Tag: Heavy Vehicle Use Taxes

What Every Truck Driver Should Know About The Heavy Vehicle Use Tax

Posted on August 7, 2023 by Marcela De Vivo - Heavy highway Vehicle use tax

Every year, truck drivers across the country pay the Heavy Vehicle Use Tax (HVUT). But what exactly is the HVUT, and how does it work?

We answer these questions and more in our detailed look at highway use tax. Read on to learn more about what every truck driver should know before paying their HVUT.

What is Heavy Vehicle Use Tax?

The Heavy Vehicle Use Tax is an IRS tax based on the weight of your vehicle. It specifies that if you have a vehicle with a gross weight of 55,000 pounds or more and you drive it on public roadways, you must pay the HVUT. This is done by filing Form 2290 annually.

But what’s the point of highway use tax anyway? Essentially, it’s a way for owner-operators to pay a bit more for the upkeep of the national highway system. It evens the playing field since heavy trucks add more wear and tear to the roadways than other vehicles.

Calculating Heavy Vehicle Use Tax

To calculate your HVUT, you must first determine your taxable gross weight.

What is Taxable Gross Weight?

Your taxable gross weight is the combination of:

The actual unloaded weight of your motor vehicle fully equipped for service
The actual unloaded weight of trailers or semi-trailers fully equipped for service that are typically used with the vehicle
The weight of the maximum load typically carried on the vehicle and on the trailers or semi-trailers

Taxable gross weight categories

The HVUT varies based on your taxable gross weight category. For example, the HVUT payment for a vehicle with a gross weight between 55,000 to 75,000 pounds is $100. If your truck is over 55,000 pounds, you’ll need to add $22 for every 1,000 pounds that your vehicle weighs (with a cap at 75,000 pounds).

However, if your vehicle has a gross weight of over 75,000 pounds, the maximum HVUT payment you’ll make is $550.

A breakdown of tax rates

Vehicles below 55,000 pounds	No tax
Vehicles 55,000 pounds	$100
Vehicles over 75,000 pounds	$550
Vehicles between 55,000 and 75,000 pounds	$100 plus $22 for every1,000 pounds over 55,000

Penalties for non-compliance

If you miss filing Form 2290 and making your HVUT payment on time, you could be penalized 4.5% of the total HVUT taxes due — this penalty can accrue for up to five months.

If you fail to pay the full amount of HVUT taxes due, you could also face a penalty of 0.5% of the unpaid tax per month, with a maximum penalty of 25%.

Tax Compliance for Heavy Vehicle Use Tax

To avoid IRS penalties, file Form 2290 and pay your taxes on time. You can do this by either e-filing or mailing Form 2290.

When to file Form 2290

The deadline to file Form 2290 and pay your HVUT is the last day of the month following the “first used month” of the vehicle. (For example, if you get a new truck in December and put it on the road, you must file your 2290 tax form by January 31st).

However, if you continue to operate your truck on public highways, you’ll file following the fiscal year. Since the tax year begins on July 1st and ends on June 30th, the deadline to file Form 2290 for most truckers is August 31st.

How to e-file Form 2290

E-filing is the easiest way to pay your HVUT. It’s also the only method the IRS will allow if you’re filing 2290 forms for more than 24 vehicles.

When you e-file, your return will be processed quickly, you’ll get your stamped Schedule 1 in a matter of minutes, and you’ll get your refund faster — usually within three weeks of the IRS receiving your tax return.

To e-file Form 2290 and pay your HVUT, you’ll need to do the following:

Gather your information – This includes your Employee Identification Number (EIN), Vehicle Identification Number (VIN), and taxable gross weight of each vehicle.
Choose a 2290 e-file provider and file – You cannot e-file Form 2290 on irs.gov. You must use a participating third-party provider like ExpressTruckTax.
Choose a payment option – You can pay your taxes by credit card or debit card, via an electronic funds withdrawal, or through the Electronic Federal Tax Payment System (EFTPS).

How to paper file Form 2290

If you paper file your Form 2290, you’ll need to print the return, fill it out, and mail it to the IRS, along with your check. This usually takes the IRS four to six weeks to accept your return.

If you’re sending Form 2290 with a full payment that is not drawn from an international financial institution, mail it to the Internal Revenue Service, P.O. Box 932500, Louisville, KY 40293-2500.

Amendments and Corrections to Form 2290

Form 2290 amendments should be filed when the information for the filed vehicle changes in these three ways:

There’s an increase in taxable gross weight
The mileage use has exceeded its limit
The VIN is incorrect

With ExpressTruckTax, we make it easy to file your 2290 amendments by accurately calculating the taxes due to the IRS so that you can get your updated Schedule 1 within minutes.

