FEDERAL TAXES and O-T-R & O-O TRUCKERS DEDUCTIONS LIST
FEDERAL TAXES and O-T-R & O-O TRUCKERS DEDUCTIONS LIST
[ ] Business Cards
[ ] Promotional (calendars, pens, brochures, sometimes also contributions if you are publicly published as a donor)
[ ] Signage on Tractor and/or Trailer
[ ] Web Site Fees & Charges
[ ] Other:_______? Auto Mileage (Business Miles)
[ ] Total Miles Driven: ____
[ ] Business-Only Miles: __
[ ] Commuting Miles: ____
[ ] Other Miles: _____
Ending Odometer Reading __Miles
Beginning Odometer Reading__Miles
Make, Model & Year of Passenger Vehicle: _______
Vehicle Placed in Service Date: Day:Month: Year:
[ ] Other: _______? Interest/Finance Charges
[ ] Business Loan Interest Paid
[ ] Credit Card Interest (business related only)
[ ] Equipment Vendor Finance Charges
[ ] Passenger Vehicle Finance Charges (limited and pro-rated between business and personal)
[ ] Tractor Finance Charges
[ ] Trailer Finance Charges
[ ] Other: ______? Professional & Legal Services
[ ] Accountant/Tax Preparation
[ ] Attorney Fees
[ ] Bookkeeper
[ ] Credit Reports
[ ] Prepaid Legal Fees Insurance Premiums
[ ] Other: ______? Office Related Expenses
(1) Administrative Banking Fees & Charges
[ ] ATM Fees [ ] Checking Account Charges [ ] ComData/ComCheck Fees [ ] Credit Card Fees [ ] Money Order Fees [ ] Other: ______? (2) Administrative Dues & Subscriptions
[ ] OOIDA [ ] Teamsters Union Dues [ ] Other: ______? (NOTE: Areas left blank in this document and the back-side of the four pages are intended by the author to permit you to jot down questions or comments to yourself or to your tax pro for later reference and to permit further expansion of this list by the trucker himself or herself)
(3) Clerical Operations
[ ] Briefcase [ ] Calendars [ ] Calculator [ ] Clipboard [ ] Computer Accessories [ ] Copies/Reproduction of Documents [ ] E-Mailing Fees [ ] Faxing Fees Paid [ ] Liquid Paper/Glue [ ] Notebooks & Paper [ ] Postage & Shipping [ ] Printer & Toner for Computer [ ] Receipt Books [ ] Stationery & Envelopes [ ] Writing Instruments [ ] Other: ______? Regulatory Licensing &Costs
[ ] Access Card/Permit Fees (i.e.: Includes access costs to military bases, shipping ports, etc.) [ ] CDL Licensing-Related Costs/Fees [ ] DOT Physicals Fees &Costs [ ] Log Books (paper & covers) [ ] Log Book-Related Software [ ] Road Use Taxes (Form 2290) [ ] Scales & Weighing Fees (NOTE: over-weight or over-length or size DOT-regulations-related penalties are not tax deductible, nor are traffic tickets) [ ] State Fuel Taxes [ ] Tolls [ ] Trailer Tags [ ] Other: ______? "SUPPLIES" CATEGORIES Personal Hygiene Supplies on Tractor
[ ] Bed rolls. pillows & sheets [ ] Ben-Gay [ ] Cleaning & Sanitation Supplies [ ] Clothes Hangers [ ] Deodorant [ ] First Aid Kit & Accessories [ ] Hand Cleaners/Fluids [ ] Laundry Bag & Detergent [ ] Mosquito Netting [ ] Nightwear [ ] Porta-Potty/Urinal [ ] Reading Glasses (safety) [ ] Shampoo & Soap [ ] Shaving Kit & Accessories [ ] Toothbrush & Toothpaste [ ] Wash Cloths & Towels [ ] Other: ______? "Lot Lizard Repellants" And Criminal Behavior Deterents
