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Travels of a Trucker Tax Time Tips

January 30, 2012

Many of you who read this are truck drivers and as a truck driver we all know that the money we make is definitely a debit since it flows out of our pockets like water and into the hands of others. Now typically when we think of taxes we think that we are only going to file what we earned and what the employer took off as deductions on our T4 slip. However, this is not the only money we can claim back and if you are not utilizing the resources available you may be losing out. Big Time!

Trucking is an industry where the employer expects you to cover most expenses out of pocket barring any major unforeseen expenses like a Hotel room in the event of an accident or the towing bill. Things like Phone Bills, Food, and as an owner operator your own lodgings if you are stuck somewhere for a long weekend. Unfortunately, a lot of employers will not reimburse for these costs and the high cost of living on the road and this is where the Government of Canada (and I am sure the IRS) allow Tax Deductions from your Net Income for the costs of these excursions.

The breakdown is very simple. You can do one of either three things. Present a bill to your employer and hope they pay it….which I doubt they will and even if this is the case and they do decide to reimburse you it becomes a taxable benefit which shows up on your T4 slip.

Secondly you can do a Detailed method in which you keep every little receipt for every little expense through out the whole year. I find this too tedious myself and space consuming to keep every receipt.

The third way is to use a batched method which is essentially the easiest method. For every day on the road over 12 hours you are entitled to a $15 meal. Any time before this and they expect that you have had breakfast and lunch brought with you…(yeah how many Government employees have you seen bring lunch with them on the road?) After the 12 hours and up to 24 hours you can start claiming $15 per meal for 3 meals. So in any given 24 hour period you can claim realistically $45 of which you get back in Tax Deduction 80%. Now for the majority of drivers who are gone an average of 4 days a week for 50 weeks of the year (average), this works out to be a Tax Deduction of $45×4=$180×50=$9000/80% =$7200 in Tax Credits for the year. (If you like a fat paycheque at year end it can be a real beauty).

Now the best way to claim the batch method is by keeping your log books year after year (for 7 years) since in an audit you can refer to your logbook and if desired they can compare with the employer to show that yes you were out of town for an extended period and obviously you need to eat to survive on the road.

Now not only can you claim this you can also invest in an RRSP and deduct that from your Income Tax either in lump sum or you can carry the RRSP as an unused contribution for the next tax year. I mean lets face it, $7200 is already a nice sum of money so why add to it and overspend it when you can save those unused RRSP deductions for next year when you may need it the most! You can also use your refund to pay back your RRSP loan and build up your credit and equity very fast.

Now as an Owner Operator here is where it gets a little more confusing. Not only are you a business but you can deduct almost everything that is associated with the truck and the cost to do and run your Owner Operator Business. For example, if you purchase the truck or lease it, you can offset the cost of the lease through amortization depreciating the value of the truck.  Secondly you can deduct the Kilometers you use on the truck (which must be detailed), thirdly you can deduct those expenses which you incurred to operate as a business. for Example  Phone Expenses, Weigh Scale Tickets (not the fines, but the weighing), Fuel Costs, IFTA Costs, Insurance, Pro Rating, even household costs (let’s face it you drive the truck, your home is your place of business), so again you can deduct the space required to operate your business. For example if you occupy one room in the house as your place of employment and record keeping, you can deduct that portion of those expenses. Let’s say for example you have a 3000Sq ft house and you occupy 500Sq ft. and you pay $1000 a month in rent. You can take the total square footage of the house dividing it by the cost of the rent for the per square foot operating cost and deduct the square footage of the space utilized and then calculate how much your paying per square foot on that occupied business use. Then you can deduct that cost per month. Again, home insurance, home phone, Electrical, Heating, Hydro, etc. As you can see, adding in all these factors will make a huge refund at the end of the year. There should never be an owner operator who has to pay money or owe money to the Government. Then there is also your WCB, your CPP, your EI, and anything else which you may have overpaid also. You should have a business licence which is also tax deductible. Repairs and maintenance are tax deductible. Tools and equipment if they are used on the truck are tax deductible if you are doing your own repairs.

There are many ways to break ahead with tax relief and many people just simply take a T4 slip and hand it in with a cheque to the Government!  My point is why pay when you can make them pay and pay you back legally for all the expenses you incurred. I know trucking and I know it is not a get rich quick method but it can be a solid investment if played right.

Anyhow, thanks for reading, I hope yo learned a few tips today. drive safe, keep em shiny side up and if you like what you read follow along by email. You can also follow me on Twitter or on Facebook.



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