8 Tax Deductions for Owner Operator Truck Drivers That You Can Use
Truck driving comes with a considerable amount of expense — from fueling up to eating. Income Tax season is the time to get some income tax breaks and some of that money back by claiming tax deductions for owner operator truck drivers. Consequently, you will end up paying less tax because your adjusted gross income and taxable income will be lowered.
Who Can Claim Tax Deductions for Owner Operator Truck Drivers?
As a trucking company employee, if you receive a W-2 at the end of the year, you cannot deduct any of your job-related expenses. You can deduct expenses related to your work if, on the other hand, you are self-employed on Schedule C, you'll report your trucking income and expenses with 1099s, along with any records you keep of your earnings and expenses. You may also need to file Schedule SE for self-employment taxes as a truck driver.
A 1099-NEC should be issued at the end of the year to any owner or operator who received more than $600 in payments during the year. You'll use those 1099s, plus your own records of income and expenses, to report your trucking income and expenses on Schedule C. You may also be required to file Schedule SE, which is a self-employment tax form. Combined with your Form 1040 tax return, both of these forms need to be filed.
Tax Deductions for Truck Drivers Owner-Operators
As a truck driver, you may be eligible for the following common tax deductions for owner-operator truck drivers. Deducting expenses listed below may help trucking companies and truckers improve their profitability.
Union / Association dues
The majority of truck drivers are members of the trucking industry's union or association. As long as the fees are related to a business or to your trucking career, you can deduct them.
Cell phone / Tablet / Laptops
You can deduct the full cost of a cell phone, tablet, or laptop you use exclusively for work, as well as the monthly data or internet plan you use. In the case of the same device used for both business and personal purposes, the use percentage for business can only be deducted.
Internet Fees
A truck driver may require a cell phone and Internet connection while on the road, which can result in high fees for mobile and internet. The owner-operator tax deductions for this are limited to 50% of drivers' mobile or internet costs as both professional and personal usage of these tools is allowed. However, do not be discouraged, since the full cost of your mobile device or laptop is deductible as well.
Insurance Coverage
Besides the liability coverage and property damage coverage you are required to keep on your truck, you may also select insurance to cover cargo or lost income if your business is interrupted. Premiums for these coverages are deductible from your business expenses.
As well as paying for your own health insurance, you may also have to pay for prescription drugs. You can deduct prescription drugs, but they don't count as business expenses. Rather, you deduct your health, dental, vision, and life insurance costs on Schedule 1 of Form 1040 for you, your spouse, and your dependents.
Apparel
Clothing worn for everyday usage isn't deductible, regardless of whether it's only worn at work. But safety gear and specialized clothing you need for your jobs, such as goggles or back supports, is deductible.
Training / Education
CDL drivers and other advanced drivers must undergo training to obtain or maintain their licenses. In general, you can deduct the costs of education you receive only if it enhances your skills in your current profession or is required for your job. Truckers can also take claim License fees for tax deduction.
Medical Exams
As part of their job requirements, many drivers are required to undergo regular medical exams. A company can deduct the costs of these required exams from their business expenses. Unless you itemize deductions on Schedule A, regular medical expenses, including visits to the doctor and prescription medication, are not deductible.
Meals
During work hours, food and rest costs are deductible if necessary for you to be able to do your job. When it comes to meals, some companies have per diem allowances (per diem rate) or standard meal allowances. Ensure that receipts are kept as proof that meals were actually consumed.
In Summary
You can prepare for tax season by doing certain things throughout the year. It can be beneficial for an owner-operator truck driver to keep accurate records of actual expenses.
The following list of common business expenses is by no means exhaustive, but it can help you get an idea of what to expect. Make sure you keep track of travel costs such as mileage and repairs. Keep receipts and documents for any expenses you may incur.