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Owning the wheel tax-time tips for MAXIMUM deductions BY CLIFF ABBOTT / CONTRIBUTING WRITER Everyone loves a tax deduction, and billions of dollars are spent each year making sure those deductions are maximized. When you own your own business, however, tax deductions can have a huge impact on your profit and loss statement. When you become an owner-operator, you’ve gone into business. You’ll pay income tax on the profit (the cash left over after your expenses are paid). You’ll pay another tax, too — the self-employment tax. When you work for someone else, 6.2% of your income is collected for Social Security tax and another 1.45% for Medicare tax. The total, 7.65% of your income, is only half the total tax. The other half is paid by your employer. When you’re self-employed, you pay both halves, or a total of 15.3%. That’s on top of the income tax, which starts at 10% and goes up. That’s more than a quarter of your profits gone to taxes — and it’s why deducting every business expense you can is vital to the bottom line of your business. Your goal is to show as little profit as possible on your taxes. If you’re paid on a Form 1099, you’re considered a contractor, not an employee, even if you are driving someone else’s truck. That makes you self-employed, too. The business deductions begin as soon as your business does. Any fees you pay for authority, registration, permits, tolls and other expenses are deductible. You’ll be paying for a variety of insurance policies, possibly including truck insurance such as liability, collision and comprehensive, etc. You’ll spend for a worker’s compensation or occupational accident policy. Personal health policies for you and your family may be deductible, too. Save every receipt. If you purchase something online, save that receipt, too. Receipts for fuel, repairs, and maintenance and truck items are a no-brainer, but drivers often overlook smaller expenses that add up. Products like cleaners and accessories for the truck — including bedding, air fresheners and other items — can be considered business expenses. Tools, flashlights and batteries, sunglasses and other items are business expenses that can be claimed if they’re used for the business. If you rent clothing or purchase items with your business logo, such as hats and shirts, you can most likely deduct those costs. Safety equipment, such as steeltoed shoes or boots, goggles, hard hats and gloves, are business expenses. Rain gear may be deductible, and the IRS allows a deduction for a percentage of phone and internet expense. Industry publications can also be business expenses, too, and dues to trucking unions or organizations such as the Owner- Operator Independent Drivers Association (OOIDA) are business expenses. You use both in your business, so take maximum advantage. If you claim the standard IRS deduction for meals and incidentals, your records should include documentation of the days you spend away from home. Copies of TAX TIP If you’re paid on a Form 1099, you’re considered a contractor, not an employee, even if you are driving someone else’s truck. That makes you self-employed. 34 THE TRUCKER JOBS MAGAZINE | JANUARY/FEBRUARY 2021 WWW.THETRUCKERJOBS.COM
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