Tax preparation for the trucking industry can seem complicated and confusing at times. In the trucking industry, you are subject to at least three to five different types of taxes just on your equipment, not to mention income taxes. However, there are some tips that you can remember to make sure you get the biggest tax break you can come tax time. This article takes you through the basics of trucking tax preparation, but it is always going to be best to hire a good accountant to help make sure you claim all of the deductions you are entitled to. This article assumes you are a owner/operator that runs your own business and is designed as a guide only to trucking tax preparation, as each individual trucking situation is different.
Set yourself up for a good tax year by keeping accurate records throughout the year and paying taxes in quarterly installments. You need to keep track of anything associated with your business, including mileage on personal vehicles, cash expenditures for business purchases and credit card receipts.
Gather your various 1099 forms and cross reference them with the records you kept throughout the year. Find your revenue for each transaction and make sure they match up.
Calculate the payment for your county or city taxes on your truck itself. These will be area specific numbers and should be readily available from your county or city auditor.
Calculate your liability for the self-employment tax. This is a 15 percent tax before you calculate your income tax liability and covers your social security and Medicare contributions.
Calculate your deductions. Trucker specific deductions are extensive and a trained tax professional is the best resource to determine whether or not some of your expenses are able to be itemized. Some of the commonly missed items include business related miles on personal vehicle, logbooks, cell phones and overnight per diem. The tax forms provided by the IRS have specific amounts that can be deducted for each one of these expenditures, and the amount of deductions will vary from trucker to trucker.
Subtract your deductions from your total income to get your taxable income. Using the tax brackets tables provided by the IRS, calculate your income tax liability. This is the amount that is owed to the government.
- Investing in tax and accounting software to track your expenditures and revenue throughout the year is money well spent when you run your own small business.
- Contact your tax professional for advice on your specific tax situation.