With the new year upon us, our next hurdle so to speak is tax season. While doing your taxes isn’t THAT difficult, it can become somewhat complicated, especially for owner-operators and lease operators, with all the allowable deductions for fuel, repairs, and other operating expenses. Company drivers have it a little easier, but only if they use a simplified return. Even with the simplified return, it can get quite complicated.
To maximize your income tax return, keep all receipts for any job-related expenses. Literally anything you buy for use in the truck, or to assist you in doing your job. Even the most obscure items you have to buy so long as it is legitimately used on the job may be deductible. Work gloves, work boots, hard hats, coveralls, and safety glasses are a few of the obvious allowable deductions but paid parking spots, money spent at a laundromat, a portion of your cell phone, and the cost of your passport or FAST card may also be deductible.
Your best bet, even as a company driver is to use an income tax preparation service. The money spent using a tax service could be invaluable if, on the off chance, you’re selected for a financial audit. Having a tax specialist in your corner to represent you to the CCRA will be worth the expense. They tend to know all the tax laws and allowable deductions, getting you the biggest return you’re allowed, and they can argue your case to the CCRA a lot better than you can. The CCRA is also less likely to audit you if your taxes were prepared by a professional.
One other thing to keep in mind if you do your taxes yourself. Tax avoidance is legal; tax evasion is not. When you file your taxes, whether you’ve done them yourself or had a professional prepare and file them for you, be sure to keep all of your records for a minimum of 7 years, just in case the CCRA comes back to do a tax audit. Keep all your records organized so you can find the required documents quickly, especially copies of your logs, whether paper copies or digitalized logs.
If you’re not already, get in the habit of downloading your Elogs every month, as well as electronic copies of your cell bill if you are allowed to claim a portion of it. , I have a folder on my computer for the year where I store all my Elogs, cell phone bills, and scanned copies of all the receipts I plan to use. I also keep the paper copies of everything, just in case.
