Taxation is the lifeblood that runs a nation or state. The money collected from taxes are utilized to pay public expenses incurred in maintaining public education, providing affordable transportation, handling necessary street maintenance, and vital law enforcement to mention just a few. Basically, everyone is required to pay taxes to increase the federal government's ability to handle necessary federal expenditures.
Similarly, motorists and truck drivers are not exempt from taxation and are probably already aware of how much tax is owed from their gross income. As a commercial driver, are you aware of how many of your expenses are tax deductible and can be taken when filing your income tax return? Let me list some of the things you need to consider when preparing to file your taxes.
Use a Professional to Prepare Your Return
The first thing you must consider is whether or not to use the services of a tax professional to prepare your tax return. Although most people can probably do these themselves, the wiser move is to acknowledge that tax professionals are trained to know tax guidelines, regulations, and all the current changes made to the tax laws. On your own, most people just do not have all of this information or know how to apply this information to their own unique situation.
Accepting that you have made a determination to let a professional handle your tax return, following are a list of tips to help you prepare your paperwork and documentation for your selected handler.
Tips to Prepare for Filing a Tax Return
1. Make a list of all of your expenses. Do not attempt to decide by yourself whether or not an expense is tax-deductible. Your tax return specialist knows what expenses can be taken as a deduction and which cannot be taken; let them decide for you and relieve yourself of that burden!
2. Keep all the receipts for expenses incurred in the operation of your trucking business. Again, do not question at the time whether or not it is tax-deductible. You will undoubtedly be surprised to learn how many expenses are tax-deductible that you would never have considered on your own! Even keep receipts for what you might consider personal items such as medical expenses including prescriptions, hospitalization, doctor's visits, etc. for possible consideration.
3. Keep receipts for fuel expenses as well as any vehicle maintenance. You can also keep the receipts for your truck repairs, oil changes, new batteries and tire replacement. Fuel and maintenance expenses are necessary to run the business and are tax-deductible as long as the truck was used for business and not personal use.
4. Keep a record of the number of miles that you travel in your business vehicle every year as this is necessary documentation. You will want to list each trip separately and include the reason for the trip and a mileage log as well.
5. Compile the total amount of fuel and simple maintenance items to compare with the standard mileage rate deduction that is available. This rate can change every year so you will want your tax handler to help you with a decision to either take your total listed expenses for which you have the receipts or elect to take the standard mileage deduction which does not require retaining any receipts at all. Obviously you would want to take whichever amount is more beneficial to you.
6. Include all other necessary travel expense for your commercial vehicle. Remember to request and include receipts for parking, tolls, etc. This is usually an amount that can be claimed even if you claim the standard mileage deduction on your truck.
7. Keep track of your travel expenses for lodging. Most commercial truck drivers keep a daily log of their travel expenses to include the date, place and name of the lodging as well as the purpose of the travel. Of course retain all necessary receipts.
8. Eating is as essential for commercial truck drivers as for anyone else. As long as you are in an overnight status, you can claim meal expenses up to certain allowable amounts. This amount is subject to adjustment each year so once again, let your tax professional determine how much of the actual expense is an allowable deduction. If you make your own meals while on the road, keep receipts for the supplies that you purchase to prepare your own meals. This does include snacks as well.
9. Compare your actual expenses to the standard meal allowance rate for that year. As with the mileage deduction, you will want to decide which one to take based upon your own circumstances. Only so much is allowed daily for meal expense, although as a commercial truck driver you are allowed to take a higher percentage of those expenses than any other business traveler in similar circumstances.
10. If you are the owner of the commercial vehicle that you drive, remember to include insurance expenses for that vehicle as well as the amount of your loan payments, in particular the interest portion of the payment.
This list is not meant to be all-inclusive of every allowable expense. Hopefully it will give you an idea that many items are an allowable expense and that it is wise to just keep every receipt and let your tax professional help determine what is and is not tax-deductible.
As a final note, be the best friend of your tax handler; organize your receipts before you drop them off in the tax office! Most tax offices will charge an extra fee to organize receipts into the allowable categories and that is certainly one expense that you can save for yourself! Better yet, organize your receipts either daily, weekly, and monthly or by trip taken and give your tax professional your log book to assist them in preparing your tax return. In any case, you will come out ahead on April 15 and hopefully save a significant amount of money when filing your taxes!