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How drivers can ease the stress of tax time

By on March 2, 2015

With April 15 approaching, Road King sought out advice from an expert on federal income tax. Eric Smith, spokesperson for the IRS, offered this advice for professional drivers.

Q What is the most important thing a driver can do to understand and comply with their tax obligations?

A Maintain adequate books and records. For example, even if drivers are claiming the “standard meal allowance” method as an alternative to the actual cost method they still must keep records to prove the time, place, and business purpose of the travel. Especially if there’s any personal use of the vehicle, making sure you log or track business versus personal miles is important. People often think of it as a burden, but really you are helping yourself. If you keep good records you get what the law allows you.

Q How does the move to electronic logs have an impact on recordkeeping, if the records are kept by the company rather than the driver?

A The main thing is that the information you need is retrievable. The format of the records does not change an owner-operator’s or company’s responsibility to maintain adequate books and records. If a driver’s company uses electronic logs and only keeps the records for a limited time, the driver still has to find a way to access that information. They might ask the company to share the electronic records, or give them a print copy. If the driver keeps their own records, that will also help.

Q What are some of the deductions that drivers most often overlook?

A Some may qualify for a home office deduction. This means having an area in your home that you use regularly and exclusively for business. The IRS now offers a simplified method for figuring out if you qualify.

Once you have determined that you are traveling on business away from your tax home, which is not necessarily the same thing as where you live, you can deduct ordinary and necessary expenses. The type of expense depends on the facts and your circumstances. If you own your vehicle, depreciation is an important expense.

Q How does a driver determine their tax home?

A That depends on a number of facts and circumstances. But some examples that may help shed light on this:

  • You travel all of the time, covering several states. Your employer’s main office is in Newark, but you do not conduct any business there. Your routes change from week to week, and you have no way of knowing where your future assignments will be located. You have a room in your married sister’s house in Dayton. You stay there for one or two weekends a year, but you do no work in the area. You do not pay your sister for the use of the room. In this case you are considered an itinerant and have no tax home.
  • You are a truck driver and you and your family live in Tucson. You are employed by a trucking firm that has its terminal in Phoenix. At the end of your long runs, you return to your home terminal in Phoenix and spend one night there before returning home. You cannot deduct any expenses you have for meals and lodging in Phoenix or the cost of traveling from Phoenix to Tucson. This is because Phoenix is your tax home.

Q Can a truck driver figure all this out on their own or are they best served by hiring an accountant who is familiar with trucking?

A There’s no one-size-fits-all answer to that question. Many people find doing a 1040EZ, the simplest tax form, daunting. On the other hand, some people are comfortable navigating incredibly complex financial transactions and have no difficulty reporting them properly on a return they prepare themselves. If you do it yourself, tax-prep software can make the process much easier, and you will likely make fewer mistakes, too. Filing electronically is also a big plus.

More than half of taxpayers hire a professional when it’s time to file a tax return, and the percentage is even higher for self-employed people and those who own a business. Even if you don’t prepare your own Form 1040, you’re still legally responsible for what is on it.

A tax return preparer is trusted with your most personal information. If you pay someone to prepare your federal income tax return, the IRS urges you to choose that person wisely. IRS.gov has new options to get information and tips on selecting tax professionals.

IRS.gov/chooseataxpro helps you avoid unscrupulous preparers, and includes a list of consumer tips for selecting a tax professional.

Truck drivers can find nearly all the information they need to file their highway use tax return —Form 2290 — at IRS.gov/truckers

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