By Howard Abrams, PBS Tax & Bookkeeping
Q. Can I take a home office deduction?
A. Yes. To qualify for the home office deduction, the home office must be your principal place of business. You must use the home office regularly and exclusively for administration and management of your business. And you may not have any other fixed location where you regularly conduct administration and management activities of the business. Keep in mind that this deduction, while legal, can flag your tax return for further scrutiny.
Q. Can I deduct deadhead miles?
A. No, you cannot. There is a big misconception concerning deadhead miles. Many truckers think that the income lost as a result of deadhead miles is a deductible item. That is not the case. Only the costs to operate the truck (i.e., fuel, insurance, repairs, and maintenance covering those deadhead miles) are deductible.
Q. How can I justify my cash payments to my lumpers?
A. You need to maintain a book such as a Day-Timer, entering name, address and Social Security number of the person you have made the payments to. If that particular person earns $600 or more from you, then you have to issue a 1099 at the end of the year.
If you are working for a household mover that has agencies for lumpers nationwide, then you should be able to get receipts when you pay those people. Find out from the agency that is responsible for issuing the 1099.
Q. I am a company driver. What is deductible when I’m on the road?
A. While self-employed individuals can generally deduct any expenses incurred to earn their income, company drivers are limited to non-reimbursed expenses required by their employer. You are entitled to per diem for meals on the road and motel expenses.
A good rule to follow for deductions would be any expenses incurred that are necessary or required in the performance of your job and/or operation of the truck but are not reimbursed by your company, such as uniforms, gloves, logbooks, maps, cell phone, CB, tools, Windex, paper towels, showers, etc. Remember, as a company driver, these deductions are available only if you itemize your deductions (i.e., not claiming the standard deduction).
Q. Because I live in my truck, the IRS disallowed my per diem. Is that true?
A. Yes. You can only claim the per diem deduction for your overnights if you maintain a separate fixed residence. It does not matter how many days you’re gone as long as it’s less than one year.
Q. I work as an independent contractor, but I do not own a business and do not perform services in the name of a business. I was told I had to pay self-employment taxes. Is that true?
A. Yes. The income you earn as an independent contractor generally will be considered income from self-employment and you will need to file Form 1040, Schedule C, Profit or Loss from Business. You will also need to use form 1040, Schedule SE, Self-Employment Tax, if you had net earnings from your self-employment of $400 or more. Because there is no withholding on your self-employment income, you may need to make quarterly estimated tax payments to prevent penalties. LL
This article is written by PBS Tax & Bookkeeping Service, a company that has been providing income tax and bookkeeping services to the trucking industry for more than a quarter-century. If you would like further information, please contact PBS at 800-697-5153 or visit their website at pbstax.com.
Please remember everyone's financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult with your own tax or accounting professional.