If you are an owner-operator truck driver, be sure to claim all your expenses when it’s taxation time. You, like virtually all taxpayers, can significantly lower your tax liability and your taxable income by availing of deductions and handling your tax situation properly. You can also benefit from your meal allowances and claim write-offs on your tractors and any other equipment.
Apart from your tax returns, you may have other reporting requirements and require to pay permit costs and additional taxes. By claiming your per diem rate and other truck driver tax deductions, you can reduce the amount of tax you pay. And, as an owner-operator truck driver, you should know everything about truck driver tax deductions.
Truck Driver Taxes: Forms You Need to File Taxes
- A W2 form is received by company drivers that provide a report of the wages and income of the driver.
- These forms must be mailed to the employees by the employers by the end of January.
- This income must be reported on Form 1040 or 1040A.
- As an owner-operator, you have different options for reporting your income and can depend on your records.
- If you are working as an independent contractor for the company, you will get a Form 1099, which is utilized to report any miscellaneous income.
- In case you are a commission driver or an agent, your W2 may have the “Statutory Driver” box checked.
- Self-employed and statutory drivers must fill out the Schedule C form. This is used to determine the profit and loss of the business.
What Deductions Can a Truck Driver Claim?
Truck drivers are allowed to deduct business expenses that are “regular and necessary” by the IRS. While these expenses vary as per the individual, some expenses are standard.
1) Meal Expenses
You can deduct the cost of your meals that you incur when you are at work, away from home. For this, you must save your meal receipts. Or, you can deduct the standard meal allowance that is stipulated by the IRS for the transportation industry and make use of your logbooks as proof.
2) Lodging Expenses
Expenses that are incurred for lodging are deductible. However, there is no standard lodging allowance and so you need to keep your receipts for each lodging expense incurred. In order to claim lodging expenses, you need to stay away from home overnight.
Your lodging or any other travel expense (e.g., travel costs) can be disallowed if you don’t have a place of residence or a proper place of business. In which case, you would be considered to be a transient or itinerant and your place of work will be considered as your home for taxation. However, as an itinerant, you cannot claim any meals or lodging deductions, as you would never be considered to be away from your home.
3) Miscellaneous Expenses (On the Road)
To be deductible, the expense of the items should be ordinary, as well as necessary for the job. These expenses include items like logbooks, tools, cargo straps, safety gear, CB radios, GPS units, etc. Usually, for any of these expenses, receipts are needed; however, if the expenditure incurred is less than $75, then a receipt is not required. You must keep a record of all the purchases in a diary in a proper manner, however.
Keep in mind that any personal products that are used for business purposes are deductible. For example, a cooler used to store food and drinks, flashlights, sunglasses, binders, luggage, and similar.
4) Personal Electronic Device Costs
Electronic items such as cell phones and laptops are included in these expenses; however, since they can be used for personal purposes also, only 50% of the monthly fees can be deducted. If the devices are used for purposes of work, then the entire cost of the device can be deducted.
This also includes cell phone and internet fees, which are 50% deductible.
5) Maintenance and Vehicle Expenses
You can deduct the expenses incurred on truck maintenance and purchase of supplies such as the cost of new tires, oil change, cleaning supplies, repairs, washer supplies, etc. if you pay out of your pocket. However, if your employer gives you reimbursement for these expenses, you cannot claim a deduction. Parking fees and tolls you must pay while trucking are also deductible.
6) Professional or Union Association Dues
If you pay any fees as a member of any trucking industry organization or union, you can deduct 100% of these expenses from your taxable income.
7) Uniform Expenses
If you require wearing a uniform when you’re at work and your employer does not pay for the uniform, then the expenses incurred to buy uniforms are deductible. This expense also includes protective boots, goggles, or gloves. Any laundry expenses incurred while you are away from your home at work are also deductible.
8) Office Supplies Expenses
Expenses incurred on the purchase of office supplies that you use for your work (to keep track of your day or route) such as writing supplies, logbooks, clipboards, staplers, route maps, etc. are tax-deductible.
9) Sleeper Berth Expenses
If you make use of a sleeper berth while you’re away at work, then items like your bedding, alarm clock, cab curtains, first aid supplies, and mini-refrigerator are all deductible expenses.
10) Work-Related Expenses
Any expenses that are related to your work are tax-deductible, such as:
- Fees for driver’s license renewal.
- Fees for DOT physical exams.
- Fees for drug testing.
- Cost for sleep apnea study.
11) Truck Operating Expenses
Expenses incurred to operate the vehicle such as fuel, insurance & insurance premiums, licenses, maintenance, and taxes are all deductible, and depending on the cost, some of the expenses can be depreciated. This also includes leasing costs.
12) Vehicle Cost Write-Offs
According to the tax code, many options allow writing off the cost of the truck.
- You can also immediately expense the vehicle up to an amount of $510,000 in the tax year (the tax season) that the asset is put into service.
- You can depreciate the cost of the vehicle in the 1st year by 50%.
- Avail normal depreciation.
- Or a combination of all the above options.
These allow the owner-operators to pick any amount to write-off as per their convenience. The IRS permits a recovery period of:
- 3-year period for over-the-road tractors.
- 5-year period for heavy-duty trucks (more than 13,000 lbs), trailers, and trailer-mounted containers.
