Small Trucking Business Tax Tips
by Apex Capital | March 18, 2013
Working as a self-employed truck driver has benefits related to independence and flexibility, but it is important to stay informed about tax requirements to comply with IRS regulations.
According to the IRS, Trucking Tax Center, “If you operate a truck or other vehicle categorized as a heavy highway motor vehicle on public highways, you must file Form 2290, Heavy Highway Vehicle Use Tax Return, and pay excise tax. Filing and Paying Heavy Highway Vehicle Use Tax e-file Form 2290. All truck owners can now e-file Form 2290 and pay electronically. You get your Schedule 1 almost immediately after we accept your e-filed return, and you can get your taxes done from your computer while you are on the road, any time of the day or night. If you are reporting 25 or more trucks on a return, you must file electronically.”
Don’t Skimp on Tax Preparation
It may seem like a good idea to forgo the tax professional when income tax returns are due, but any cost savings enjoyed by going it alone can be quickly eaten up by missed deductions and penalties. Since being unaware of tax responsibilities related to self-employment is not considered a valid excuse for failing to pay the IRS, self-employed individuals, like truck drivers, can be hit with heavy fines and fees if they do not correctly file.
Use a tax professional with experience working with self-employed individuals and truck drivers to ensure that there are no errors on a return. These professionals often offer guarantees related to tax preparation, so any penalties that may be assessed due to errors on the return will be reimbursed by the professional.
Be Aware of Additional Taxes Due
When a person is employed by a company, the employer will remit half of the employee’s Social Security and Medicare taxes to the IRS. While the other half is the responsibility of the employee, this amount is automatically withheld from a paycheck and remitted on behalf of the employee.
Self-employed individuals are responsible for paying the entire 15.3 percent of their income for Social Security and Medicare. It is important to budget accordingly throughout the year in order to meet this tax obligation. If a self-employed truck driver makes $50,000 per year, $7,650 will need to be set aside to pay Social Security and Medicare taxes.
Plan Ahead to Avoid Penalties
Some self-employed truck drivers are required to pay estimated taxes to the IRS on a quarterly basis to satisfy tax obligations. An accounting professional can calculate the amount that should be paid every three months, but self-employed individuals can calculate this number on their own by using Form 1040-ES.
Individuals who fail to pay enough toward self-employment taxes throughout the year may be penalized, so it is important to meet estimated tax deadlines. For the 2013 tax year, the due dates are:
â¢ April 15, 2013
â¢ June 17, 2013
â¢ September 16, 2013
â¢ January 14, 2013
The best advice we have for self-employed truck driversÂ is to plan ahead for taxes. Failing to save for taxes can lead to penalties and anxiety when due dates come around. For more information on self-employment tax issues, visit the IRS Small Business and Self-Employed Tax Center.