Tax season is officially here!
Maximizing tax returns and minimizing costs are top of mind for most people across every industry. For contracted drivers, owner-operators, and fleet managers, tax needs are varied. With the state-to-state and border-to-border operations we in the trucking industry are all too familiar with, handling your taxes the right way can feel overwhelming — but it doesn’t have to be.
Where owner-operators and contracted drivers differ
If you are an owner-operator, remember that you are solely responsible for paying your own taxes, including federal and state income taxes. If you are a contracted driver, your taxes should be automatically deducted from your paycheck.
Jackson Hewitt shared these expert tips for when tax season rolls around:
- Company-employed truck drivers should receive a standard Form W-2. In this form, no job-related expenses are deductible.
- Owner-operators or self-employed fleet managers should receive and complete a Form 1099-MISC., Miscellaneous Income. All income and expenses should be reported on Schedule C, Profit and Loss from Business.
- If you are self-employed, you may be able to deduct everyday items, including parking and toll fees, lodging and food travel expenses, subscriptions to trade publications, truck trailer leasing costs, and safety uniforms.
If you’re a driver, recordkeeping is your best friend
When it comes to receipts, there’s no such thing as too much of a good thing in the trucking industry. These receipts can help you deduct as many costs as possible. One tip we have is to keep an accessible folder in your truck for receipts you gather on the road. You can also store your digital receipts in a folder on the cloud.
When recordkeeping goes beyond managing receipts, however, keeping track can be quite the challenging endeavor. This is where utilizing a solution that can streamline the recordkeeping process — in the form of easily customizable PDFs and automated data collection, for example — can benefit your business greatly.
Fleet management and IFTA
The International Fuel Tax Agreement (IFTA) was designed after truck drivers had to spend too much of their work hours navigating through individual fuel tax forms for each state they operated in. With IFTA, drivers are now able to consolidate their fuel taxes in one, single form. Every three months, fleet managers have to submit IFTA reports based on their own jurisdictional tax rates.
Since IFTA reports must be submitted every three months, ensuring that you remain organized with limited disruptions to your fleet operation is imperative. Organizing tax data by storing and filing all of your necessary tax information in one place can keep you and your business secure — and more than likely more profitable!
For more tips and tricks on how to best get through this tax season, check out our Make IFTA Work for Your Operation eBook!