As a business owner of a trucking fleet, taxes can be a major burden. All of the paperwork and time spent preparing taxes, in addition to the taxes themselves, add up. Fortunately, through fleet management technology, there is a solution for streamlining your tax situation and fleet operations. Fleet tracking technology enables trucking companies to improve freight delivery services in every aspect, from customer service to delivery times. Even better? The use of this technology can also help you save money on your business taxes.
Here are some of the deductions and tax tips you can use to reduce your tax burden and improve your bottom line for your trucking company.
Choosing a fleet tracking system aids in accuracy when it comes to reporting fuel tax. According to the International Fuel Tax Agreement (IFTA), all truck drivers in the U.S. and Canada must file a fuel tax report each quarter. This determines the amount of tax drivers or their employers will be charged based on fuel consumption. While it seems simple enough to keep track of fuel expenses, the paperwork process is not.
Your drivers are responsible for maintaining all of their fuel tickets and receipts, as well as their trucking hours of service that must match up with times, dates and addresses of these receipts. When handling this manually, the process is time-consuming and mistakes are common. A fleet management system uses GPS fleet tracking and electronic logging records to correctly calculate fuel taxes in a fraction of the time. By digitizing the process, drivers and employers are less likely to make calculating errors resulting in hefty fines and fees.
Section 179 of the IRS publication on “How to Depreciate Property” covers a new deduction in 2018 that affects trucking operators. This deduction allows trucking companies and owner-operators to deduct up to $2.5 million in trucking equipment. This equipment must have been purchased in 2018 — it includes electronic logging devices, GPS fleet tracking technology, and other equipment upgrades to fleet management.
This new tax opportunity enables business owners to deduct the full value of their equipment for a greater deduction. For example, if you had a used Class 8 truck that was worth $125,000, previously you would only be able to deduct a fraction of the valuation determined by the lifespan of the equipment. Now, you do not have to account for lifespan and can deduct the total value. Please note that computers and related equipment, such as hardware or cables, that you purchased in 2018 are not considered listed property in Section 179, according to the IRS.
Fleet technology enables trucking companies to save in a variety of ways during tax season. Find out if there are any additional tax deductions or related expenses that you can receive in your state or local municipality. For example, you may be able to benefit from green tax deductions, thanks to your use of fleet management systems for reducing diesel emissions through less idling. As you consider the investment of fleet tracking technology for fleet management, include your accountant or bookkeeper in the conversation — especially with potential changes in the tax code.
When you are investing more of your budget into repairing outdated fleet technology, this continues to reduce that gap between tax savings and operational costs. Invest in fleet technology and save on operational expenses, including taxes, to optimize your trucking company’s performance.