ExpressTruckTax can quickly file the increase in taxable gross weight and report the tax due for vehicles that exceed the mileage use limit. We also offer free VIN corrections to anyone who filed their original 2290 with us. Get started today with ExpressTruckTax.

Rev Up Your Savings: The Ultimate Guide to Heavy Vehicle Tax Deduction

Posted on July 24, 2023 by Marcela De Vivo - Taxable Heavy Vehicle

As an owner-operator, it’s essential to consider all the tax implications of your truck, including heavy vehicle tax deductions. Understanding the ins and outs of tax deductions, benefits, and credits for your heavy vehicle can save you and your business considerable money.

From Section 179 Deductions and Bonus Depreciation to writing off maintenance and repair deductions, here’s everything you need to know about heavy vehicle tax deductions.

Tax Credits and Benefits for Heavy Vehicles and Equipment: Section 179

The Tax Cuts and Jobs Act (TCJA) of 2017 changed how depreciation can be deducted. With the new tax law, truck drivers now have two options for heavy vehicle tax deductions: Section 179 or Bonus Depreciation.

What’s the difference between Section 179 and Bonus Depreciation? Let’s explore the differences:

How does Section 179 work?

The Section 179 deduction is a small business tax deduction used for capital assets — typically vehicles and equipment. It lets you write off the entire cost of your item immediately instead of depreciating it over time.

For example, if you spent $50,000 on a piece of heavy equipment, you can write off the entire purchase price for the current tax year instead of deducting it for five years at $10,000 a year, for example.

The whole point of Section 179 is to encourage small business owners to make more expensive purchases and, in turn, help stimulate the economy.

Qualifying for Section 179

To qualify for Section 179, you must purchase your heavy vehicle or equipment and put it into service on the year you are filing for. This means if you bought your truck in late 2023 but didn’t start using it for your business until 2024, you’ll have to wait to claim the Section 179 deduction for your 2024 tax returns.

Other stipulations include the following:

The heavy vehicle must be purchased (not leased).
The vehicle can’t be bought from someone related to you.
If using the vehicle for both personal and business use, you must use the vehicle for more than 50% of your business.

While Section 179 has a complicated set of exceptions for vehicles, non-personal heavy-weight vehicles intended for business are eligible for a full deduction. These vehicles include:

Semi-trucks, tractor-trailers, and dump trucks
Heavy construction equipment like forklifts
Vehicles with a fully enclosed compartment and no seating behind the driver’s seat (like a cargo van)
Vans that seat nine or more passengers (i.e., an airport shuttle)

To claim the Section 179 deduction on your tax returns, you must include a description of your heavy vehicle, its cost for business use, and the amount of Section 179 you’re claiming. This deduction is made on Part 1 of Form 4562.

Limits to Section 179

Section 179 has important limits, such as a cap to the total amount that can be written off. For example, in the 2022 tax year, you can expense up to $1,080,000 of eligible property. For 2023, this deduction limit will increase to $1,160,000.

There’s also a cap on the total amount of equipment that can be purchased. For 2022, this limit is $2,700,000. And for 2023, the cap is $2,890,000. This means the deduction begins to be reduced on a dollar-for-dollar basis after the total amount is spent.

You also can’t deduct more money than you make in a year. So, if you have a net income of $100,000 (before taking the Section 179 deduction into consideration) and you purchased $110,000 worth of deductible property, your deduction will be limited to $100,000.

At this point, you can take regular depreciation on the remainder of your assets.

Tax Credits and Benefits for Heavy Vehicles and Equipment: Bonus Depreciation

Bonus Depreciation is usually taken after the cap for the Section 179 deduction is met. Available for new and used vehicles and equipment, bonus depreciation lets you write off an additional first-year depreciation on eligible property.

After the TCJA was passed, the potential value of Bonus Depreciation increased significantly — but only for a limited time. The Bonus Depreciation rate was expanded to 100% for qualified property in service through 2022. After that, the amount dropped by 20% for 2023 and will continue to drop at 20% until 2027, when the program will close.

That means the Bonus Depreciation rate is 80% for 2023, 60% for 2024, and so on, until 2027, unless Congress extends it.

What’s the Difference Between Section 179 and Bonus Depreciation?

