With so much focus in recent weeks on what the tax reform legislation passed late last year will mean for paying taxes going forward, it’s important to remember that none of that will impact what truckers are going to do between now and April 15 to file their 2017 taxes.
There is no shortage of online advice. We looked at multiple sites with advice specifically for truckers, and we’ll try to distill the main themes here.
- Keep receipts: The list of what you can deduct, particularly if you are an independent owner/operator, is a long one. We’ll get to that in a minute. But if you deduct something, you need to be able to show the expenditure in an audit. You also need to keep receipts for several years; you can find references to needing to keep them for five years, or needing to keep them for three to satisfy the IRS. A search reveals several apps out there designed to track receipts, some with the ability to scan a receipt and upload it directly to the app. But there are no signs of a “killer app” that the majority of truckers use.
- What can you deduct? It might be easier to list what you can’t deduct. The rule of thumb is that if you can show it had something to do with getting your job done, you can deduct it. One deduction that several of the various tax advisers say can often be forgotten are expenses that have to do with keeping clean on the road, and we’re not talking about the truck: hand cleaner, paper towels, a portable vacuum, bedding and cab curtains for the sleeper. One site even specifically notes Tupperware, though it’s not likely such a deduction needs to be brand-specific. (It may be deductible even if it doesn’t have the patented burp.)
- Vehicle expenses: This one seems obvious. A very thorough summary by Jackson Hewitt describes vehicles expenses as “parking fees and tolls; standard mileage rate if not deducting actual expenses, and actual expenses such as maintenance and repairs, fuel, oil registration fees, insurance, tires and depreciation if you own the vehicle.”
- Per diem: There are lots of questions out there about per diem deductions. The per diem rate for 2017 is $63. You can deduct 80% of that in lieu of specific deductions for meals and other similar expenses, but can do so only if you spend the night away from home. Whether you take the 80% is a complex brew of what your actual expenses are, how they compare to 80% of the per diem, and whether you itemize or take the standard deduction.
- Tax home: This issue can be a tricky one. You need to figure out where it is before you can start deducting for time and expenses away from it. “Generally, your tax home is your regular place of business,” the Jackson Hewitt report said. “It does not matter where you live.” But if you don’t have that sort of place of business, it could be that the tax home is in fact your residence. The nonforcedispatch.com website cited an article in a professional accounting journal back in 2015 that said a driver used his mother’s address as his permanent address, since he was not regularly returning to any sort of home base. He paid nothing at his mother’s house, which was nice of Mom but led to the IRS disallowing about $19,000 of deductions related to home base expenses.
- Don’t take somebody else’s word for it: As the nonforcedispatch site wrote: “When you are part of the trucking industry, every tax return is unique. Drivers are subject to specific requirements.” Repeatedly, the need to consult with a tax professional comes up in various stories full of tax advice.