[ ] Alarms & Sirens [ ] Guard Dog & Related Expenses [ ] Illumination Devices (lights) [ ] Signage (i.e.: "No Riders" or "Please Do Not Feed the Snake" or "Beware of Dog") [ ] Surveillance (audio-visual) Systems [ ] Wetted Paper Towels (gross, but true?) thrown out of drivers' side window [ ] Other: ______? Safety & Security Devices
[ ] Air Fans [ ] Alarm Clocks & Timing Devices [ ] Boots (steel-toed) [ ] Boots (hazmat or rubber) [ ] "Bungee" Cords/Tie Downs [ ] Cab Curtains [ ] Chains for Drive Tires (if legal) [ ] Crowbar [ ] Duct Tape [ ] Eyewear/Sunglasses [ ] Flags & Flares [ ] Flashlights & Batteries [ ] Flyswatter/Pest Control [ ] GPS Systems & Updates [ ] Hardhat & Hazmat Devices [ ] Hearing Aids [ ] Jack Straps [ ] Load Chains & Locks [ ] Magnification Devices [ ] Maps with Map Light Devices [ ] Rain Gear [ ] Surveillance Devices [ ] Uniforms (with insignia) [ ] Visine (eye drops for safety) [ ] Watch or Timing Devices [ ] Windshield Cleaners/Fluids [ ] Window Screens (ventilation) [ ] Work Gloves [ ] Work Tools [ ] Other: ______? Decontamination Supplies
[ ] Bleach [ ] Cleanings Devices & Related Supplies [ ] Disinfectants [ ] Paper Towels [ ] Other: ______? Other Supplies
[ ] Air Decontamination & Fresheners [ ] Armor-All [ ] Atlas (maps & mileage), paper or computer program(s) [ ] Bolts and Screws with Locker [ ] Broom, Dustpan, Garbage Bags [ ] Buffer to Shine Paint/Chrome [ ] Bunk Heaters [ ] Cigarette Lighter Plugs [ ] Circuit Tester [ ] Coffee Maker [ ] De-Icer [ ] De-Greaser [ ] Ether (for engine starting purposes) [ ] Portable Refrigerator or Cooler [ ] Portable Vacuum [ ] Power Boosters [ ] Power Cords [ ] Other: ______? Rents (Real Estate Related Only)
(Useful Also If Trucker Qualifies to Claim Office In The Home Deductions)
[ ] Office Space Lease/Rents
[ ] Parking Space Rents
[ ] R/E Homeowners Flood Insurance (= OIH)
[ ] R/E Homeowners Insurance (= OIH)
[ ] R/E Mortgage Insurance Premiums (if qualified on Form 1098) (= OIH)
[ ] R/E Mortgage Interest (= OIH)
[ ] R/E Property Taxes Paid (= OIH)
[ ] R/E Utilities (Electric, Heat, Sewer, Waste Removal, Water, etc.) (= OIH)
[ ] Storage Space (i.e.: Public Storage Facilities/Private Storage Facilities)
[ ] Other: ______?
NOTE: OIH = Office In Home Consideration (see IRS Form 8829 and instructions) Rents & Leases (Equipment)
[ ] Computer, Computer Accessories [ ] Equipment for Office [ ] Equipment for Operations
[ ] Tool Rentals for Operations [ ] Other: _______?
Overnights Meals ? Entertainment-Incidentals (ME & I) 80% Deductible Non-DOT workers
[ ] Actual Costs: $____ (NOTE: There really is NO "AUTOMATIC* or UNIVERSAL RATE Per Diem lodging or meal allowance permitted (keep log of ACTUAL expenses = one of the many federal tax regulations applied "penalties" for being un-incorporated sole proprietorship, Limited Liability Company and/or Partnership)) [ ] Number of overnights per driver's logbooks: _? [ ] Other: _______? Qualified DOT W-2 Employees
Non-DOT workers [Number of overnights per log books: _ and # of 6-Hour Shifts (divide the number of hours worked by the number 6 to arrive at the number of 6-hour shifts qualifying for precise per Diem calculations)*
*Choice of Per Diem by locale or per Diem per "average" at "COST ME & I rates factored by # of 6-hour shifts." Not all "shifts" are created equal on first and last day of a trip.