13) Child and Dependent Care Expenses
This enables you to recover some expenses that you may have incurred for the care of a child or dependent. To qualify for the credit the child must be under 13 years; however, in the case of disabled spouses or children, the eligibility is regardless of the age.
14) Child Tax Credit
You could claim a credit for an amount of up to $1,000 for every child under 17 years of age living with you and more than half of the child’s living expenses must be borne by you.
15) Earned Income Tax Credit
This tax refund credit is based on your business income and provides reduced tax liability of around $6,000 or more. This was developed originally for workers with a low income but has been not extended to middle-class families and individuals.
16) Medical Expenses & Exams
Even out-of-pocket fees for medical exams and other medical expenses are deductible — if they are required by the employer. Deductibility applies only if the amount exceeds a particular threshold.
While we’re at it, one tip we can share here is to fill up your health savings account (HSA). Funds that go into such an account are pre-tax, meaning you can use them to ensure your HSA is full and functioning (which might come in handy depending on whether you qualify for government subsidies for monthly insurance premiums—see below), while at the same time lowering your tax burden.
The second tip is regarding paying monthly insurance premiums and government subsidies for social security. If you apply for health insurance through the government, you need to make an estimation of annual family income first. If it is under a particular threshold, you can apply for subsidies for your monthly insurance premiums payments.
This comes with a caveat, though. If your actual annual family income turned out to be higher than your estimation, you will be required to pay back the balance.
Who Can Claim Truck Driver Tax Deductions?
As an employee of a trucking company who receives a W-2 at the end of the year, you can’t claim any of your job-related expenses. However, if you are a self-employed driver, you can deduct expenses related to your work.
What Expenses Aren’t Deductible?
- Street Clothing: Only the cost of protective clothing or uniforms is permitted as a deduction.
- Lost Income: Lost income does not require to be reported on the tax return, as it is accounted for. Examples of instances that cause loss of income are:
- Time spent to repair or maintain your equipment.
- Because of a deadhead.
- Suffering through an IRS audit or inquiry triggered by you claiming these deductions.
As an owner-operator truck driver, you incur several expenses. However, if you don’t claim all the expenses, you may end up paying more tax than necessary. These expense lists are regarded as itemized expense lists instead of standard expense lists. If you itemize all your expenses, you can claim more by way of deductions. However, you need to keep all the receipts and organized records of your expenses.
You don’t have to memorize the tax law by heart in order to benefit from applicable deductions! You could use the services of a tax professional, who can help you file your returns and get your money back.
General Tips on Truck Driver Tax Deductions
Here are some general tips that would pay to follow in order to make the best out of standard deductions, pay tax on time, and avoid penalties and audits from the IRS.
Prepare Documents and Your Tax Return in Time
Contractors will need their 1099-NEC form (which they use to report income for their services given) by January 31 the year that follows the tax year reported. You’d want to have this form sent to the contractors and then to the IRS well ahead, probably by mid-January at the latest.
After two years of postponed tax deadlines because of the COVID-19 pandemic, Tax Day returns to a more regular schedule: the IRS has set this year’s deadline to April 18, 2022.
Also, make sure that you calculate and pay your quarterly tax estimates. This has several advantages:
- Paying taxes approaching Tax Day will feel a lot less punishing to your account since you already pre-paid most of the liability;
- It’s an obligation for you to do it, and if you don’t you might get penalized for underpayment (calculated on how much you owe);
A good rule of thumb would be to set aside about 1/4th of your net income each week for your quarterly estimates. Just cut it out, maybe send it to another account, and make the payment each quarter. Finally, if you think that you underpaid the estimation throughout the year, you can catch up with the 4th quarter by paying more (but try to avoid this as it can trigger a penalty or an audit from the IRS).
Probably the best approach here is to have an accountant get everything you have in order well before you need to submit them (see below).
Hire an Accountant
We know, we know. Taxes are boring. Filing tax returns and forms — even more so. Luckily, there are people who seem to revel in looking at those piles of documents and extract something meaningful out of them: accountants.
In the case you find filing taxes cumbersome and bland, our advice would be to employ an accountant or a tax consultant. They will go through all the documents you send over them and will petition you for any additional info they might need. In the end, they will produce a filled tax return ready to be submitted to the IRS.
This doesn’t rescind your obligation to keep all the relevant documentation so that you can send it to your accountant, of course. Also, accountants and consultants are not machines, and they serve other clients besides yourself. So make sure you submit all documentation they require well ahead of Tax Day.
Can Truck Drivers Deduct Meals?
Before 2021, the IRS allowed an 80% deduction. Temporarily for 2021 and 2022, the Federal Consolidated Appropriations Act of 2021 (FCAA) allows a 100% deduction on Per Diem.
What Can a 1099 Truck Driver Write Off?
Here’s a list of some things you can write off on your 1099:
- Car expenses
- Health insurance
- Travel expenses
- Interest on loans
Are Deadhead Miles Tax Deductible?
In short, no, you can’t deduct deadhead miles. However, you can deduct all expenses associated with deadhead miles. Also, you can deduct all expenses on all laden miles.
Are Truck Drivers Considered Self-Employed?
Many truck drivers are classified as independent contractors by their employers.
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