Trucker Tax Tips, Part 3: Set Yourself Up for Success with Good Tax Habits

Is this the year you get your taxes better organized than ever before? You’ve come to the right place. In part 3 of our 4-Part Tax Primer for Truckers created by Trucker Path and the tax experts at ATBS, we’ll address winning tax habits for owner operators.

Good driving habits keep you safe and in good stead with the law out on the road. Similarly, good tax habits can keep you stress-free in tax season and in good standing with the IRS.

Document Every Deduction

This is a key to not running afoul of the IRS. Long-haul truckers especially need good systems for capturing every expense as well as filing and protecting receipts and important documents throughout the year. Trying to remember important details during tax time will only create stress.

Stay On Top of Per Diem Expenses

To claim the per diem deduction, you have to keep track of days on the road. Keeping a per diem calendar that records full days and partial days can be a saving grace come tax season when memory can fail. ATBS clients can easily track their days on the road using the ATBS Mobile App. You also need DOT ELD logs with times, dates, and locations for your records.

Reconcile Your Expenses Daily

Make a habit of ending the day updating mileage logs and recording notes for each job and the expenses incurred for each one. Technology can help. Again, the ATBS Mobile App is a great example. It also enables drivers to scan or import receipts and documents.

Keep Important Documents in Order

1. Did you buy a new truck? You need the documents so you can deduct depreciation.

2. Did you work with new carriers? Get your 1099s in order.

3. Do you have a new lease? Keep your legal documents in a safe place.

4. Do you have additional sources of income? Add them to your quarterly income estimate so you can adjust your quarterly tax payment accordingly.

5. Did you contribute to a traditional IRA or convert your IRA to a Roth IRA? The IRS needs to know.

6. Did a creditor forgive any of your debt? The cancelled debt needs to be reported to the IRS.

7. Do you have a new baby? Be sure and update your tax form—the same with any changes to your marital status.

Don’t Wait Until the Last Minute

Impending deadlines for filing taxes always add to the stress of tax season. It helps considerably if you’ve been keeping your logs up to date and saving your receipts throughout the year. Also, don’t wait until the last minute to start your taxes. You’re much more likely to make a math error or forget a form when you do your taxes in a panic.

Getting a jump on your taxes is the best strategy. And if you choose to enlist the help of an accountant, it goes the same. Get your records and receipts over to them as soon as you can. You want to give them as much time as possible to find every conceivable deduction that can reduce your taxes.

Always File Your Return.

Even if you can’t afford to pay your tax bill, it’s important to file your taxes. If you don’t file a tax return, the IRS will assess a penalty immediately. The amount you owe won’t go away the longer you wait to pay; in fact, it will grow because you’ll have to pay compound interest. It can also result in your bank accounts being garnished.

Consider Filing for an Extension.

If you are not able to file a tax return by the deadline, it is possible to file for an extension. This extends the amount of time you have to file your return without penalty.

Remember an extension to file isn’t an extension to pay. Getting an extension doesn’t relieve you from having to pay your tax bill and the interest that accumulates on what you owe.

Don’t Ignore IRS Notices

IRS notices can blindside truckers. They typically come by regular mail, so it can be easy to miss them if you are on the road or don’t have a steady mailing address. Attend to them as soon as you receive them. Delaying can have severe ramifications.

Know When to Seek Help

If you’re dealing with complicated tax issues or feeling overwhelmed by IRS requirements and deadlines, an experienced tax professional can advocate for you with the IRS and provide invaluable assistance navigating the IRS system.

Right now Trucker Path is offering a special discount for Trucker Path users on tax and accounting services from ATBS. Learn more here.

Next Up in Our 4-Part Tax Primer for Truck Drivers Series: Avoid Trouble

In general, it’s best not to mess with the IRS. Learn the things that can make you a target for an IRS audit in our next post.