Taxes are never fun, but maximizing your tax savings can make the process less stressful. Truck drivers can benefit from many tax deductions, all of which can help them reduce their business costs.
With these eighteen deductions, drivers can minimize their tax burden and make truck driver tax preparation a little easier. Learn how truck driver tax deductions can save your business money as an owner-operator truck driver.
What Are Tax Deductions?
As a self-employed owner-operator truck driver, there are many deductions you can take to maximize your tax savings. Tax deductions are things you can subtract from your taxable income while filing taxes to reduce the amount of money you owe.
There are many expenses you have while running your trucking business. With trucker tax deductions, you can subtract eligible expenses to save money come tax time.
Who Can Claim Truck Driver Tax Deductions?
There are two main types of truck drivers, those being company drivers and owner-operators. Company drivers work as employees, and as such, they receive a W-2 tax document at the end of the year.
These company drivers are not eligible for truck driver tax deductions. Owner-operators or contract drivers are self-employed truckers. As business owners, these owner-operator truck drivers receive 1099 tax forms.
They also have expenses related to running their businesses, and these expenses are tax-deductible. Therefore, these owner-operators can claim truck driver tax deductions.
18 Trucker Tax Deductions
As an owner-operator truck driver, you can maximize your tax savings with these eighteen trucker tax deductions.
You will need many types of business insurance to operate your trucking business safely as well as legally. Some examples include commercial auto liability, general liability, non-trucking liability and cargo insurance.
You can deduct the cost of these insurance policies when filing taxes. Owner-operators who pay for their own health insurance can also deduct this from their taxes, though it needs to be done in a separate place on their tax returns.
Many truck drivers are part of either a trucking association or a union. You can deduct your membership fees and dues on your taxes as long as the organization is directly related to your work as a truck driver.
You can deduct educational expenses related to your trucking career from your trucker taxes. Whether to maintain your commercial driver’s license or learn how to manage your business better, these educational courses are considered a business expense when filing taxes.
The cost of any electronics that you use exclusively for work, such as a laptop or a phone, can be deducted from your taxes. If you use the device for both business and personal use, you can deduct the percentage of use that is related to your job. For example, if 50% of your $500 cell phone use is for work-related purposes, you can deduct $250.
Cell Phone Plans
As with the cell phone itself, any phone plan used exclusively for your trucking business is a trucker tax deduction. If you also use the plan for personal use, you can calculate the percentage of time used for work-related use and deduct that percentage as well.
If you’re a long-haul or regional driver who spends enough time on the road to be subject to hours of service regulations, you can claim 80% of your meal expenses on your taxes. There are two ways to claim food-related expenses.
Either you can keep track of your receipts every time you buy food on the road or you can deduct a per diem rate. For drivers who opt for the per diem method, the amount you can deduct will vary based on where you drive. Further information about the per diem method can be found on the U.S. General Services Administration’s website.
Clothes For Business Purposes
Any special apparel that is needed while you work can be considered a truck driver tax deduction. For example, gear such as steel-toed boots, safety goggles and back braces will qualify, as does clothing featuring your company’s logo. However, everyday clothing that you wear while driving is not eligible for a deduction.
Dispatch and Licensing Fees
If you use a dispatch service for your loads, you can claim the expense on your tax return. Also, you can deduct the cost of your CDL and business license needed to operate in your area, if applicable. As with other trucker tax deductions, make sure you collect proof of payment for these fees.
Load expenses are specialized forms of equipment that are needed to transport your loads safely. Some examples of load expenses include straps, chains, locks and wide load flags. With a bookkeeping service or software, you can make it easier to keep track of these miscellaneous expenses.
Part of being a commercial truck driver entails the need for regular medical exams. If there are medical exams you must undergo for work-related reasons, you can deduct them as a business expense on your taxes by claiming them as an itemized deduction.
If these exams are not directly work-related, you might still be able to deduct them on your taxes, but only as a personal deduction. Keep that in mind.
Tools and Equipment Costs
Good truck drivers are prepared for anything. Most drivers will carry a tool kit in their truck. They will fill the tool kit with items such as tire irons, hammers, wrenches, duct tape and screwdrivers. These tools and equipment are truck driver tax deductions when they are used exclusively for your business.
Fuel and Travel
As an owner-operator driver, you need to file quarterly International Fuel Tax Agreement (IFTA) reports. With this information, you can easily deduct fuel costs while filing taxes. Along with fuel expenses, you can also deduct related travel expenses, like parking fees and tolls, for even more tax savings.
You can deduct your trucking-related subscriptions, such as websites and magazines, from your trucker taxes.
Truck Maintenance and Repairs
As a qualified non-personal use vehicle, you can deduct the cost of repairing or maintaining your truck. This includes emergency repairs, regular servicing and even car washes.
Other vehicle expenses, such as depreciation and loan interest, also qualify as trucker tax deductions. However, as a truck driver, you must keep track of actual costs, as there is no standard mile deduction in the industry.
Even in the trucking industry, you’ll need office supplies to run your business. From pens and paper to software designed for truck driver accounting and more, you can deduct office expenses for additional tax savings.
Occupational and Excise Taxes
To avoid double taxation, keeping records of any occupational or excise taxes paid throughout the year is important. Then, come tax time, these expenses will be viewed as truck driver tax deductions.
If you sleep in your truck while on the road, you can claim expenses for setting up your sleeper berth. These costs include bedding, storage containers, a mini fridge and more.
For drivers who stay overnight in hotels as part of their job, the associated expenses can be deducted. However, there are not any per diem rates for lodging, and truckers need to keep track of receipts to claim their actual travel expenses.
Non-Trucking Tax Credit
There are additional tax credits that truck drivers can qualify for based on their personal situations. While these deductions are not work-specific, they still equate to considerable tax savings. Some examples of non-trucking tax credits are earned income tax credits, child care credits, dependent care credits and educational credits.
Maximize Your Tax Savings With Trucker Tax Deductions
You can benefit from various tax deductions if you’re an owner-operator or you run your own trucking business. So, be sure to keep track of your receipts and use a trucking accounting service or software to ensure that you receive the largest tax return possible.
If you’re an independent contractor or an owner-operator truck driver, you can write off fuel expenses on your taxes. However, company drivers cannot write off fuel.
Long-haul truck drivers can write off showers as a travel expense on their taxes.
Truckers can sometimes claim per diem tax deductions to cover meals and lodging. To qualify, you must be away from home for longer than a typical day’s worth of work, and your work must require you to seek food or lodging on the job.
Sign up for a FreightWaves e-newsletter to stay informed of all news and trends impacting supply chain careers and operations.