While both Section 179 and Bonus Depreciation allow for serious deductions for a heavy vehicle in service, they also differ in the following ways:

The Section 179 deduction is capped by the IRS ($1,160,000 in 2023) and is reduced by the dollar amount if it exceeds the IRS threshold ($2,890,000 in 2023). However, there is no annual deduction limit for Bonus Depreciation.
Section 179 is typically more flexible than Bonus Depreciation. With Section 179 depreciation, you can deduct any amount you want as long as it’s within the IRS threshold set that year. You can also allocate which assets/vehicles get the deduction. Bonus Depreciation, however, requires that you write off all vehicles and take the entire tax break at once. You don’t get to pick and choose which assets/vehicles you want to deduct.
Section 179 is limited to the amount of taxable income, but Bonus Depreciation can exceed taxable income and create a net loss to be carried forward.
While qualifications, deduction limits, and investment limits change yearly, Section 179 is an indefinite part of the IRS tax code. Bonus Depreciation, on the other hand, is set to end on Dec. 31, 2026.

Keeping records for Section 179 deductions and Bonus Depreciation

You must keep detailed records of your vehicle usage — like mileage logs, receipts, invoices, etc. — to qualify for the Section 179 deduction or Bonus Depreciation.

These records will back up your business use claims of your vehicles in the event you’re ever audited by the IRS.

Claiming Heavy Vehicle Tax Deduction: Maintenance and Repair Expenses

Since your truck is not a personal-use vehicle, you can deduct all the expenses you’ve made to maintain or repair it throughout the tax year. For example, you can make deductions for the following costs:

Oil changes
Regular checkups
New tires
Routine and emergency maintenance
Truck parts
Cleaning supplies
Loan interest (if you financed the purchase of your truck and trailer)

The deductions for the maintenance and repair of your vehicle will be made on your Schedule C, which you will file along with Form 1040 in April every year.

Other vehicle maintenance deductions for Schedule C

In addition to the costs it takes to maintain and repair your truck, you’ll also come across other vehicle-related expenses that you can deduct from your Schedule C, including the following:

Load-related tools – Deduct any equipment needed for your trucking business, like bungee cords, chains, ratchet straps, duct tape, tarps, and locks.
GPS systems – Write off any navigation system you use while driving your truck for work.
Association dues – If you’re part of a union or other trucking association, you can deduct any required fees you’ve made to belong to that group.
Liability insurance – While your health insurance will be deducted on a separate form (Form 1040), Schedule C is where you’ll count your premiums for auto/cargo liability and property damage insurance you’re required to have on your truck.
Parking and toll fees – If you encounter any parking or toll fees while driving your truck for work, you can also count these as a deduction on Schedule C.

Claiming the IRS Commercial Clean Vehicle Credit

Beginning in 2023, the Commercial Clean Vehicle Credit will be available for qualified heavy-duty electric vehicles. According to the IRS, this credit will equal the lesser of:

15% of your basis in the vehicle (30% if the vehicle is not powered by gas or diesel)
The incremental cost of the vehicle

The maximum credit is $7,500 for qualified vehicles with gross vehicle weight ratings (GVWRs) under 14,000 pounds and $40,000 for all other vehicles.

While the IRS has not yet released information on how to claim the Commercial Clean Vehicle Credit (as of Tax Day 2023), it will apply to vehicles purchased on or after Jan. 1, 2023. Keep checking the IRS website for the latest details.

Claiming Additional Heavy Vehicle Tax Deductions

There are also additional heavy vehicle tax deductions, credits, and benefits you can take following IRS guidelines for other tax forms.

Heavy vehicle tax deductions: Form 1040

If you’re an independent contractor or owner-operator and pay for your own health, dental, and vision insurance, you can count this as a deductible — just not as a business expense. Instead, you’ll deduct your health insurance separately (for you and your dependents) on Schedule 1 Form 1040.

Heavy vehicle tax deductions: IFTA

If you have a qualified motor vehicle and travel between two or more of the member jurisdictions (48 of the United States and 10 Canadian provinces), you must have an International Fuel Tax Agreement (IFTA) license and decals. IFTA reports are filed quarterly and are separate from your annual taxes.

You can count the fuel taxes and costs you pay on the road toward IFTA as part of your tax deductions.

Heavy vehicle tax credits: Form 2290

In certain circumstances, you can also claim a tax credit for heavy vehicles on your Form 2290.

For example, if your truck is registered as a Heavy Highway Motor Vehicle and it was stolen, destroyed, sold, or did not exceed mileage credit, you can count it as a tax credit.

Similarly, if your truck is registered as a heavy vehicle and you use it for 5,000 miles or less (7,500 miles or less for agricultural purposes), it will also qualify as a tax credit.

Form 8849 Schedule 6 is the IRS form used to claim a refund of excise taxes. There is no deadline to file this return. You can also claim credits using this return if you’ve overpaid in taxes.

Filing Form 8849 Schedule 6 with ExpressTruckTax

E-filing Form 8849 is easy with ExpressTruckTax. Here’s how you can easily claim your excise taxes with our help:

Create or sign in to the ExpressTruckTax account
Choose Form 8849 and fill in the necessary information
Pay for our services and transmit your return to the IRS

The IRS will issue a refund via check and send it to the address mentioned on the return. It can take up to six weeks to receive a refund.

