24 Mar A Walkthrough for Truck Drivers for Tax Preparation 2021
The coronavirus disrupted the world on a massive scale in 2020. But while many industries suffered, the eCommerce and trucking sector experienced a surge as organizations closed their brick-and-mortar shops across the nation.
And as we entered 2021, it was clear that the COVID-19 pandemic would continue impacting the world and economy. It’s even changed tax season for 2021. The IRS moved the tax deadline to May 17, 2021 for all federal tax returns and payments. The standard deduction for 2020 also increased slightly to adjust for inflation, along with income tax brackets.
With Tax Day approaching, you should be thinking about paying your taxes, whether you’re self-employed or an owner-operator. Complying with tax payment regulations helps you avoid tax penalties. Here is a guide on preparing your taxes this 2021:
Practice Good Recordkeeping
Ensuring you’re prepared for tax season starts with tax record-keeping best practices. You should be saving your expense receipts at the end of every run. Keep track of them by labeling the receipts and maintaining an expense log. If you don’t maintain separate credit cards for your personal and business use, you should be collecting the receipts for your business-related purchases and logging them.
You should also keep an orderly record supporting the deductions you claim. Remember, failing to show deductions will result in the IRS determining the taxes that you owe. The amount may end up being much higher than what you would be required to pay more than necessary. Here is a list of common tax deductibles for truck drivers:
- Travel expenses, including meals and lodging
- Truck repairs and maintenance, including fuel, new tires, and oil changes
- Trade association and union dues
- Truck accessories and equipment, including communication devices and GPS
- Truck lease
- Business supplies
- License renewal fees
- Per diem expenses
Report Your Compensation Using Form 1099-NEC
Your company should have given you a Form W-2 or Wage and Tax Statement to ensure you file your tax returns on time. And if you’re an independent, self-employed driver or contract your services to fleets or carriers, you should have secured Form 1099-NEC to report nonemployee compensation. Previously, the form used for reporting this information was Form 1099-MISC.
The fleet or carrier that issues your paycheck should also be able to issue your Form 1099. You can also request this form from the IRS. Alternatively, you can estimate your 1099-NEC income by reviewing your end-of-year pay stubs. Remember, it’s better to overestimate your income and amend it later rather than end up with penalties for underreporting your earnings.
If you’re in doubt about tax preparation, consult a tax professional. It would be a shame to pay more than is required during these unpredictable times, especially when there are economic incentives and money-saving deductions to take advantage of. If you are unsure about particular elements of your potential tax deductions or need additional tax preparation advice, contact us at Golden Tax Relief.