Truck Driver Tax Deductions
Owner Operator Tax Deductions
Many truck drivers that own and operate their own trucks are experienced when it comes to filing taxes. They think they already know everything they can deduct off their tax bill. However since tax laws change and memories fade, it never hurts to review what the government allows for expenses. If you are new to the business of being an owner operator, it is even more important that you have a good grasp on how this will affect you at tax time. Either way, owner operators are in a unique position and need to take a second look at how they file their taxes.
The first and most important thing that owner operators need to understand about truck driver tax deductions is that they are treated differently than normal employees of a company, such as a company driver. This may come as a surprise, particularly to those that may not realize what they are getting into until it is tax time. If you are a new truck driver, and there is any doubt as to how the company you haul freight for will treat you, ask them whether you will be receiving a W-2 or a 1099 at the end of the year. Employees get W-2s and have taxes held out of their paychecks from week to week; whereas, people who receive 1099s are regarded as independent contractors and are responsible for paying all their own taxes out of pocket.
The other part of this that owner operators need to understand is they will be required to file another form with their taxes called a Schedule C. This is where all 1099 income will be reported, as well as any other truck driving income. While to new truck drivers it may seem like a bad thing to have to file another tax form (and pay someone to prepare it), they actually have a unique advantage that employees do not. The Schedule C treats their income as if it comes from their own business, which means they are allowed to deduct their expenses dollar for dollar. Employees can deduct their expenses as well, but the government makes it harder for them to do so, without the same tax breaks the Schedule C allows.
This leads to the next question of what owner operator tax deductions can go on the Schedule C. The answer is just about any work related expenses the driver has. For a great guideline to keep track of your expenses, use: Tax Deductions Truck Drivers Miss. Not only will it keep you from overlooking key deductions, it will also help you to categorize your receipts. While it may not seem like there will be that many things to keep track of, truck drivers often have more expenses than even they realize. Any supplies for your truck from the curtains in the windows to trash bags for the garbage count as deductions. Even the alarm clock and clothes hangers that you use all count towards expenses against your income. Any driver that stays out overnight will have personal hygiene expenses to claim for showers and laundry.
In that same manner, any owner operator that buys tools has deductions. Besides the obvious ones like hammers and pliers, load straps and bungee cords, think about all the other things you need to do your job. Duct tape and flashlights come in very handy both on the road and at tax time. All truck drivers use boots and gloves, and many need safety glasses and hard hats as well. Do not to forget to include office supplies because they are important tools of the trade. Pens and paper may not cost much, but when they are added with log books, calculators, clipboards, and staplers, the money spent continues to add up.
This is intended as a guide for deductions you may be able to take.
Consult a tax preparer for other deductions you are eligible to take.