When using ExpressTruckTax to file your 2290 forms, we automatically generate your Form 8849 when the credits on your Form 2290 exceed the tax you owe. We also offer bundle pricing so that you can E-File both Form 2290 and Form 8849 for one low price.

Why wait? Start e-filing with ExpressTruckTax today!

What’s the Deal with Form 2290 Deadlines and Month of First Use?

Posted on March 31, 2021 by Marcela De Vivo - 2290 deadline

Your IRS Form 2290 deadline can be a bit difficult to figure out. There’s a lot of legalese surrounding when your deadline might fall.

This is a problem because late filings and late HVUT payments almost always result in penalties and interest from the IRS.

Let’s cut through the confusion and phrasing so you can figure out exactly when you need to file your Form 2290.

The Form 2290 Tax Period

Let’s start with the first factor to consider when trying to figure out your Form 2290 deadline – the HVUT tax season. Unlike the primary IRS individual and business income tax year that we are all familiar with, the Heavy Vehicle Use Tax season runs from July 1 – June 30 each year. Why? We don’t know. Who knows why the IRS is the way it is?

What we do know is that if you are using the same truck as the last HVUT tax year, your Form 2290 deadline will be one month after the end of the current tax year – August 31. Since the tax season ends on July 1, the IRS generously gives you almost two months to file your new Form 2290 before the due date.

But what if you start using a different truck during the tax year?

Form 2290 First Use Month

If you start using a different truck during the tax year, you cannot wait until the typical August 31 deadline to file. You will need to file Form 2290 by the end of the month following the month of first use. So, for instance, if you started using a vehicle in February 2021, you will need to file your Form 2290 by March 31, 2021 (today).

Then for the next tax year, if you are still using that truck, your Form 2290 deadline will be August 31 along with everyone else.

What do you need to file Form 2290?

In order to file your Form 2290 by your deadline, you will need the following information:

1. Business Details: Name, EIN, and Address
2.Vehicle Details: VIN. and gross weight of the vehicle.
3. Type of Return: If you are filing a 2290 VIN Correction or amended return, be sure to choose the type of amendment.
4. Suspended Vehicle Details: If your vehicle is tax suspended choose the mileage category and enter the VIN.
5. Paid Preparer Details: If you are Tax Professional filing for your clients, Enter your Firm name, address, EIN, name, and PTIN.

File your Form 2290 today!

If you started using a truck in February or earlier, you need to file your Form 2290 by midnight tonight!

We provide easy-to-follow prompts and we guarantee you’ll get your stamped Schedule 1 back from the IRS! The whole process only takes a few minutes.

Get ahead of the curve! File your 2020-2021 Form 2290 right now!

Posted on May 18, 2020 by Marcela De Vivo - 2020 Form 2290

We have officially begun accepting Form 2290 tax filings for the 2020-2021 tax season. As in today!

We know the IRS doesn’t start processing HVUT returns until July 1, but we wanted you to be able to get ahead of the crowd this year!

In fact, when you file Form 2290 for 2020-2021 early with ExpressTruckTax, we will automatically submit your return on July 1, so your 2290 will actually be among the first in the door for 2020.

What is IRS Form 2290?

Anyone who owns a commercial motor vehicle with a gross weight of more than 55,000 pounds must file a Form 2290 and pay Heavy Vehicle Use Taxes (HVUT) by August 31, 2020.

Why File Form 2290 Early for 2020-2021 with ExpressTruckTax?

By filing Form 2290 early for 2020-2021, you can avoid the IRS delays that occur during peak filing season in July and August.

Plus, we will automatically transmit your 2290 return when the IRS begins processing the Form 2290 on July 1. And if you choose to pay your HVUT by check or money order, you will not be required to pay their taxes until August 31, 2020.

Learn how you can delay your HVUT payment until August 31 here.

Who is ExpressTruckTax?

ExpressTruckTax provides a secure, interview-style e-filing process so that you can complete your return in a matter of minutes.

We also offer 100% US-based customer support and free Form 2290 VIN Corrections for our clients. Our customer service experts are happy to provide a personalized support experience.

During our ten-year history, ExpressTruckTax has processed over $1.6 billion in excise tax payments. Our e-filing solution is trusted by most of the largest fleets in the nation.

Learn more about e-filing with ExpressTruckTax here.

Ready to file Form 2290 early for the 2020-2021 Tax Period?

What are you waiting for? There’s no reason to wait around deal with your 2020-21 Form 2290 when you could file now. File today with ExpressTruckTax!