Accountant Perry Wiseman says owner-operators often overlook two technology expenses that can yield modest tax deductions:
CELL PHONES. “Analyze a month’s worth of calls, see what the percentage of business calls is, then take it times 12 for the whole year,” he advises. The same holds true for a pager or other telecommunications service.
INTERNET SERVICE. Whether the costs are incurred at home or on the road, any business-related use – load-matching, weather, routing, etc. – is deductible as a percentage of total costs.
A bit of good news from the Internal Revenue Service: You’ll get more of a tax break for business use of your personal vehicle, starting next year. Unfortunately, not much more. The mileage rate goes from 36 cents to 37.5 cents in 2004, affecting the tax bill you pay in April 2005.
What’s bigger news for some owner-operators, though, is the tax break itself. Some contractors don’t know about it, and some who know don’t bother to claim it.
Many operators log quite a few miles on their car or pickup running business-related errands, such as getting truck parts, doing bank business and buying groceries and other supplies for the road.
While an employee cannot deduct miles to and from a job site, an owner-operator can deduct miles to and from a truck parking spot because his business is being run from his home. “Some guys live 30 to 45 miles from where their truck is parked,” says Perry Wiseman, who runs Truckers Accounting Service in Omaha, Neb.
A simple and quite thorough way to document business miles in a personal vehicle is to keep a notepad in it and record date, trip purpose and miles. Short of that, Wiseman says, record your dates on the road and at home and estimate things such as frequency of trips to and from your truck parking and average miles to run errands during each period at home. Then add those up for the year. In the event of an IRS audit, you want to have “some kind of systematic way of documenting that,” he says.
This one deduction won’t make you rich. But developing the habits that will help you keep such records as this is worth, over the years, thousands of dollars in tax savings.
MORE FOR MEALS
The per diem allowance for meals on the road rose to $40 a day for 2003, with 65 percent of that deductible. That rises to 70 percent in 2004 and 2005, to 75 percent in 2006 and 2007, and finally to 80 percent in 2008. Unless you’re spending more than $40 a day to eat, don’t bother keeping meal receipts.