For 20 years, we’ve been helping clients in the trucking industry navigate their taxes and maximizing fuel excise tax refunds.
The trucking industry can be tricky with guidelines always changing and complicated tax regulations between states and regions. However, with the right plan in place, you can come out on top.
Today, we’re going to discuss a broader theme: common tax confusions in the trucking industry. While we work with clients of all sizes, from small trucking operations to government fleets, we think this article will be particularly helpful for our owner-operators and trucking industry rookies.
Common Tax Questions for Owner-Operators
Taxes are confusing, and tax season can leave plenty of people with questions, across all industries. In our two decades of business, we’ve seen it all.
Read on to get an idea of some of the most common tax-related questions we’ve encountered over the years, and it could help come tax time!
1. How much should I put aside for taxes?
This varies, but at least 25% of your weekly net income for quarterly taxes.
2. What are the types of taxes I have to pay?
Self-employment taxes (this tax rate is 15.3%), federal income tax, and state income tax. When you are an employee of a company, your income taxes are calculated and withheld, but as an owner-operator, you are responsible for the estimation and the payment.
3. Is fuel tax deductible?
Yes! This is considered part of the cost of fuel, and it’s deductible as an owner-operator fuel expense. In fact, our team has been helping owner-operators like you maximize fuel tax recovery.
4. What equipment is eligible for fuel refund?
Unfortunately, we see a lot of owner-operators miss out on this area because many don’t realize just how much is eligible. Equipment like refrigerated trucks and trailers, gas golf carts, maintenance equipment, generators, boats, and many other vehicles. Take a look here for a full list!
5. What other deductions should I be claiming?
Fortunately, there are tons of fees and expenses that truckers may claim as deductions. This includes fees like association dees, cleaning supplies for your truck, medical exams, office supplies, safety gear, uniforms, etc.
A Starting Place
We hope these five questions were a great starting place as you start preparing for tax season. If you’d like to know more about fuel tax recovery and how we can help, check out our latest blog here.
We’ll continue with more important trucker tax-related information that could make the next few months easier to manage.
Common Mistakes Owner-Operators Make on Taxes
We’ve also seen owner-operators that have run into some issues over the years. We’ve compiled a list of the most common tax mistakes that could land you and your trucking operation in hot water.
Under-estimating taxes owed.
More times than not this is a rookie mistake when new owner-operators don’t make the recommended quarterly tax payments.
Not keeping track of income.
Missing or forgetting a payment happens, and it’s not uncommon for 1099s to get lost in the mail, but underreporting could cause a dilemma you don’t want to get in the middle of.
Being self-employed certainly has its perks, but if you’re not the detail-oriented type, then tax season may not be a breeze. Filing taxes as an owner-operator requires a lot more paperwork than the average Joe.
Not using fair market value.
It’s not unheard of in the trucking industry for some to write off a piece of equipment that they got at a used price as if it were paid for at the new price value. Doing so will send up big red flags to the IRS.
A few myths are floating around the trucker circle, and one we can’t wrap our head around is the notion that you won’t owe taxes in the year you start your business. This is absolutely false, so please take all of the free advice we’ve given in this article.
What Do You Think?
Have you encountered these issues before? If you’re a new owner-operator, we hope this information will be helpful as you prepare for your taxes this year. Making a small mistake like one of the above could trigger an audit and halt your operation before you even have time to get established.
While many small businesses and startups have the do it yourself mentality and believe they don’t need an experienced professional to get things done, your taxes aren’t exactly the best time to take on a DIY approach.
Don’t Wait Until it’s Too Late, Call the Experts!
April may still be a few months away, but as they say, “the early bird gets the worm.” So, don’t wait until it’s too late and be sure you’re prepared come tax season.
If you put off the tax planning and management for too long, you could see all your hard work go down the drain. When you enlist the help of an expert, you can keep your focus on more pressing issues related to your business.
The TiP team has experience helping owner-operators just like you maximize their fuel tax recovery! You can read more about our services and how we can help here.
When you’re ready, get in touch! Give us a call at 1-888-505-0847 or send a message to email@example.com. We’re here to help.