____ overnights X $_____ = $_____ multiplied by 80% = $___________(80% Deductible with Log)
Other Business Meals, Entertainment & Incidentals
[ ] For Business Meetings: $__
[ ] For Continuing Professional Education Purposes (Overnights) $_ [ ] Work Search Overnights: $_ [ ] Other: ______?
(50% Deductible with Log; NO DEDUCTION without a Log) Travel Expenses
[ ] Air fare (to and from work place and tractor) [ ] Bus Fares (away from home) [ ] Cab Fares (away from home) [ ] Car Rentals (away from home) [ ] Dry-Cleaning (away from home) [ ] Lodging (Bread & Breakfast, Hotels, Motels, Room or Apartment (daily) Rentals) (away from home) Actual Expenses $_ [ ] Showers [ ] Other: ______? Utilities List
[ ] Electrical Power Fees (for Tractor Operations) [ ] Waste Removal Fees (for Tractor Operations) [ ] Other:______? Communications Devices/Fees
[ ] Access Fees (i.e.: Internet, Satellite radio (XM-Sirius) and Television for road conditions, weather, "heads-up" detour announcements, and other safety and security purposes) [ ] Antennas & accessories [ ] CB radio, parts & repairs [ ] Cellular/wireless fees paid [ ] Laptop computer & accessories [ ] Portable radio [ ] Portable television devices [ ] Other: ______? Other Deductions Trucking- Specific Expenditures Contract labor
[ ] Broker Commissions Paid* [ ] Commissions to Job Finders* [ ] Lumper Fees* [ ] Sub Driver Fees/Commissions* [ ] Other: ______?
*If amounts reach $600 or more per tax year in cash or $10 or more per year for barter to a single individual or unincorporated firm (Yes, and you do need to get that IRS Form W-9 accurately completed to prove it); If you have no 1099-MISC or 1099-B and the expense you claim can be determined at IRS audit to be "personal expense" and therefore 100% NON-DEDUCTIBLE! Tractor Operations
[ ] Finance Charges (see Interest)
Owner should have an amortization of Principal & Interest payments scheduled plus, if at all possible, a detailed document or receipt letter (or IRS form) stating the amount of interest (and principal, if possible) paid; also good idea to always have remaining principal balance owing as of December 31st of each tax year for all and any tax year. This is one major expense many O-T-R and O-O forget each and every year to tell their tax pro). [ ] Fuels & Fluids for Tractor [ ] Insurance on Tractor [ ] Lease Payments on Tractor [ ] Liability Insurance on Tractor [ ] Maintenance, Parts, Repairs [ ] Non-refundable Escrows Paid to Broker for Insurance, Maintenance, Parts, Repairs, and Taxation "Reserves" [ ] Parking Charges & Fees [ ] Reefer Fuels & Fluids [ ] Reefer Lease Payments [ ] Tags (see Taxes) [ ] Tires and Rims (there are instances where NEW tires and rims must be depreciated...ask your tax pro) [ ] Towing and Hauling (whether for logistically-required relocation only or repair purposes) [ ] Washing & Waxing & Detailing (for safety, sanitation, security and improved wind-resistance purposes) [ ] Other: ______? Lubricants
[ ] Devices and Tools Required for Lubrication purposes [ ] Grease & Oil [ ] Vaseline & WD-40 [ ] Other: ______? Various Other Potential Deductions
[ ] Amortization of Long-Term Intangible Expenses (ask your tax pro to handle this specifically... may involve matters like refinancing costs of business loans, equipment financing, lease-to-own terms, prepaid insurance and warranties, etc.). [ ] Paid out damage claims
[ ] Prepaid Expenses (like 2 years or more years' worth of insurance or other expenses...trucker needs to know if there would be a refund if the prepaid expense could be repaid by the vendor before the end of the terms on an expense). [ ] Other: ______? [ ] Other: ______? [ ] Other: ______? [ ] Other: ______? Non-Deductible Expenses Short List on Business Return
1) Expenses that were reimbursed by your employer(?ask your tax pro whether you are obligated to claim such reimbursements for business-related expenses in whole or in part?especially items like reimbursed fines or penalties paid by you but reimbursed back to you by employer).
