You aren’t alone if you’re a truck driver overwhelmed by taxes owed to the IRS. It isn’t unusual for independent contractors or owner-operators to struggle when it comes time to file their tax returns.
There are numerous reasons truckers don’t file their taxes, but the outcome is the same. If the IRS files on your behalf, they base their calculation solely on your income, which results in tax returns that are rarely accurate.
Find Local Tax Attorneys
While you may consider talking to a tax relief company about your issue, you should discuss your situation with tax attorneys first. Having a tax debt attorney on your side will ensure you’re prepared if the IRS files an investigation into your finances or tries to garnish your pay.
The IRS will seek you out if you fail to pay your tax liability. State and Federal tax agencies will collect tax debt at all costs, and you’ll want a lawyer representing you if you face bank levies or Federal or State tax liens.
Are You a Self-Employed Truck Driver?
A truck driver who is a W-2 employee will have taxes pulled from their paycheck by their employer. However, independent contractors are responsible for withholding their taxes.
Truck drivers often don’t file their taxes, resulting in the IRS filing on their behalf. Avoid this by contacting an attorney as soon as you struggle with your taxes.
Talk to an Expert
Tax season can be frustrating if you are a self-employed truck driver. You may not know how to ensure eligibility for tax relief programs or be confused by tax deductions, self-employment taxes, and quarterly taxes. Instead of letting back taxes grow, take control of your financial situation.
If the IRS is already contacting you about owed taxes, don’t despair. A skilled tax debt lawyer can help you find a resolution.
Tax Debt Relief for Truck Drivers
For truck drivers facing tax debt, tax relief offers a chance to regain their financial footing. Tax relief occurs when the IRS or local tax agency agrees to reduce tax debt owed.
Your attorney will work closely with the IRS to find a solution for your tax problem. They may request a payment plan, propose installment agreements, or negotiate to lower your tax debt.
Your specific circumstance will determine if you’re eligible for tax relief. Some tax relief options include:
- Installment agreements
- The Fresh Start Program
- Offer in compromise
- Penalty abatement
- Currently non-collectible status
Understanding Truck Driver Tax Deductions
Your work-related expenses aren’t tax deductible if you drive for a trucking company as a W-2 employee. The Tax Cuts & Jobs Act of 2017 removed the majority of deductions for drivers who are trucking business employees.
Still, you’ll want to track your expenses and out-of-pocket costs. Many employers will compensate you for these expenses since they deduct them when they file business taxes.
Know That Tax Law Constantly Changes
This act and others like it can cause truckers to be surprised by tax bills. Misreporting your income is easy if you are unaware of law changes.
Tax law changes frequently enough that the average individual can lose track of the policies that impact their tax filing, causing them to incur tax debts. Contact an attorney immediately if you have an unexpected tax debt.
If you are self-employed, you’ll want to keep track of your expenses. Truck drivers often fail to deduct trucking expenses because they don’t keep records when traveling over the road.
Although holding on to receipts and invoices may feel inconvenient initially, the difference it will make when filing your tax returns is worth the aggravation. However, resist the urge to claim deductions you don’t have documentation for, no matter how tempted you may be.
If IRS agents choose to audit you because you have an excessive amount of deductions, they will want records. In addition to paperwork proving your expenses, you’ll need to verify deductions were not used for personal purposes.
Tracking your expenses will require record keeping which can feel tedious. However, you’ll be glad you did if the IRS audits you.
Common Deductions for Truck Drivers
You can enjoy significant tax breaks by claiming deductions on your tax returns. Some deductions you don’t want to overlook include:
If you paid for training to acquire your CDL, your education expenses could be deducted. However, the education you received must benefit your current line of work or be required for your career.
Trucking-related publications like instructional materials may be deductible as well. To ensure the eligibility of any publications, contact a tax professional.
Since the Internal Revenue Service views your truck as a qualified non-personal use vehicle, you can claim many of the expenses accrued by operating the vehicle. Fuel, insurance, registration fees, repairs, and tires are deductible.
Many truck drivers forget to deduct parking fees, tolls, and the heavy highway vehicle use tax. Every business expense counts, and being able to deduct the full cost of a trucking expense will save you money on your return.
In order to deduct expenses such as meals or lodging, you must be away from your tax home, typically overnight. Your tax home is your place of business.
For some drivers, this may be their business headquarters or residence, while for local drivers, it may be an entire city. Since the trucking industry is based on travel, often cross country, some drivers’ tax home may be across multiple states.
If you’re familiar with lodging deductions in other industries, you’ll need to remember the IRS handles lodging differently for truckers. Instead of claiming a per diem rate per day, truck drivers must claim the actual lodging expenses.
Drivers deducting meals can claim the per diem rate or the actual expenses. Truck drivers bound by the Department of Transportation’s time limits for work cannot claim the total cost of their meals.
However, they can claim 80% of their actual meal expenses. To do so, they must be away from their tax home.
If your career requires you to join a union or association, membership fees can be deducted from your income. Unfortunately, many truck drivers are unaware that voluntary memberships may qualify if they directly benefit your work.
Avoid Unfiled Tax Returns
If you have unfiled tax returns, your priority should be hiring a lawyer to help you file them. When you don’t file a tax return, the IRS might file an SFR (substitute for return) for you.
Truck drivers rank among the highest group for missing filing and having an SFR filed on their behalf. This statistic is unfortunate because if the IRS files for you, they calculate off the income reported, which results in a bigger bill.
File Even if You Can’t Pay
When the IRS files on your behalf, it can negatively impact your chances of obtaining benefits like loans, the Payroll Protection Plan, the economic injury disaster loan, and receiving stimulus checks (when applicable). To avoid this, file your taxes even if you will have a remaining balance.
Since the IRS bases its calculation on the income on your 1099, they don’t get an accurate representation of your actual income after expenses. This miscalculation results in you paying a greater tax bill than you should.
Contact a Tax Resolution Attorney
Hire a tax relief attorney to prevent aggressive collection attempts. Even if you only have profit and loss statements for your tax year, an attorney will find the best outcome for your situation.
Don’t let tax debts cast a shadow on your future. Instead, contact Damiens Law Firm, PLLC, at 601-488-2079 today.