When it comes time to file truck driver taxes, are you a 1099 truck driver or a company driver?
A 1099 trucker is an independent contractor who is self-employed and receives Form 1099-NEC from clients at the end of each tax year. Working as an independent contractor has many benefits, including more control over your work schedule and eligibility for tax deductions.
Learn more about 1099 for truck drivers and the advantages of a career as an independent driver.
What is a 1099 Worker?
A 1099 is a tax form that independent contractors receive from their clients to file their taxes. Therefore, a 1099 worker is a self-employed individual who receives one or more 1099s from their clients. Owner-operators are considered 1099 truck drivers based on this tax-filing status.
Independent contractor trucking offers pros and cons. By working as a 1099 truck driver, you are your own boss and have far more control. You are also able to claim more truck driver tax deductions available for owner-operators, and you may find that you have higher earning potential.
Despite the benefits of being a 1099 worker, independent truck drivers have a lot more responsibility. Along with needing to fund their own health insurance and retirement, 1099 workers must pay 100% of their federal, state, local, Medicare and Social Security taxes.
How Does a 1099 Tax Form Work?
The 1099 tax form documents payments made to an independent contractor during the year. Any client that has paid an independent contractor truck driver or other non-employee more than $600 within the tax year is required to fill out Form 1099-NEC and send it to them and the IRS by February 1.
You can find the following information on a 1099 tax form:
- The payer’s name, address and phone number
- The payer’s Tax ID Number
- The recipient’s TIN or SSN
- The recipient’s name and address
- The total amount of non-employee compensation paid to the recipient within the tax year (Box 1)
- Whether any federal income tax or state tax was withheld and the amount
After receiving all of their 1099-NEC forms, one from every client who paid them more than $600 in the past year, 1099 workers file Form 1040 to calculate taxes owed.
5 Top Advantages of Being a 1099 Trucker
Working independently as a 1099 truck driver has many benefits, including more control over the type of loads you take, your schedule and your earnings. Learn more about the top advantages for 1099 truckers here.
Tax Deductions
As a 1099 worker, owner-operator drivers get to take more deductions on their truck driver taxes than W-2 company drivers. Only independent contractor drivers who receive 1099 forms can claim the following tax deductions:
- Insurance premiums including commercial auto liability, general liability, non-trucking liability and cargo insurance
- Trucking association or union dues
- Educational expenses including CDL training
- Business electronics and cell phone plans
- Eating expenses for long haul drivers subject to hours of service (HOS) regulations
- Work-specific apparel and safety gear
- Dispatch and licensing fees
- Load expenses such as straps, chains, locks and wide load flags
- Work-related medical expenses
- Tools and equipment costs
- Fuel and travel expenses
- Trucking magazine or website subscriptions
- Office expenses
- Occupational or excise taxes paid throughout the year
- Sleeping expenses including sleeper berth costs and hotels
Earning Opportunity
Since 1099 truckers work for themselves, they have higher earning potential. Rather than relying on a boss to issue a pay raise, an owner-operator can seek out higher-paying loads and clients to boost their income.
Independent drivers generally earn more than company drivers since they get a larger percentage of revenue from each load. These independent workers assume more responsibility and are paid more because of this risk.
Plenty of loads are available for 1099 truckers, so hardworking drivers shouldn’t have an issue meeting their financial goals.
Wider Range of Work Experience
By working as an independent 1099 truck driver, you can build a wider range of experience to develop professionally. Since independent drivers aren’t limited to the work their employer offers, they may find more opportunities for hauling different loads, driving various trucks and working with a wide range of companies.
If you’re a truck driver that enjoys variety in your work, becoming an owner-operator can further expand your job opportunities. Owner-operators are 1099 truckers who own their truck and choose their own loads. Regardless of the independent driver’s path, they can enjoy variety in their jobs while building their resumes.
Work Flexibility
Being self-employed means that 1099 truck drivers enjoy a large amount of work flexibility. Independent contractor truck drivers can choose when and where they work and for how much.
If a 1099 trucker wants to spend more time with their family or go on a vacation, they can do so without approval from a boss. They also get to choose their clients, the types of loads they take and the rates they’re willing to accept.
Independence
Many truck drivers enter the profession with dreams of freedom on the open road. As a 1099 driver, this dream can be your reality. With control over your schedule, the type of loads you haul and client relationships, independent contractor truck drivers have more independence than company drivers.
Rather than working as an employee of a company, 1099 truck drivers are responsible for deciding when, where and how they work. It is the degree of control and independence a worker has that determines whether they are classified as an employee or contractor.
1099 Trucker vs. W2 Trucker
An independent contractor or owner-operator 1099 truck driver is self-employed. Rather than being employed by a trucking company, these drivers work for themselves. They decide what loads they haul and when. Also, 1099 truckers receive 1099-NEC forms from their clients to file their taxes.
In contrast, a W2 trucker is a company driver or fleet driver who works directly for a trucking company. These drivers are classified as employees and report to management. At the end of the year, W2 truckers receive Form W-2 from their employer to file their taxes.
Independent Contractor Trucking and You
Working as an independent contractor means more responsibility in your job but also more flexibility, higher earning potential and tax deductions. So if you’re looking to take the next step in your career, consider becoming a 1099 truck driver.
FAQ
The amount of tax owed on 1099 income depends on how much you earned, what tax deductions you’re eligible for and other factors the IRS determines when you file taxes. Self-employed workers with 1099s must pay both income taxes and self-employment taxes for Social Security and Medicare.
Self-employed or independent contractor truck drivers need a 1099 form from each client that pays them $600 or more during the tax year. Company drivers who receive a W-2 do not receive 1099 forms.
It is legal to work as a 1099 truck driver.
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