Truckers are often trying to cut down on expenses, and one area that's a potential saving is the prorated Heavy Vehicle Use Tax, along with Form 2290. In case a new truck has been purchased or vehicles added in-between the year, it might not be required to pay the whole tax for the year. Instead, one can go for prorated taxes as per IRS regulations under Form 2290, keeping the money in your pocket while being compliant with the rules.
Prorated HVUT implies you pay taxes only for the months in which the truck is operational, not the whole year. This is a fair system, for truck owners purchasing vehicles late in the tax year will not pay any additional taxes.
Whenever a truck is registered for the first time or added to your fleet after July of the tax period, the proration of taxes applies. Instead of going from July to June, it begins from the very date of first use of the truck by you.
The IRS calculation of the prorated tax is on the basis of weighing, gross weight of vehicles, and the number of months remaining in the current tax year. When a truck goes into operation in December, you would pay from the month of December through to June, instead for 12 months.
The main difference is quite simple: Annual HVUT accounts for the entire tax period from July 1 to June 30. Prorated HVUT accounts only for the months following your vehicle’s first use. The difference could mean huge tax savings for truckers adding vehicles later in the year.
Upon purchase of a new truck, you are required to file Form 2290 for the month of the first use, not waiting for the next tax season. This makes your Schedule 1 good for vehicular registration and compliance with state requirements.
Deadlines from the IRS are strict. You have to file by the end of the month that follows the month of first use of the truck. Say your truck first operated in September; you will have to file a prorated 2290 by October 31.
Truckers can calculate prorated taxes either using the IRS Form 2290 taxing tables or through online 2290 e-filing software that applies the correct prorated amount automatically. Thereby minimizing the chances of errors while making sure manner of compliance is being observed.
If you ever happen to overpay your prorated HVUT by mistake, you can request a refund or credit using Form 8849 Schedule 6. This way, while correcting your tax payments, you also keep your tax filings correct.
Tax proration is imposed at the first use month for every new truck added to the fleet during the year, which states that each truck must be reported separately for IRS compliance.
Farm trucks and agricultural vehicles are also subject to prorated HVUT if added during the year. These vehicles are generally under the exemption of suspended vehicles (less than 7,500 miles in a year) and can benefit from such reduced and exempted tax liability.
To complete the prorated HVUT, the following documents will be required:
Having them ready will ensure a smooth filing.
Yes, it is possible to electronically file prorated Form 2290 via IRS-approved e-file providers. E-filing can speed up processing and provides instantaneous confirmation with your stamped Schedule 1 delivered within a matter of minutes.
Late filing attracts penalties from the IRS, and interests on the unpaid tax increases massively. More importantly, with an expired Schedule 1, the truck registration and vehicle tags cannot be renewed, and if left unchecked, can cripple operations.
Understanding prorated HVUT taxes on Form 2290 is pretty important to allow you to save money and avoid facing penalties. Be it adding a new truck, managing a fleet, or operating agricultural vehicles; prorated filing gives you the assurance of paying just what is necessary. Filing at the right time with Prorated HVUT forms gives truckers the extra dollars that can remain in their pockets while being compliant with the IRS
Note: For more information, visit IRS website
