Working as a long-haul owner/operator is a difficult, dangerous career not meant for the faint of heart. Ever-changing road and weather conditions, unfamiliar locations, 70-hour workweeks, and almost total isolation—the modern owner/operator faces unparalleled challenges day in and day out. As the winter season creeps in, drivers have their work cut out for them as they deliver all of those unbelievable Black Friday deals and Santa’s nice-list promises. With that in mind, it’s imperative that owner/operators plan ahead for the harsh winter weather and prepare their trucks for what is sure to be one of the busiest holiday seasons to date.
Here are five tips for winterizing your semi-truck to stay safe and save money while on road:
1. Inspect Your Battery
Many people don’t know this, but extreme weather can zap the charge from a vehicle’s battery. According to Farm and Dairy, “Cold temperatures wreak havoc on batteries because they slow the chemical reaction inside of the battery. Though batteries can function under myriad conditions, the cold weather tends to degrade high-quality batteries and may render subpar batteries useless.” The last thing an owner/operator needs is to wake up to a dead battery as their truck sits in a parking lot in the middle of nowhere, therefore losing valuable driving time and increasing expenses. Avoid battery problems by inspecting the battery connectors for corrosion, securing the mounts, and checking the electrical components. If the battery is over two years old, consider replacing the battery prior to peak season.
2. Install an Electric Block Heater
Diesel engines require significantly more heat to turn-over than their gasoline counterparts—the combustion range for gasoline is 700 to 1,000 degrees Fahrenheit while the range for diesel is 1,000 to 1,200. In cold enough temperatures, a diesel engine may struggle to turn-over, and during the most inclement winter weather, there may be no viable way for the engine to reach the necessary temperatures. This can be avoided by installing an electric block heater to keep the engine warm while the vehicle is off overnight, ensuring it rolls over on the first try regardless of the weather outside.
3. Check Your Tires
Ideally, drivers should inspect their tires religiously as tire blowouts account for roughly 6% of semi-truck accidents. The need to inspect tires increases with the colder weather as worn-out, damaged, or underinflated tires can struggle to gain traction in snow and ice, creating unsafe driving conditions. Additionally, owner/operators need to pack the correct size and number of tire chains in case their route takes them through a state where semi-trucks are required to use chains. Tire chains are an owner/operator’s best friend when driving on icy terrain; they can make all the difference between reaching your destination safely or sliding into a ditch—or worse. Stay prepared and plan ahead.
4. Inspect Your Cooling System
A semi-truck’s engine cooling system has to work overtime during the winter months. This is due to the fact that the harsh winter weather forces the engine itself to work significantly harder than in the warmer months. The cooling system should be thoroughly inspected and tested by a mechanic prior to the winter season to make sure no hoses are worn or damaged, hose clamps are tight and secure, and the radiator has no damage or leaks. If the cooling system fails, the entire engine will fail along with it, costing you precious dollars and quite possibly your deadline. The last thing an owner/operator wants is to be stranded on the side of the road with no fix other than replacing the cooling system completely.
5. Prepare an Emergency Kit
Sometimes, no matter how much you plan, or how much you prepare, you still run into the proverbial—or literal—bump in the road. If an owner/operator finds themselves stranded in harsh winter climates while in route to their destination, it can be incredibly dangerous without the necessary supplies to ensure your safety and survival. Always prepare an emergency kit to protect yourself from the weather or other threats you may face while on the road. We recommend including the following items in your emergency travel kit:
● Extra blankets
● First aid kit
● Flashlight and extra batteries
● Canned food and bottled water
● Snow boots
● Snow shovel
● Flare and flare gun
● CB Radio
● Extra coolant, washer fluid, engine oil
● Extra fuel filter and fuel filter wrench
● Spare Diesel fuel
● Tire chains
These items will make sure you are safe, protected, and have extra supplies on-hand in case the problem can be easily solved—such as low oil levels or running out of fuel.
