Sunday, September 21st, 2014

Taxes – Part 1 – Taking Full Advantage of Business Tax Deductions

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As a courier you can be absolutely sure of one massive tax deduction, and that is the mileage you put on the business’ vehicle(s). This, however, demands accurate record keeping and it will be up to you to ensure that you create a flawless system for tracking the number of miles used strictly in the line of work.

Does it really make a lot of financial difference? Actually, the average rate is around $.55 per mile.

This means if you only drove around 25,000 in a year, which is actually low for a busy courier, the deduction is a whopping $13,750. This is taken right off the top of your earnings and can help to spare you thousands of dollars in income tax payments.

What else could a courier use as a deduction? Well, you already know that you MUST drive that vehicle, and this means that you must also insure it.

The premiums are a deduction, and are a complete deduction if the vehicle is used entirely for business.

Your car is going to need repairs from time to time, and these too are viewed as an allowed deduction. Although it is important to note that regular maintenance, such as an oil change or tire rotation does not qualify.

While the fuel used to power that car is not going to be a deductible, the tolls you pay to cross bridges or take certain highways can be taken off the income, and the payments made to park that same vehicle on the street or in garages in order to make deliveries are as well.

There is also the need to remain in constant communication with clients and with anyone in your home office. This means a cellular phone is required. The monthly service on this device could be a tax deduction, especially if it is dedicated strictly to business use.

There are many other deductions, and it is best to work with a CPA or tax professional to ensure you enjoy them all.

Comments

3 Responses to “Taxes – Part 1 – Taking Full Advantage of Business Tax Deductions”
  1. Sam Knowlton says:

    Tony,

    You need an accountant. It would be unusual circumstances indeed that would disallow you from using the standard mileage deduction, as far as I understand it.

    As with all tax and legal matters, it’s worth consulting a professional who can advise you to your specific situation. Particularly when it comes to taxes, that person could save you thousands of dollars a year.

    Richard,

    The same applies to you. :)

    Best regards,
    Sam

  2. Richard says:

    My wife is a courier and she works for a company delivering medical supplies. There is no way she will ever make a profit according to IRS rules. Is she still bound by the 3/5 profit rule? Is there a legal way around it? This is not a hobby, it’s a job.

  3. Tony Pereira says:

    I am a courier who has always used the standard mileage deduction. I have detailed records of all my miles and I just got audited by IRS and was told that I can not utilize teh standard mileage deduction. IRS pointed to the limitations section and informed me taht i am considered a car for hire (like a taxi cab). Can this be correct???

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