Although the payment is reasonable, it is challenging to be a truck driver. Being on the road most of the time and away from family is not an easy task. Truck drivers also don’t have enough sleep, and their sleeping hours are limited. Truck drivers do not have enough time and tools to tax preparation and submit returns. A precise mileage report and abundant notes for expenses and other details can be challenging for these drivers. Since the drivers are away from home and don’t have computer access, the calculations for annual taxes are tricky.
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These drivers have to pay various kinds of taxes. They need to pay income taxes, indirect taxes, payroll taxes, and many more. Fortunately, there are some advanced plans to lower the bills considerably. Keep reading to know more about available rules for truck drivers.
There are various professionals to prepare tax returns for truck drivers. This tax area needs knowledge and specialty, so truck drivers must get expert services. When truckers want to hire a tax adviser, they must first be sure about the capabilities and specialty of the adviser. The adviser must be able to reduce tax liability and exposure to audit.
Truck drivers usually don’t file their returns by themselves and give the job to preparers. It is a practical requirement for many of them because they don’t have enough knowledge and experience to undergo the process. Drivers categorized as independent contractors and owner-operators usually report via Form 1040. Other truckers incorporate a business like LLC. They might have the advantage of being taxed as an S corporation. It will help decrease self-employment taxes that, in some cases, are problematic.
Some truckers are employees. Taxes are clear for these truck drivers. Employees must deduct income taxes and send them to the Internal Revenue Service (IRS). They also have to pay other kinds of taxes like Medicare or Social Security. These truck drivers only need to file Form 1040 annually. Many deductions are removed for truckers categorized as employees according to The Tax Cuts & Jobs Act of 2017. These drivers can ask the employers for reimbursement because the employers can reduce these types of costs. It is a win-win scenario for the trucker and the employer.
A lot of truck drivers are independent contractors. It involves owner-operators. The situation in which the employers do not deduct taxes is an independent contractor or 1099 contract agreement. The agreement has pros and cons for the drivers. They receive larger paychecks and will have more money for their current expenses. It also has downsides, and the primary one is estimated payments. In this case, the truckers must file quarterly and make quarterly payments. If such a trucker fails quarterly payments, penalties and interest await them. It is a problematic issue for many truckers.
Self-employment taxes are the result of contract pay. Self-employment taxes are mandatory for truck drivers who work as contractors. Truckers who do not manage their businesses through legal organizations must use Form 1040 to compute the taxes and remit them to the IRS. It can easily have an additional 10% to the amount.
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Many costs add up for the truckers, and the deduction is attractive for them. The deductions involve phones, maintenance, oil changes, insurance, storage fees, licensing, uniforms, and many more. There are also deductions for other taxes like Heavy Highway Vehicle Use Tax.
Travel expenses are also deductible for truckers. The costs include various things like taxis and airfare. These travel expenses are only deductible for travels away from the driver’s tax home. It involves trips that are longer than a typical working day. Tax home refers to the trucker’s place of business. Many truckers are transients and do not have a specific post of duty.
When there is no regular post of duty, and the trucker only makes deliveries locally, the entire city might be considered a tax home. It can involve many local drivers. These truck drivers can have deductions while they are not inside the city. The entire country can be considered a tax home if the trucker works over the road. It will make more limitations on the deductible travel expenses. The trucker needs receipts or a log to confirm the costs.
The deduction of actual daily costs is sometimes possible for truckers. Many truckers use these daily rates for everyday meals to pass the need for detailed records, which is troublesome. Keep in mind that settlement or hotel costs are not daily deductible for truckers. Truck drivers must keep supreme records for these types of expenses.
The way the IRS sends taxpayer notices is problematic for most truck drivers. The IRS usually mails notices but not to the truck stops. So, the truckers typically don’t receive these notices on time. Most truckers get the mails late and can’t respond to them on the due date. The truckers won’t find mails and notifications until it is late.
There are common problems for truckers. Some issues will occur on audit or the IRS collection for most truckers. They all bring more taxes and stress for truck drivers. The truckers are attractive to auditors, who usually adjust truck drivers’ reported income. One argument put forward by the IRS is that the truckers’ reported income is too little and does not involve things like paid cash tips. The IRS agents are also strict regarding tax deductions for truckers. The deductions for truckers are also denied due to the lack of excellent records. The agents might argue the deductions are impossible because they were susceptible to reimbursement by the employers. Sometimes, the agent will count some expenses as unnecessary or unusual.
As you can see, truckers face many challenging tax payment issues. So, they indeed need tax professionals to get through these difficulties. SCL tax services in & near Bronx, NY, is the best choice. Bring your tax problems to us because we have the best solutions for you. Our professionals have the required knowledge to help you through tax preparation. Call us at +1-347-305-4348 right now to experience our quality services!
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