(2) Clothing that is adaptable to everyday wear(i.e.: Blue jeans, business suit, street shoes, etc.)that does not have insignia sewn onto it(i.e.: Company insignia on shirts, jackets, hats, etc., = "Uniform").
(3) Commuting costs (tolls, gas, parking with your passenger vehicle but not for any illegitimate and/or un-logged legitimate business purposes).
(4) Haircuts or other personal grooming expenditures of your person or for your body (i.e.: Manicures, massages, pedicures, tattoos, underwear, etc., are not a business related expense). However, cold weather coats, gloves, "union suits", etc., and/or wet weather gear and wear may qualify?again, ask your tax pro.
(5) Home phone line fees (except safety and security systems and long-distance fees if both documented and logged for business purposes). IRS long ago ruled that the first telecommunications (telephone) line charges for a line going to a residence is a personal expense and therefore not deductible.
(6) Interest on personal non-business credits cards or loans(exceptions on a very few items?ask your tax pro about "pro-rations" issues...complicated when the use of the funds is used for both business and personal expenses). Easiest to use a single credit card and/or loan ONLY for business purposes.
(7) Personal vacations(with possible exception ONLY if primarily the travel was actually a job or work search expenditure...there had better be a log of who the trucker met with, where the meeting(s) took place, business cards of individuals and/or firms visited for employment purposes, etc., or forget it). "After-the-fact" documents prepared for only an IRS audit presentation are generally not accepted these days as "original or valid proof of intent."
(8) Student-based continuing professional education tuition and loan interest that may or may not be directly related to truck-driving work the driver is not already performing. For example, if one drove diesel powered tractors and took a course or two on maintenance and repair of diesel powered tractors (i.e.: Like a professional trucker taking diesel mechanic courses with the intent of doing more maintenance and repair themselves on their tractor(s) and to thereby save money by not having to pay others to do the work), then it may indeed be justified as a deduction on the truckers' tax return...this type of matter really does require the experienced "finesse" of a skilled tax pro to fully qualify such costs for deduction from taxable income). For another example: You already have a CDL and then must take course(s) to acquire specialized "Hazmat" or qualified "Homeland Security Instruction & Compliance Training" credentials in order to keep your job).
"THE NO-CAN-DO LIST"
<>You CANNOT legitimately deduct the value of your own time you incur from working on your own equipment or property.
<>You CANNOT legitimately deduct the income lost as a result of deadhead/unpaid mileage?Only the expenses incurred to operate the truck during that time such as fuel, tolls, scales, etc., would likely be deductible.
<>You CANNOT legitimately deduct expenses for downtime (with some minor exceptions?ask your tax pro); but you can usually deduct expenses experienced when "dead-heading" to your next work location or freight pick-up assignment and/or back to your tax home.
<>You CANNOT deduct charitable contributions against your self-employment earnings or on the Schedule C or Form 2106 on a business tax return?although it is possible to deduct "business gifts" to your broker, co-workers, employees, employers, supervisors, and/or vendors?but these are limited to $25 per specific individual or person per year. Smarter to get yourself publicly named as a donor for business promotion/public relations purposes (like your company name on the back of a little-league baseball (or basketball , soccer, etc. ) teams' jersey).