The COVID-19 pandemic created a situation where e-commerce sales have grown astronomically—with total online spending in the month of May reaching upward of $82 billion (an increase of 77% year-over-year). This rapid increase in online sales also led to an upsurge in the demand for trucking services, and with trucks having limited storage capacity, the trucking industry as a whole has seen a steep uptick in demand and revenue—in September alone dry-van spot rates hit a record high of $2.37 per mile. With success comes responsibility: More than ever, it’s important for owner/operators to ensure their taxes are filed accurately and on time to maximize their return and avoid penalties.
Here are five things CPAs must be aware of when filing taxes for truck owner/operators:
1. Per Diem Rates
Filing taxes as an owner/operator can be complicated and navigating the tax code can feel arduous. One of the most beneficial tax incentives for an owner/operator is the ability to deduct certain costs under the travel expense tax category, including a per diem tax deduction equal to 80% of $66 per day. In order for an owner/operator to be eligible to receive a per diem deduction, the IRS has two specific requirements:
- The owner/operator will be away from home overnight while traveling for work
- Work requires travel substantially longer than the length of a workday
Be sure to keep track of receipts from travel expenses, including meals and lodging, in order to capitalize on all per diem tax deductions and avoid losing hard-earned money while on the road.
2. Mileage Deductions
For owner/operators, the IRS considers a semi-truck to be a qualified non-personal use vehicle, which means mileage cannot be deducted as a part of business expenses. This is because owner/operators are taxed only on the profit they make and receive deductions for time off and “deadhead miles,” or miles driven without a load on a truck’s trailer. Although mileage cannot be deducted while on the road since the truck is considered a non-personal vehicle, what can be deducted are actual expenses for the truck such as fuel costs, oil changes, minor and major repairs, insurance, and even tires. Additionally, while truck mileage may not be deductible, mileage on personal vehicles used for work can be deducted if the vehicle is used for business-related driving such as during trips to a supply store or the bank.
3. Depreciating Property Deduction
One of the largest tax deductions owner/operators are eligible for is the depreciable property tax which allows owners to deduct the depreciated value of the equipment that they use—most importantly, their truck and trailer. Owner/operators have the option to choose from a variety of different depreciation schedules in order to meet their specific tax needs, providing owners with the option of an expense deduction up to $1 million for a new truck in the first year of service. The depreciating property tax may be one of the most important tax deductions an owner/operator needs to be familiar with.
4. Tax Form 1099-NEC
For the tax year 2020, the IRS resurrected the 1099-NEC (non-employee compensation) tax form requiring owner/operators to file their taxes differently than they have in the past. Typically, at the end of the year, an owner/operator would receive a 1099-MISC form from the companies they contracted as a driver for, fill out the form, and submit that form to the IRS. This changed for 2020; now the IRS requires owner/operators to complete both the 1099-NEC and the 1099-MISC. The 1099-NEC is used exclusively to report the compensation received by contractors for fees, commissions, rewards, and other forms of payment for services rendered while the 1099-MISC is used to report miscellaneous income such as rent or legal settlement payments. Ensuring the appropriate tax forms are correctly filed within the IRS deadline is important to prevent the IRS from performing an otherwise unnecessary audit of an owner/operator’s finances.
5. Security Dog
If an owner/operator brings their dog on the road with them, there are circumstances where expenses related to the dog can be used as tax deductions. If an owner/operator uses their dog as a form of security for themselves and their truck, then expenses related to the dog while on the road are tax-deductible. These expenses can include dog food, training, veterinarian bills, or other expenses incurred in the process of caring for the dog. In order to utilize this tax deduction, the IRS requires any dog used as a guard dog must receive training from an accredited training service or school—the cost of training is deductible as well.
