By: Jim McCormack
As a cross-country truck-driver, you will likely have to spend some of your hard-earned money in the line of your work. But as luck would have it, you have chosen a profession that allows you a number of business deductions come tax time. For starters, pretty much any expenses related to your profession will likely fall under the category of tax deductible (aside from those that are reimbursed by an employer). However, you don’t want to fall into the trap of claiming too much and winding up with an audit, so it pays to know what can (and can’t) be written off when the tax man demands his due.
Here are a few items that will help to ensure that you get money back instead of owing this year.
For starters, you will likely have to put out some cash periodically for gear, either for your rig or for yourself. This could be anything from winter chains and other safety gear to extra parts like spark plugs. It could also include tools and personal safety items such as a face shield, gloves, coveralls, etc. needed for repair work. As long as it serves the interest of the business (but you are not repaid for your expenditure) you can definitely claim it. And if you are expected to wear a uniform rather than street clothes, you can also write that off (along with any costs for laundering said work clothes).
In addition, office supplies, software, cleaning supplies, administrative fees, shipping costs/postage, association dues (if you are a union member), and even a cell phone (for business purposes) can be used as a write-off. These are all perfectly acceptable and should not raise any red flags. But there’s more!
If you have a business loan (say you’re buying your own truck or trucks) or business credit cards, you can use the interest payments as a deductible (although not the principle – you will have to break out specific items in order to use them as write-offs). And if you have your own business that contracts out, any interest on a mortgage payment for office space can be deducted, as well (along with any real estate taxes).
You can even deduct “research and development” items such as related subscriptions and access fees like internet and satellite radio, although you should try to keep these on the down low since too many deductions of this type are considered suspicious.
As for what you should avoid, there are a few things that will definitely make the IRS stand up and take notice. Once again, anything that is reimbursed by an employer CANNOT be deducted. This is considered fraud and it is illegal. Sadly, any costs related to commuting (tolls, parking, gas) and any time spent deadheading or working on your own equipment (in other words, unpaid time) is not eligible for deduction. You can, however, deduct any costs such as gas, tolls, and so on, that are an out-of-pocket expense related to these activities.
If you hire a tax preparer, they can help you figure out exactly what you can get away with deducting without the fear of incurring an audit. But if you stick to the guidelines listed, you can probably work it out on your own. As a contract worker, you need to make every effort to list all deductions, so hang onto receipts and keep a ledger to ensure that come tax time, you’re getting everything you’re due instead of paying out unnecessarily.
Jim McCormack writes for Trucker to Trucker where you can find information on commercial truck financing and check out the latest deals on trucks across the country.
© 2010, Jim McCormack. All rights reserved.