<>You CANNOT deduct PAC (Political Action Committee) contributions (most unions will show what portion of union dues are in fact PAC contributions and not union dues).
WHERE ELSE DOES OR MIGHT THIS EXPENSE GO ON MY TAX RETURN?
Sometimes an expenditure simply will not qualify to be deductible from self-employment or for business expense purposes. Here again, your tax pro can assist you in finding other places where an expenditure might be deductible and/or even generate a tax credit and/or a refundable tax credit.
Expenses or other data that might be deductible or required to be claimed elsewhere on a related tax form:
Form 1040: Medical insurance premiums paid may be deductible!
Schedule A:Various Medical Expenses, Charitable Contributions, Unreimbursed Employee Business Expenses, etc.
Schedule D: Capital Gains & Losses
Form 4797: Sales of Business Assets (involves recovery of depreciation, gains and losses on sales and other conversions of ownership of business assets, may also relate to qualified Schedule D Capital Gains and Losses).
Form 4562: Depreciation of Assets (Fact: Tractors are 3-year property, not 5-year property like a Ford F-150); this is also the form used to expense all or a portion of qualified business assets. Your tax pro should deal with this form and explain your options to you prior to filing of your tax return(s). This form deals with depreciation of tangible personal property, real estate and also intangible assets. Accurate details really count here...no room for error.
Form 8829 Office in Home:
- First time and date of claim:___/___/ ____ (month, day and year)
- Office space in sq. ft.: ___X___ = _____ square feet (for example a 12' x 10.5' room would be 126 sq. ft)
- Residence total sq. ft.: ________ (that finished portion of the home heated and/or air conditioned)
- Mortgage Interest Paid: $_______
- Property Taxes Paid: $______
- Homeowners Insurance $______
- Flood Insurance Paid $______
- Home Maint. &Repair $______
- Utilities paid (electric, gas, pest control, sewer & water, water purification/softener rental, waste removal, etc.) are best calculated and listed in actual amounts for the tax year and provided to your tax pro at the first meeting.
- Other: ___________________ ?
Perhaps also education and continuing education tuition deductions and/or tax credits opportunities may be available. Tell your tax pro about such expenditures, and if you get one, by all means, do bring the IRS Form 1098-T (for Tuition) with you for examination and consideration.
OVER-THE-ROAD-TRUCKING-TAX-FACTS & DATA
This still-growing list of potentially-tax-deductible expenditures by over-the-road truckers is more or less "mute" if your records are not properly kept.
I highly recommend that you make records maintenance as easy as possible by making any and all purchases via:
- Installment agreements on financed purchases (and, yes to bring these with you to your tax preparation pro)
- Checking account used for business purposes only
- Credit card used for business purposes only
- Debit card used for business purposes only
- Keep all bills of sale, point of purchase receipts and slips
- Avoid cash purchases but do keep a log of expenditures when you must pay for an item in cash (like tolls, parking, "lumper fees", etc.).
Another smart move: Don't bother just keeping a shoebox full of receipts; but do bother with recording them into a computerized system on a daily or at most a weekly basis (I highly recommend QuickBooks Pro 2011 or later dated software (bookkeeping software produced by Intuit, Inc.) but I do not usually recommend that you use Quicken, Peachtree or any other "spread sheet" up to and including those you design for yourself?in short, if it doesn't produce both an accurate and detailed journal entry report and an accurate and detailed Profit & Loss Statement it is relatively useless for tax preparation and at an IRS audit should one occur.
And don't kid yourself?as an adult person you already know as you read this whether or not you are really going to do your own bookkeeping or not. If you are intelligent and mature enough to be honest with yourself, you will most likely and simply contact your tax professional and make arrangements for a fee-basis bookkeeper to handle such bookkeeping chores for you. And remember these facts:
[ ] Bookkeeping fees ARE DEDUCTIBLE
[ ] Fines, interest payments and penalty payments on your taxes ARE NOT DEDUCTIBLE
[ ] Better to pay $100 (or less if you do as I indicate above) a month for bookkeeping services than to pay higher taxes, non-deductible penalties and interest, and to lose a couple of weeks of gainful employment over your failure to keep "contemporaneous records" as required by IRS regulations.
