If you’re the owner-operator of a small trucking company, you may find all the taxes you have to pay rather overwhelming. The trucking industry isn’t only one of the most regulated industries in the country, but it’s also one of the most heavily taxed.
It’s very important to pay your taxes when you’re in the trucking industry. The Federal Motor Carriers Safety Administration regulates trucking. If you want to be compliant with their rules, it’s important to pay all of your Truck driver Tax on time and in the right amount. There are a few tips that you should follow to save more money.
Join The IFTA
The IFTA is an agreement between the U.S and Canada that makes tax collection easier and less confusing. Instead of acquiring a fuel permit in each state and paying taxes to it. You’ll register with the nearest office of the IFTA.
They’ll issue you an IFTA license, and you’ll pay taxes to that office. They redistribute your tax payments to the proper states based on the amount of money you’ve spent on fuel and the miles you have driven in that state. You must file a return with the IFTA quarterly. If you don’t file in time, you’ll be subject to fees.
The lower 48 states and several provinces in Canada participate in this agreement. Participation is voluntary, but if you don’t join, you’ll have to adhere to tax reporting laws in every jurisdiction you travel. This can be confusing and time-consuming.
If you’re like most trucking companies, you won’t do your own taxes. Why pay a tax preparer more money than you have to? If you do not join the IFTA, you’ll have to meet tax deadlines from every state you travel through.
Look for a Full-Service Compliance Company
No small trucking company can operate entirely on its own. The company will need to have a relationship with an attorney. It also needs a compliance company to ensure they’re following all FMCSAs rules. They’ll need a tax preparer, and they’ll need an insurance broker.
There are companies out there that perform more than one of these services. It’s a good idea to find a compliance company that offers tax preparation and insurance. Going through one company saves you time and money.
Know Your Deductions
No matter who is preparing your taxes, you should be aware of all the deductions you can take.
You should deduct all reasonable expenses. Hence, it’s a good idea to have your drivers save every receipt and document all the expenses on every trip they take. You should be able to claim as much as $66 a day for expenses. That can save you a lot of money in the long run.
Once you’ve been in business for a while, you should deduct taxes on truck depreciation. You can also deduct:
- Maintenance expenses
- Professional association fees
- Computers
- Internet
- Cell phones
- Some equipment
- Business Insurance
Get Involved With Your Community
If you donate money to a charity or organize an event, you can write it off on your taxes. This not only saves you money but is a great way to get your name out there.
Form 7072
If you’re an independent trucker who missed work because of COVID, you should fill out form 7072. It’ll give you tax credits for the work that you missed. If you work with contractors, they should be able to take this deduction as well.
Running a trucking company is a lot of hard work. You shouldn’t have to give all of your profits to the government. If you follow these tips, you’ll save money and time.
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