Trucking & Taxes – August/September 2025

As an owner-operator, you are a business owner. That means you wear a lot of hats.

Of course, taxes are not No. 1 on your list of things to do, and neither is bookkeeping. However, these are important tasks. Even small mistakes can add up and lead to missed deductions, cash flow problems, tax overpayments and even IRS penalties.

Some mistakes are simple and have simple solutions, like bookkeeping errors. But some are caused by not understanding tax laws or requirements and attempting shortcuts that result in an audit.

As a business owner, you must understand what to do and what not to do, as both are important to make it in business.

Here are a few of the most common tax mistakes that business owners make and the problems they can cause.

Not reading the IRS letter establishing your EIN

This letter establishing your Employer Identification Number tells you how you are going to be filing taxes, the form to file and the deadline for you. If you are an LLC single member, it will tell you 1040 or LLC multi-member 1065. However, if you file as a corporation, it will say 1120. So make sure you read the letter, as it may even include such filing payroll forms as 941 and 940. Also make note of the deadline to file, as missed deadlines often result in penalties. Most forms require you to file even if there is no income or nothing to report.

Not separating business and personal finances

Co-mingling finances is one of the biggest mistakes a business owner makes. When using one bank account for everything, mixing business and personal expenses makes it difficult to track actual business. This can also lead to missed deductions and cause tax compliance issues.

When you do not keep financials separate, it is hard to know where the business stands. Are you profitable? Losing money? Spending too much? Without proper records, you are making decisions without the full picture.

Poor record-keeping and documentation

It is one thing to claim an expense. It is another thing to prove an expense.

Many owner-operators do not keep proper records or receipts, which can become an issue if you ever get audited. The IRS does not just take your word for it. It wants proof. If you cannot produce receipts or documentation, those deductions can be disallowed.

This is especially important for expenses like:

Business travel
Per diem
Repairs
Office supplies and equipment

Without records, you could end up paying more in taxes than necessary.

Not tracking all accounts

As an owner-operator, you may focus mostly on your main checking account. But do not forget about your business and personal credit cards, line of credit and escrow accounts. Credit card payments are not deductible, but the expenses charged on the card can be. Loan and line of credit payments are tax deductible only for interest, not principal. But the expense that was paid by the loan may be deductible or depreciated.

We often find that business owners forget to track certain bank or credit card accounts and then miss transactions that should have been deducted. If money is moving between different bank or credit card accounts and you are not keeping up with it, expenses can start slipping through the cracks.

Paying yourself the wrong way

Some business owners do not pay themselves the right way or enough, which can lead to tax compliance issues.

A few common mistakes:
Being on W-2 payroll as a sole proprietor or as a partner in a partnership
S-Corp owners not paying themselves a reasonable salary, which raises red flags for the IRS
Taking only a salary instead of a mix of salary and distributions as an S-Corp or a partnership, which leads to missing out on tax-saving opportunities

The way you take money out of your business affects taxes, and it is important to get it right.

Not using tax deferral options

Not using these options means missing an opportunity to reduce your taxable income because you are not thinking about strategies to reduce taxes.

You could miss these big opportunities:

Retirement accounts – 401K, Simple IRA and SEP IRA accounts, where you can put aside money for the future
while reducing today’s taxable income
Health savings accounts (HSA) – Tax-deferred accounts to cover medical expenses if you have
a qualifying medical plan
Roth accounts – Retirement accounts with tax-free growth
Many owner-operators put off or avoid setting these up. However, they can be some of the best tools for saving money on taxes.

Spending money just to save on taxes

Many tax preparers suggest you spend money to save money on taxes, and many business owners think that by spending more money, they will pay less in taxes. Technically, these things are true. But is it really smart business?

We hear this a lot at the end of the year about business owners who had their tax preparer suggest buying expensive equipment or vehicles just to lower their taxable income. The problem is that you are still spending the money.

For example, let’s say you buy a $100,000 tractor to get a tax deduction of 10,000 to 30,000, depending on tax bracket, self-employment taxes, etc. Sure, you saved on taxes … but you still spent $100,000. If you didn’t actually need the tractor, that is not a great financial move.

The goal is not to pay the least amount possible in taxes. Instead, the goal is to manage cash wisely and maximize profits while still minimizing taxes.

Incorrectly calculating depreciation

Depreciation can be complicated, and many business owners either:

Take too much depreciation too soon. Depreciation can be used to lower your taxable income, but you need to apply some logic and review savings today and into the future. Just writing off the entire cost of equipment when you are in a low tax bracket may not be right.
Forget to record assets altogether, missing depreciation deductions.
Use an incorrect cost. We have seen business owners provide a number or cost that was just a guess. You need to use the actual cost of the equipment, which is tied back to the purchase agreement.
Record repairs as an expense. Repairs can be expensed. However, if they improve the asset or extend its life, it may need to be capitalized and depreciated.
Some leases are expensed as the lease payment is paid. Other leases are capitalized and the equipment depreciated. Make sure you are getting this right.

Depreciation should be handled correctly, or you risk losing deductions or facing an IRS audit.

Failing to work with a tax pro

One of the biggest tax mistakes owner-operator business owners make is not working with a proactive tax professional who knows trucking. At TruckerTaxTools.com, we work with truckers who want clear financial statements, a better tax strategy and a team that truly understands the trucking industry.

Taxes should not be ignored or be something you think about only in April. By working with TruckerTaxTools.com, which actively helps you plan throughout the year, you can avoid costly mistakes, find every deduction and take advantage of tax-saving strategies – thereby keeping more of your money. LL