tax timeAsk any accountant and they’ll say this is their busiest time of year, now up to April 15th. For owner operators, tax time is all the time. Jan 15th your 4rth quarter estimated taxes are due, if you have employees all kinds of forms are due and your 4rth quarter fuel taxes are due. April 15th is just as bad because not only is your 2007 return due (and any taxes), your first quarter estimated and first quarter fuel taxes are all due.

I’ll start out saying - I’m not an accountant, I don’t even play one on TV and your mileage will vary. With that said, I have fired two accountants and have learned to double check everything from the third. I’ve been audited three years in a row and plan on being audited again.

As an owner operator I would love to be able to delegate taxes to someone else. But like most jobs you delegate, you’ve got to double check the people you hire, because with taxes of any kind, you’re ultimately responsible for any mistakes or omissions your accountant makes.

Personal and Business use

I hear how great a driver’s accountant is all the time and I ask, “have you been audited?” Because you don’t know how great your accountant is until everything is on the line. One thing I learned from sitting in a little room inside a big government building with an IRS agent on the other side of the desk (besides not being a fun experience) is that the IRS is getting picky about being able to tell the difference between personal use and business use.

For instance:

Cell phones - If you use your cell phone for business and personal, you have to be able to document the percentage of business use. If you’re deducting your cell phone as a business expense, document by highlighting all the business numbers and coming up with a percentage. Or get a totally dedicated cell phone for work.

Satellite TV/Radio - If I’ve heard it once I’ve heard it a hundred times, “I can deduct my satellite TV because I need to monitor the weather.” Just keep in mind personal use (your personal entertainment, even in the truck isn’t deductible).

Dogs - I heard a “trucker’s accountant” say they even won this in Tax Court - You can deduct your dog’s expenses as theft deterrent. Unless your dog is kept in the truck when you’re home, I think I would come up with a percentage on that one.

Laptops - Even though you bought it for the truck and use it most of the time for trucking, document somehow that you don’t use it for games or personal emails or come up with a way to show a certain percentage is for business use.

Clothing - Unless they’re uniforms, most clothing can be used for personal use. If you have a uniform allowance, your uniforms aren’t deductible unless you go over your allowance and spend your own money.

Idleaire - All that money you spent not idling your truck is deductible. Until they find out Idleaire has pay-per-view movies, you’re probably okay (but you didn’t hear that from me).

Anything that can have a personal use, even if it’s in the truck, may come under scrutiny and unless you can document what percentage is business use, you may not be able to deduct any of it. Again, this is what I learned, the agent you get may focus on something else or you may not ever get that letter. But this is something you need to bring up to your accountant. If your accountant says, “don’t worry about it.”  I might be inclined to shop around some more, but that’s just me.

Per Diem

Per Diem is always a big question on the trucker talk shows. My answer: Look it up at irs.gov Have that tattooed onto your computer. Every year per diem changes, every year the percentage is growing so you can deduct more of it, but it’s still only a percentage. Even after I showed one of the accountants I don’t use any more the actual IRS publication she said, “She gives all of her truckers 100% of the per diem deduction.” That’s not right. It’s right there in black and white but she wanted to do what she wanted. I’m pretty sure even as a CPA you can’t make up your own rules.

And to show how crooked some can be, I had one accountant try and deduct hotel expenses when he knew I always stayed in the truck. This guy was recommended by a friend that said he always found big deductions for them. Like using the Earned Income credit if you don’t have a family? Can you say, “Fraud?” I’m pretty sure the IRS frowns on that stuff.

You’ve got to be careful with this stuff. If you want to play the odds, fine. Nowadays the odds are probably against you because several things truckers do will cause a red flag. People that are self-employed are a red flag, one person corporations - red flag, people that deduct a home office have a GIANT red flag flying over their house, it’s an honest deduction, just make sure you can document it and you do it right. You, not your accountant, YOU.

Finding the right accountant

You’ve got to find an accountant that’s honest, knows trucking and will sit down and take the time to explain what the heck he’s doing. Don’t just sign your return without looking at it and take their word that everything is okay. If he can’t explain during his “crunch” time, make sure and schedule a time when he can sit and explain. The more informed your are will actually make his job easier.

If you want to play the odds, that’s your choice. But from someone that lives in Vegas, odds always favor the house and the IRS is the biggest house on the block. I’d rather owe the mob (if there was such a thing) money instead of the IRS.

I’m going to say it again, “Don’t take my word for any of this!” Look it up or ask your accountant yourself. If you find or hear a different answer, great, it’s up to you to choose the right one.

Have any accountant stories? Hopefully, I can’t be the only one that has had bad luck with these guys!