Thursday, December 12, 2013
The four most overlooked tax deductions for drivers.
1.Laundry: Your uniform and other clothes will need to be cleaned from time to time. Fortunately, you can claim related expenses on your tax return.
While on the road, your laundry expenses are tax-deductible. This is provided that you don’t live in your truck, as you must be away from home to utilize this deduction. Keep all receipts for laundry expenses to ensure this deduction goes smoothly.
2. Satellite Radio: Many drivers are not aware of this, but satellite radio expenses are tax deductible. Since a driver can use it as a tool for weather and traffic information, a business need for this device is established and the IRS treats it accordingly.
This doesn’t mean you can’t deduct satellite radio if you also listen to your favorite bands and shock jocks on there. As long as the satellite radio is for your truck and not a personal automobile or other non-work location, write it off and save a few bucks.
3. Mobile Phone: Your mobile phone is also tax-deductible, provided that it is used for business purposes.
Keep all phone records to verify that your phone is used to make business calls. During an audit, the IRS may ask for proof to back up your deductions.
To illustrate, trucker Hatem Elsayed lost a tax court case involving mobile phone deductions. He substantiated his claim of paying for the phone, but did not keep detailed logs of his calls. Thus, he was denied a mobile phone deduction because he couldn’t prove the business use of his phone.
4. ATM, Bank and Credit Card Fees: Fees for your various financial transactions are also tax-deductible. These include ATM fees, bank charges and credit card fees.
As with any other deduction, such fees must be for business purposes. Therefore, it is a good idea to separate your business and personal expenses.
Keep separate bank accounts and credit cards to use exclusively for business. Then, during each tax season, you’ll be able to calculate your deductions more easily instead of sifting through a combination of business and personal expenses. If Uncle Sam comes knocking, you can simply show your statements as proof instead of explaining each item individually.
The Bottom Line: While taxes are a fact of life, drivers can minimize them by claiming these often-overlooked deductions. You may be able to do so retroactively, as well. A qualified tax preparer who understand the trucking industry can review previous tax returns and help drivers claim missed deductions.
Keep the mentioned deductions in mind as you complete your tax return this year. For specific advice, consult a tax professional.
Scott Christensen is vice president of Tax Services at Equinox Owner-Operator Solutions