Trucker Tax Tips, Part 4: Know the Things that Can Make You a Target for an IRS Audit

Welcome to part 4 of our 4-Part Tax Primer for Truckers created by Trucker Path and the tax experts of ATBS. In this post we address the elephant in the cab: IRS audits.

Being audited by the IRS is every taxpayer’s nightmare. However, if you adhere to the IRS’s rules and complete your tax return properly, then you shouldn’t have anything to worry about if you’re audited.

No mistake an audit by the IRS is something to be avoided, but there is only so much you can do to avoid attention. Whom the government chooses to audit often has to do with statistical probabilities, biases and dumb luck. Nevertheless, it is important to know what the authorities look for.

7 Things That Can Invite an IRS Audit

1. If you make a lot of money. That doesn’t mean you should try and make less. Just make sure you report everything you make and have good records to support deductions. How does high income increase your chances of an audit? According to IRS statistics on audits, if you make up to $200,000, your chances of an audit are about .9%. $200,000 to $1 million those chances jump to 3.25%. If you make over $1 million, they surge to 11.1%.

2. If you don’t report everything you make. The IRS knows what you’ve been paid by the W-2s and 1099s they receive. If you’ve underreported, they know and you can expect them to look into it.

3. Failing to deduct fair market value. This has to do with large equipment purchases. Claiming you paid more than you did can invite the IRS’s scrutiny.

4. Entering the wrong information. Errors invite a closer look by the IRS. Proofread your return for misspellings and double-check your math.

5. Screwing up the forms. There are a lot of forms you have to file as a business owner. Take the time to get them right and if you can’t, get help from an accountant.

6. A lot of donations. If you are a super generous supporter of causes, the IRS is going to be suspicious. It’s just statistics. Don’t let that stop you from giving. Just be warned and be meticulous with your records.

7. Having a business. That’s right, you’ll invite extra scrutiny just for being an owner-operator. The IRS considers business owners a high-risk category because there are a lot of opportunities to cheat on the income and deductions they report. (Not that you would.)

Avoid Mistakes with the Help of an Accountant

Taxes can be a tremendous distraction to independent truck drivers. For truckers struggling with the complexities of taxes or overwhelmed by IRS requirements and deadlines, outsourcing can be the answer. An accountant that specializes in handling taxes for owner-operators understands the expenses and deductions particular to trucking. They will have the experience and grasp of changing tax laws to provide you every advantage and ensure compliance with the law.

If you’re considering getting outside help for your taxes this year, Trucker Path users can get special discounts on tax and accounting services through ATBS. Check out the details here.