Even if you do nothing more at tax time than bury your accountant with receipts and other papers, it’s good to know the basics on deductions.
The most important point to demythologize regarding deductions, one of three fallacies I wrote about recently, is this:
MYTH: “Tax-deductible” or “writeoff” means getting something free.
FACT: A tax-deductible expense, such as mortgage interest, is deducted from your income. You pay tax on a smaller net, usually reducing your tax bill between 15 percent and 30 percent. So don’t go buy an expensive APU, thinking you’ll get a virtual refund from Uncle Sam.
Here are a few more:
MYTH: You can deduct deadhead mileage and out-of-route miles.
FACT: You pay tax only on profit. All business expenses reduce your profit. So you’re already getting a deduction for the cost of deadhead and out-of-route miles, along with all the other costs of running a business. There’s no way to double-dip and further make up for these seemingly wasted miles.
MYTH: You can deduct the cost of your dog.
FACT: This isn’t a myth as long as Diesel is always with the truck when it’s working. It’s justified as a security measure.
As with owning a dog, there are many things that potentially qualify as a deduction. You can get an idea by checking this fairly comprehensive list, compiled by our partners ATBS, the nation’s largest owner-operator financial services provider.