By Michael Schneider, Tax Manager, ATBS.
Every year there are changes to tax laws that may go under the radar for some self-employed truck drivers. Ignorance of these changes may cause carriers to miss out on significant savings when it comes time to file their taxes.
That’s why we asked ATBS to provide a few pieces of advice to ensure you don’t make the same common mistakes other owner-operators sometimes make.
1. The Standard Deduction increased again. Make sure to take it if it’s greater than your Itemized Deduction
In 2021, 96% of clients used the Standard Deduction. This percentage is not expected to change due to the Standard Deduction increasing to $12,950 for single taxpayers and $25,900 for married couples filing jointly.
2. You can no longer deduct charitable contributions if you take the Standard Deduction
You can no longer deduct up to $300 of qualifying charitable cash contributions. Last year, you could take a charitable deduction for cash contributions made before December 31, 2021, even if you didn’t itemize. In 2022, only taxpayers who itemize their deductions are entitled to a charity deduction.
3. Form 7202 has expired for those who were unable to work or had to care for a family member due to COVID-19
Self-employed individuals could use Form 7202 if they were unable to work or had to care for a family member for reasons related to the coronavirus. This COVID credit has expired and is no longer available for any taxpayer.
4. There was no stimulus check or Recovery Rebate Credit in 2022
You were able to take this credit if you didn’t receive an EIP (Economic Impact Payment) or your EIP was less than the full amount for you and each qualifying child you had in 2021. However, there were no stimulus checks issued in 2022.
5. Don’t miss out on the QBI Deduction
Seventy-seven percent of owner-operators received a QBI Deduction for 2021 because they had a net profit. If a business operates at a loss for the year, a QBI Deduction can’t be claimed. As an owner-operator, chances are you will qualify for this deduction, so if you didn’t take this deduction last year make sure you look into it this year.
6. Make sure to accurately calculate your Child Tax Credit
The Child Tax Credit reverted back to $2,000 per child under the age of 17. In 2021, the credit was $3,600 for each child under age 6 and $3,000 for each child aged 6 to 18. Additionally, it does not appear that an advanced tax credit will be available for 2022.
7. Don’t Wait
The most important aspect of tax time is filing and paying taxes due by the April deadline. Extensions can be provided for additional time to file, however, extensions are not available for deadlines to pay your taxes. Organize and send all your tax documents as early as possible to get a head start on filing.
Tax Day 2023 is just around the corner. Do you have a plan for how you’re going to file your taxes this year? DAT has partnered with ATBS, the industry’s largest tax and accounting firm for owner-operators and truckers, to offer drivers a discount on accounting and tax preparation services!
ATBS: American Truck Business Services (ATBS) is the largest tax, consulting, and bookkeeping firm in the transportation industry, with 25 years of experience working with owner-operators and independent contractors. Since 1998, ATBS has helped over 150,000 clients earn more money, reduce stress, and drive a richer life. For more information, visit www.ATBS.com.
About the Author
Michael Schneider attended Western State Colorado University in Gunnison, Colorado, where he received a Bachelor of Arts degree in Accounting and a minor in Business Administration. Michael started his accounting career with ATBS in 2010. Michael passed the Enrolled Agent (EA) exam in 2016. The EA exam is administered by the IRS and is the highest credential awarded by the IRS.