It was a long time ago, way back in 1789, in Colonial America, when the legendary Benjamin Franklin wrote a letter to a friend in which he penned the now-famous quote, “In this world nothing is certain except death and taxes.” Flash forward 230 years to today, and much has changed, but much is still the same. Looks like old Ben was right!
The IRS tax code, rules and regulations prove to be daunting for tax professionals, which include highly-educated people like Attorneys, Certified Public Accountants, Enrolled Agents and Bookkeepers, just to name a few. All of them went to school for years and require tests, certifications, licenses and background checks, yet even they struggle to keep up.
So, what’s an independent owner operator truck driver to do? Many try the “do it yourself” approach, and for some that works fine. Truck drivers by their very nature are independent and, in general, willing to solve their own problems. Many of them purchase tax preparation software and do fine on their own, but for some, the task proves to be too much. For those, I recommend seeking professional help with your tax preparation and filings. Actually, I would recommend professional help to anyone, because the pros really know the ins and outs of the business and are up-to-date with the ever-changing rules.
Let’s face it, the biggest collection tool the IRS has is fear. There, I’ve said it! The elephant in the room that no one ever talks about. For all the methods and tools the IRS possesses – the ability to clean out a delinquent taxpayer’s bank account, to garnish their paycheck, to intercept a refund, to file tax liens and destroy someone’s credit for 10 or more years – yes, the biggest most powerful tool that the IRS has is fear. Truckers, like anybody else, don’t want to mess with trouble, especially from the IRS. If you are already in debt to the IRS, call a tax attorney for guidance.
For those who do decide to file on their own, here are a few tips regarding deductions that drivers can claim. Mileage, daily meal allowances, truck repair (maintenance), overnight hotel expenses and union dues are some of the tax deductions available. However, local truck drivers typically cannot deduct travel-related expenses. Drivers can visit the U.S. General Services Administration (GSA) website to get “Per Diem Rates” to claim. These deductions help lower your tax liability and help you recoup some of the money spent during the year for travel, so don’t miss any of them.
In addition to missed deductions, another problematic area is often the dreaded “Form 2290” filing, more commonly referred to as the Heavy Highway Vehicle Use Tax. The filing season for Form 2290 is July 1 through June 30. The filing deadline for Form 2290 is based on the month you first use the taxable vehicle on public highways during the reporting period. For vehicles you first use on a public highway in July, file Form 2290 between July 1 and August 31. The tax for the current filing season will be prorated for vehicles you first use on a public highway after July. Regardless of the vehicle’s registration renewal date, you must file Form 2290 by the last day of the month following the month in which you first used the vehicle on a public highway during the taxable period.
The first step in getting ready to file is gathering all the necessary information and getting an Employer Identification Number (EIN), if you don’t already have one. An EIN is required to e-file Form 2290. You cannot use your Social Security number. If you need to apply for an EIN, go to the Trucking Tax Center (www.irs.gov/trucker). Once there, find and select the “Apply Here” text in the EIN section. It takes approximately two weeks to establish a new EIN, at which point you can then e-file your Form 2290.
When filing, it is imperative that you use the same name on your Form 2290 as was assigned to you with your EIN. The name control traditionally is the first four letters of your business name. You must also know and provide your complete Vehicle Identification Number (VIN) to e-file Form 2290. If your VIN is less than 17 digits, enter zeros preceding your VIN so that it equals 17 digits. The last bit of important information you will need is the taxable gross weight of your vehicle, as this is what will determine the appropriate amount of Heavy Highway Vehicle Use Tax you will pay.
If you are reporting 25 or more vehicles, it is required that you e-file your Form 2290, but e-filing is also encouraged for everyone, because of the faster processing (you can receive a watermarked Schedule 1 within minutes, instead of having to wait up to 6 weeks if you “snail mail” it in). Also, to avoid any potential problems, ensure that the watermark on your Schedule 1 is legible before submitting it to your state’s department of motor vehicles. You may need to reprint with fresh ink or on a different printer to ensure a legible watermark.
Once you have filed your Form 2290, you will have to pay the amount due. Typically, a debit or credit card is required to pay your Form 2290, but there are a couple other options, including Electronic Funds Withdrawal (EFW) or the Electronic Federal Tax Payment System (EFTPS). EFW requires your bank routing number and the account number. These are not the same numbers as those appearing on your debit or credit card, although these cards may be linked to your checking or savings accounts.
EFTPS requires enrollment on their website (www.eftps.gov). When you enroll in EFTPS, you’ll receive a PIN by mail within 7 business days. Once you receive your PIN, you can make your payment and begin the Form 2290 e-file process. You’ll indicate an EFTPS payment was made when you e-file. Call EFTPS Customer Service at 800-555-4477 with any questions. If you choose not to use the EFW or EFTPS electronic payment methods, you can still e-file and mail a check or money order to the address shown on the Form 2290 instructions, but the IRS must receive your payment by the due date of your return or you may be charged a penalty and interest.
It is natural to feel somewhat overwhelmed because there is so much information, not only here, but on the IRS website. If you feel like it would be best to contact someone for help, there are many qualified professionals available. The firm I work with, Anderson Bradshaw Tax Consulting, offers free consultations for this and many other tax resolution services. Please feel free to contact me personally by calling (888) 829-6857 or visit the website at www.andersonbradshawtax.com today. We are here to help you with all your tax needs – wherever you are. If you have back tax problems, please do not wait. Call now and let us clear them up for you!