25 Dec Truck Tax – Depreciating Property and Deductions
Truckers have a tough time when it comes to taxes – there are so many rules, then the changes from the 2017 tax act, and, to top it all, different rules tend to apply to truckers.
However, whether you’re an owner-operator or a trucker employed at a trucking company, you should still know about some important deductions and especially about depreciating property.
First, let’s clear some things up:
Deductions and Depreciation
Whenever any business entity, including truckers, buys any property (a vehicle, for example) for business purposes, they get the option to receive tax deductions. Such deductions exist due to the fact that you are buying and using the said property, which is why they are essentially depreciation.
As you already know, any business asset that’s considered a business expense over its lifetime can be depreciated. That’s why equipment and the very vehicles truckers use are considered business properties, which can, in turn, be depreciated.
The tax deductions you can get in this way are not negligible. You get tax deductions, the potential for saving money on business tax returns, and on top of all of that, you get even bigger deductions during the first year of owning and using the property.
Section 179 Deductions
When talking about depreciation for truckers, it’s vital to explain what Section 179 deductions are. Section 179 is part of the IRS code, and it allows small businesses to take depreciation deductions on specific assets in a single year, instead of the regular prolonged depreciation over many years.
The benefit of this lies in the fact that you get the full deduction for the property you’ve purchased, instead of getting smaller amounts over its lifetime.
Naturally, not all assets are eligible for deductions per Section 179. However, the good thing for truckers is that vehicles are qualified property according to the section, just as trailers, computers, and furniture are. In essence, all tangible, depreciable personal property qualifies as a Section 179 deduction:
- Vehicles above 6,000 lbs in gross weight
- Listed property used for both personal and business purposes
- Business personal property (not physically attached to a building)
- Improvement costs to a business building (alarms, security, HVAC, fire suppression, and roofing)
Additionally, to claim these deductions, you have to apply for them in the same year in which you’ve bought and started using the property you want to deduct. Be aware that if you buy a property without starting to use it, you can’t claim Section 179 deductions for it.
As you can see, depreciating property as a trucker can be quite beneficial and get you some sizeable tax returns in the end. All you need to do is contact your tax professional and start looking into how you can claim deductions, according to Section 179.
Additionally, if you need some help with your IRS dealings, or if you have any questions relating to taxes for the trucking industry, feel free to contact Golden Tax Relief. We help working people like you in their dealings with the IRS by providing you with the help and knowledge you need to defend and eventually gain something from the IRS.