[ ] Depreciation of assets is often a large part of a trucking operation. Bills of sale, financing agreements with all the terms for purchase of the equipment, an amortization of the principal and interest payments, the statement from the lender "proving" the interest, late charges and principal paid for the tax year?and the precise balance still owed as of 12/31 of the tax year is also quite handy if you need finance statements for lenders, partners, potential buyers or for selling of your business.
[ ] Track all sales of business assets (i.e.: sale or trade in of a tractor, trailer, computer, passenger vehicle used for business, etc.). Bills of sale, financing agreements, etc. should also be provided your tax pro?this is absolutely necessary and if you do it right the first time and every time after that, you will save yourself considerable money, stress and money.
The complexion of tax return preparation changed considerably in 2010 and will make things far more difficult for those who cheat intentionally or otherwise on their tax returns from now on. The IRS is cracking down on a number of industries, and the trucking industry is very near the top of the list of tax audit targets these days.
Another consideration: Your tax pro today and from now on faces a minimum penalty of $1,000 each for even a single error on a tax return they have been paid to complete. If your bookkeeping is sloppy, you should simply and ethically then expect to pay ten times more than in the past to get the tax work accomplished at any date from January 1, 2011 and thereafter. Why? Because your tax pro finds himself or herself immediately exposed to far higher risks of being assessed thousands of dollars in fines and penalties assessments by the IRS and even the possibility of being dis-barred from his or her tax related credentials for wrong-doing, mistakes and errors.
This list of potential deductions from both the income tax and self-employment taxes (and that will also impact on what you pay under "Obama Care" in the coming years) is not exhaustive. If you discover that the list is incomplete for your purposes, please feel free to write me via e-mail to Tom@TomBlairEA.com and mention any additions to the list that you might care to add. The better this list gets the more truckers and their families can be helped.
The list I have provided you in this document has been compiled over 30 years' time as a tax preparer and in my personal taxpayer representation efforts (and yes, I have won almost all the IRS audits for over-the-road truckers that I have represented since 1981).
This document is not copyrighted and may be used by any legitimate over-the-road trucker, or his or her agents, and/or by any duly-registered and/or state or federally licensed tax preparer as their highest ethical and professional efforts may justify.
This list, as I have indicated earlier, is not exhaustive and will continue to "evolve" and be corrected and/or up-dated as time and circumstances permit.
I have not stated the Title 26 Internal Revenue Code Sections related to the lists and comments made herein: That function is best left to the tax pro at the proper time and as the ever-changing U. S Tax Code dictates in providing assistance to truck drivers by those tax professionals that assist them in becoming and remaining federally tax compliant.
Finally, then, how to contact the author about this document and its contents: Remember "I spEAk Tax" And have done so since 1981
Second, remember the person who provided you with this document and that it was created in total by:
Thomas Avery Blair Federally-Registered Tax Preparer
Federally-Licensed Enrolled Agent Wealth Retention Consultant P O Box 814 542766 US Hwy 1 Northbound Callahan, FL 32011-0814
Phone: (904) 879-6336 Toll-free: 1-888-250-5687 Fax: (904) 879-1112 E-mail: Tom@TomBlairEA.com
Web site: www.TomBlairEA.com
Affiliated with: Pamela J. Soule' Attorney at Law and Mediator
(16-Plus Years' before the Florida Bar Association) 542766 -542788 US Hwy 1 Callahan, FL 32011-6498 Phone: (904) 910-3729 E-mail: Soulelaw@gmail.com
(Last revised 07/01/2011)