Company Truck Driver vs Owner Operator Taxes

Ines Zemelman, EA

• 06.10.21 • 5 min read

Company truck driver tax deductions are a terrific method to save money on taxes. The money you spend on the road for work could boost the amount of money you get back from taxes. As a result, keep meticulous records of any job-related expenses. Staying organized could help you save a lot of money on your taxes. Remember to see a tax professional if you have any queries or concerns.

Tax filing process

If you work for a firm as a company driver, you should receive your W-2 form by the end of January. The income and annual pay of a trucker are reported on a W-2 form. The data from the W-2 will be used as tax preparation for truck drivers to complete a 1040 or 1040A tax form. The 1040EZ is a reduced version of this form, but you must meet many requirements to use it. This includes:

There are several tax deductions for company truck drivers that can save you money, so think twice before choosing the 1040EZ.

 If you’re a sole proprietor, a 1099 form is the simplest way to report your earnings. Miscellaneous earned income is reported on the 1099 form. It’s critical to be organized if you’ve decided to become an owner-operator. This form allows you to itemize your job expenses and deduct them from your taxes.

 Tax deductions

How do owner-operators file taxes? Owner-operators must estimate their business profit to make projected tax payments. When you submit Form 1040 at the end of the year, the profit is also used to figure out how much tax you owe. You should apply the following profit equation:

GROSS PAY (as reported on 1099-MISC) – ALLOWABLE BUSINESS EXPENSES = NET PROFIT

Suppose you fail to disclose deductions or file a tax return. In that case, the IRS will calculate your tax liability without taking into account any of your possible deductions. This amount will almost definitely be significantly higher than what you would have had to pay otherwise.

While there are owner-operator tax deductions, there are also others that are unique to company drivers. Local drivers, in general, are not eligible for these reductions. You must have a “tax home”—a location where the IRS can contact you—to claim these deductions. This is usually your home address. A solid rule of thumb is that you can’t claim anything that your employer reimburses you for because you’ve already received that money.

Here’s a short rundown of the tax breaks you might be eligible for:

 Common business expenses  

Here are a few typical business expenses that truck drivers and owner-operators should consider when requesting tax deductions. However, you must pay close attention to details and maintain all receipts for your expenditures and other important data for many years. When needed, this will be presented to IRS (Internal Revenue Service) officials as verification.

1. Travel Expenses

This is a comprehensive element of tax deductions. Tax deductions are available for expenses incurred by a truck driver while on the road. Transportation to and from meals, as well as hotel and other costs, are among them.

 2. Associations

You are expected to be a member of a particular union or other collective trucking body as a truck driver or owner of a commercial trucking company. It may be interesting to know that the dues for membership in these organizations are entirely tax-deductible.

 3. Medical Exams 

Like many other workers, truck drivers are required to undergo a variety of medical exams and examinations. Before employment, drivers who were required to undergo medical tests are also entitled to reimbursement of their out-of-pocket expenses.

4. Truck Maintenance Costs

 Expenses for truck maintenance and cleaning are deductible regardless of whether you are leasing the truck from the firm, working as an employee, or owning the truck.

 5. Work-Related Fees

 The expenses incurred in getting and keeping a commercial driver’s license are tax-deductible.

 6. Telephone and Internet Access

 The Internal Revenue Service is fully aware that many truck drivers rely on mobile phones and wireless Internet laptops to keep their businesses running smoothly. 

7. Fuel

 Truck drivers can deduct their out-of-pocket gasoline costs incurred during regular business activities. This will be repaid as long as the total does not exceed $100.

Truck drivers, in general, must be aware of the specific requirements for claiming deductions. It's critical to stay on top of updates so you don't lose out on any tax deduction opportunities or over-claim deductions.