think about incorporating your trucking business in order to better protect your interests. Switching from a sole proprietorship to an LLC would allow you to keep more of the profits you earn. It could also provide you with a greater degree of economic security by enabling you to separate your business expenses from your personal finances.
After all, you log a lot of miles to bring home those paychecks. By understanding the intricate state and federal tax requirements specific to your trucking business, you can take advantage of all the deductions you deserve, and lessen your chances of having to contend with an IRS tax audit.
SHARE
