Know your tax deductions to save your business thousands

Transcript

ATBS Vice President Mike Hosted, in part of a conversation with Eric Harley of Red Eye Radio at the 2023 Mid-America Trucking Show, emphasized what too many owner-operators and their sometimes local tax preparers miss -- a lot of the deductions that are unique to trucking and can reduce your year-end tax bill substantially.

Hosted pointed specifically to the per diem deduction and how often ATBS sees that it wasn't claimed by a qualifying owner-operator. At $69 a day for food, the average owner-operator is getting $14,000 to $16,000 a year in deductions, he said, "and we see that missed constantly."

Red Eye Radio host Eric Harley noted that when "taking advantage of those deductions, that is money in your pocket. That's money you are keeping in your business." And when it comes to staying prepared for freight downcycles like we're seeing over the last 12-18 months, Harley emphasizes those deductions become even more important.

This video excerpts Harley's roundtable conversation at the 2023 Mid-America Trucking Show with owner-op business coach and Overdrive contributor Gary Buchs, ATBS' Hosted, and Overdrive Editor Todd Dills about the Partners in Business Overdrive/ATBS coproduction

Catch more in the video. The full talk can be heard via Red Eye Radio's "Extra Mile" podcast or via the Overdrive Radio podcast at this link Find brief excerpts from the talk in the eight-video playlist below.


Owners looking for additional business tips, among a myriad of other topics, can find more in the Overdrive/ATBS-coproduced "Partners in Business" manual for new and established owner-operators, a comprehensive guide to running a small trucking business. Click here to download the updated 2023 edition of the book free of charge

Transcript

Eric Harley: Knowing the tax code, I mean, my gosh, I don't know how many thousands, hundreds of thousands of pages there are in tax code, but I mean, truckers should know the benefits of having that knowledge, and it's just like negotiating rates. It's just like anything else. When you are in business, you need to know what those advantages are. What can you share with drivers from an ATBS standpoint on that part of it, of being knowledgeable about those outside items like tax code and what you can benefit from?

Mike Hosted: Yeah, great question. That's something that we do every day is put out content to help drivers stay aware of what's happening with current tax code. We see so often that owner operators go to someone local, their friend, their spouse, who might not know anything about the trucking industry. And as you said, especially over the last few years, let's call it the COVID era, there's been many stimulus packages, benefits that you could get, changes to per diem, changes in filing days, things of that nature that are just almost impossible to keep up with. I mean, it's all we do and it's still hard for us to keep up with. And so you just have to have that knowledge base or that resource, which we can be for you to make sure that you're keeping up with these changes daily, weekly. When it comes out, you need to understand it.

I'll give you a good example is the per diem deduction. We see so many new clients that went to an H&R Block or a Jackson Hewitt, and we look at their past tax return and they didn't even claim the per diem deduction, which is a daily food allowance when you're on the road. It's $69 a day right now, so the average independent contractor's getting $14,000 to $16,000 in deductions just for their food allowance, and we see that missed constantly.

Eric Harley: Wow. And again, when you're taking advantage of those deductions, that is money in your pocket. That's money you are keeping in your business, and you hear it all the time. I know you folks hear it, but trucking is that feast or famine thing, but with the planning, it doesn't have to be feast or famine. You can plan because the famine's coming back around that you stock up your business pantry, I guess, to make sure that as you're taking advantage of all of those benefits and that knowledge that you are prepared for those leaner times in trucking, which are inevitable. They come around.

Mike Hosted: They are, and what we've seen, and especially for newer owner-operators that came in during the COVID stimulus freight boom I would call it, where freight was on fire for two years, the longest we've ever seen it be on fire, the highest rates we've ever seen. So people came in to being an owner-operator during that boom time, and that's all they ever knew, and that's how they think things have always been. But like the economy, like everything, it's a very cyclical business. And so we've seen a lot of bad habits come out of that great time where people aren't looking at their numbers because they didn't have to. Things were so good they didn't have to care about their cost per mile. They didn't have to care about their fuel mileage. And now they do, but they never learned how to do it.

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Overdrive editors and ATBS present the industry’s best manual for prospective and committed owner-operators. You’ll find exceptional depth on many issues in the Partners in Business book, updated annually.
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