Tax time is approaching again and it’s time to round up your receipts and get ready for tax time. Hopefully you have gotten a computer and are using it to track your business so tax time will just be a matter of clicking a couple buttons and printing out a Profit & Loss statement and a Balance Sheet. If you are, we have a couple tips for you; if you aren’t here’s what you need to do to get ready for taxes.
First round up all your receipts and see if you can sort them into some semblance of order. If you have a computer this sorting is not quite as important, get a program that will do the organizing for you. Any accounting package will allow you to enter your receipts in any order and will then print out reports for you summarizing your income & expenses. This is called a Profit & Loss statement, and this is what you need to take to your tax preparer for them to be able to do your taxes. There are also some trucking specific packages available. Google “Trucking Software” for links to software specific to our industry. The advantage of using a trucking specific program is that it is already setup to understand things like driver advances and will give you cost/mile and revenue/mile reports which will help you understand how your doing.
If you don’t have a computer yet, now might be a good time to take the plunge. It can save your hours of entering numbers on a ledger sheet only to find you then need to spend another several hours totaling up your numbers. It will take you just as long to enter the numbers into a computer as it does to write them into a ledger, but when you’re done entering them into an accounting package, just click a button and all the adding up and categorizing is done for you automatically.
So what can you deduct? Basically anything you spend on, in or around your truck is a business expense. Here’s a few of the most common items:
Antennas, batteries (for the flashlight as well as the truck), binders, blankets, boots, briefcase, calculator, CB repairs, CB’s, cellular phone, chains, checking account fees (atm fees for the extra charge because you’re away from your home bank), chrome things, cleaning supplies, com check charges, coveralls, Federal Express (UPS, Postage for business mail or other mail which is necessary because of your absence from home), flashlights, gloves, hand tools, ice box, insurance, laundry, legal fees (not fines, but the cost for legal fees to defend yourself and court costs), lights, log books, luggage, lumpers, maps, motels, office supplies, pens, permits, pillows, radio, repairs, ropes & equipment, safety equipment, safety glasses, scales, scanner, sheets, showers, signs, smelly stuff, special clothes, special equipment, stapler, staples, stereo, storage, sun glasses, tarps, taxi, tires, tolls, tool boxes, truck organizations, truck parking, truck wash, truckers newspapers & magazines, TV, and uniforms.
This list is by no means complete but it should give you the idea. If you’re not sure about a particular item check with the IRS on it, especially if it’s a large expense. If you take an expense and it’s later ruled invalid you can be charged penalties for any additional tax now due from the time the tax would have originally been due. There are also a few other items worthy of more specific mention.
Meals are covered by their own rules and the rules for truckers are a little more liberal than they are for other occupations. For 2009 is split, $52 for the first nine months and then $59 for the last quarter. If you keep your receipts and your meals come to more than that you can deduct 80 percent of your receipt total or the standard deduction for meals. Remember when you’re entering your meal receipts to keep the tips separate, you can deduct 100 percent of them.
TAX HOME — in order to claim travel expenses you must have a “tax home.” This is the place where you live when you are not on the road. A PO Box is not a “tax home.” For details on what is a tax home check out the Tax Forum at www.thetruckershelper.com.
USING AN ACCOUNTANT — I also recommend using a tax professional to get your taxes done and preferably one who knows the trucking industry. There are many advantages to using a tax professional and a good tax advisor will save you more than his or her fee in both time and money. You’ll also get the additional peace of mind that comes with knowing that in the event of an audit you’ll have a professional representing you.
Till next month, be safe.
John Ewing is a former owner/operator and the author of The Truckers Helper, business management software for truckers. If you'd like to ask questions or make comments on this article please visit our forums at www.thetruckershelper.com. We will be happy to answer any questions on trucking or managing your trucking business.