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Days are becoming colder and shorter, festive lights are appearing on every street, and fleets of semi-trucks are working to move holiday goods in tandem with their essential deliveries. This peak season, you can anticipate a 10-20% increase in your mileage as you travel the U.S. to transport products and meet high consumer demand. The combination of demand, winter road conditions, and the restrictions of the COVID-19 pandemic can lead to truckers feeling more pressure than usual.
Not to mention, this year, companies like Amazon and UPS plan to fill over 100,000 seasonal distribution jobs throughout the United States. As these large retailers hire seasonal workers, the demand for shipping providers will mirror the growth—which means you need to prepare yourself and your rig before starting on a busy haul during peak season. In this blog, we will discuss how you can prepare, get ahead of your competition, and reach your maximum earning potential while staying safe and enjoying the holidays.
1. Preventative Maintenance
Caring for your rig is crucial to the survival of your operations. A great way to start the caretaking process and prepare your truck for peak season is through preventative maintenance. If your truck has recently been idle for an extended period, you could be looking at rusted parts, sludge where there once were fluids, and other potentially critical issues. With the holiday season approaching, take your semi to a mechanic to perform a full inspection; they can then handle any necessary maintenance, like an oil change or hose replacement. While this may seem like a costly process, it could mean the difference between a successful season and a broken-down rig. In the long run, taking care of your truck will keep you safe and your truck running smoothly all season long—which means more jobs and greater revenue.
2. Vary Freight Sources
When COVID-19 forced America to shut down, around 88,300 drivers lost their jobs in April alone. This hit was devastating to the trucking industry, and it caused many owner/operators to reevaluate how they run their fleet. As technology progresses, mobile apps and load boards are on the rise in popularity among drivers. A source like DAT keeps up with the industry’s varying factors, like the economy or the weather. Technology can also provide real-time updates and insights to keep you in touch with your supply chains and help obtain your maximum earning potential.
On top of mobile apps and load boards, you can work with companies like Amazon, Walmart, Target, and more. As e-commerce demand sets new records year after year, the holiday season continues to see spikes in spot rates as companies meet their contract limitations but rush to keep up with shipping demands brought on by the COVID-19 shutdown. Spot rates have hit a record high of $2.37 per mile this year and will most likely surpass that number in these next few months. Keep an eye out for these job openings over the next couple of months.
3. Revisit Your Insurance
Another way to prepare for this unique holiday season is to revisit your insurance. The COVID-19 pandemic brought immeasurable amounts of uncertainty, and it’s during times like these that insurance becomes crucial. While commercial trucking insurance is one of the more expensive components of owning and operating, it reduces the majority of your expenses and covers you in the event of an accident. With the winter weather bringing harsh weather conditions, your chances of an accident increase, making peak season the perfect time to reach out to your provider and reevaluate your damage and rental coverage.
4. Practice COVID-19 Protocol
Possibly the more obvious way to prepare for the COVID-19 holiday season is to familiarize yourself with the standard protocol. As you travel, you’ll find yourself in unfamiliar locations; plan your route by keeping in mind where you can eat, sleep, and refuel. Restaurants and fast-food locations across the country have had to change their operation hours, so you’ll need to consider that when planning your route. On the bright side, some of these restaurants are providing discounts and other offers for the inconvenience. These can be found under the International Franchise Association at franchise.org.
The same restrictions and benefits go for accommodations as well. Try to limit your exposure by decreasing the number of times you interact with frequently touched objects and disinfect these objects and surfaces when you can. Stay socially distanced from others during stops or when loading and unloading, and use a proper face covering in public. Wash your hands after visiting a location or handling items like clipboards or other frequently touched objects. To keep up with state and local regulations, use government resources like the CDC, ATA, CVSA, FMCSA, FHWA, and the SBA.
Now that you know what it takes for a successful peak season, it’s time to get to work.
While this year has higher shipping demands due to COVID-19, the holidays have always come with their own set of challenges. Read our post, How the Holiday Season Impacts the Trucking Industry, to see what obstacles the holidays present and how to overcome them.