As a reminder, if you have not yet filed your partnership or S-Corp tax return for the 2017 tax year, the last date to file your return without late filing penalties will be September 17th, 2018. Please contact us at 417-380-5000 if you need assistance with getting your return prepared.
By Chase A. Probert
When you sign up to work with Abacus CPAs, you will be required to notify our staff of deductible expenses in order for us to properly file your taxes. Some expenses may come from a company settlement, others may be paid for out of pocket with cash or with a debit/credit card, but all expenses will have to be accounted for to ensure that your taxes are properly filed. But how do you know what is considered deductible?
The IRS provides three simple criteria to determine if an item is deductible. The IRS indicates that for an expense to be deductible, it must be both ordinary and necessary. An ordinary expense is said to be "one that is common and accepted in your trade or business" and a necessary expense is "one that is helpful and appropriate for your trade or business." The expense must also be paid for out pocket, meaning that any reimbursed expenses are technically not considered deductible.
While the IRS does not provide a list of deductible expenses for each industry, drivers can easily help determine if something is deductible by asking themselves if an item is considered ordinary and necessary. An expense such as fuel can be determined as ordinary and necessary because it is both a common expense in the industry and necessary in order to conduct business.
Drivers will be required to keep records for any expenses they will be deducting (with few exceptions). Drivers are required to keep copies of each receipt and should also keep a back-up copy such as a photo copy or a scanned copy of the receipt. Drivers will not be required to keep receipts for items falling underneath their daily per diem deduction, including purchases for meals, personal hygiene, and over-the-counter medications. Drivers will be required to keep logs indicating days out over the road while maintaining a living space outside of their truck in order to claim the per diem deduction.
If you have any questions regarding deductible expenses, please contact our office at 417-380-5000 or visit our website at abacustrucking.com.