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March 2017

Overdrive Magazine | Trucking Business News & Owner Operator Info

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Business 22 | Overdrive | March 2017 With the April 18 deadline to file 2016 income taxes looming, owner-opera- tors' accountants are busy tallying up lots of deductions for their clients. For every $1,000 in deductions, those in the 15 percent tax bracket, common for those married filing jointly, see a tax reduction of $150 plus any appli- cable reduction in state income tax. Savings would be higher for those in the 25 percent bracket. Here are five of the most common deductions, says trucker tax expert Dennis Bridges, an Atlanta-area CPA who works with about 1,000 own- er-operators. Savings examples are based on the 15 percent bracket. 1 Meal expenses: Drivers are allotted a per diem for meals of $63 for each day on the road, says Bridges. Of that, 80 percent ($50.40) is deductible. Potential savings: $2,300. A driver averaging days a week on the road six would see a net deduction of $15, 725, yielding $2,359 in savings. 2 Small purchases: "Many of our new clients think of this as a nickel-and-dime category," Bridges says, but spending on sup- plies and small equipment adds up. "Everything from tarps to tiedowns and log books." Potential savings: $400. Deducting $50 a week for 52 weeks would knock $390 off your tax bill. 3 Local mileage: If you, your spouse or significant other makes trips in a personal vehicle on behalf of your business, count the roundtrip miles as a deduction. Such trips could be to Walmart to pick up supplies or to pick up your truck at a shop after maintenance. Use a note- book to record the date, total miles, destination and purpose of the trip. Potential savings: $100. The IRS allows a deduction of 54 cents per mile driven. Claiming 25 miles a week would reduce your tax bill by $105. 4 Phone bill: "The IRS has ruled that, in most cases, the full cost for cell phone and monthly service for trucking professionals is fully deductible," says Bridges, "even if reasonable personal use is made." Potential savings: $200. If your phone bill is $125 a month and you bought a new phone last year for $200, you could take a deduction of $1,700. That would save $255. 5 Home office expenses: "Expenses incurred for business furnishings are fully deductible," Bridges says. The IRS also allows a deduction for space devoted to a home office, but the space must be used "exclusively" for business. That means no personal use of the room or a home office computer. Potential savings: $200. The IRS allows you to take $5 a square foot, up to 300 square feet, for office space. If you count a 10-foot square bedroom as an office and spent $800 on sup- plies and a new computer last year, you could cut your tax bill by $195. – James Jaillet Don't neglect tax deductions Flatbed, reefer rates rise with new year $2.45 $2.40 $2.35 $2.30 $2.25 $2.20 $2.15 $2.10 $2.05 $2.00 $1.95 $1.90 $1.85 $1.80 Jan. - 2015 Jan. - 2016 Jan. - 2017 Flatbed Reefer Dry Van Reefer and flatbed rates climbed in January, according to per-mile spot market rate data from Truckstop.com. Van rates fell 3 cents a mile in the month, ending a four-month rally. Rates in all three segments remain below almost every month in 2015 and some months in 2016. Document the small spending Want to get ahead of the game on 2017 taxes? One way is to take notes on undocumented business-related spend- ing, says accountant Dennis Bridges. For any expense under $75, the IRS doesn't require a receipt. "As long as you can make a written record for the day, amount, location and what it is you purchased, you're entitled to that deduc- tion," says Bridges. One $70 purchase a week can knock $910 off the tax bill of an owner-oper- ator in the 25 percent bracket. "Not by spending more money," Bridges says, "but by taking advantage of spending that's already taken place." Bridges offers a tax checklist for truckers on his website, etruckertax.com.

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