Trucking & Taxes – October 2021

You’re a business owner and now have an entire suite of tax strategies available to you that W-2 employee drivers don’t. But are you taking full advantage of all the deductions for truckers? Trucking comes with a lot of taxes and subsequently tax liability. Filing tax returns as a driver is tricky, and for most that would be an understatement. Truck driver tax deductions also are a big deal when filing your tax returns.

There is a silver lining to trucker taxes – a lot of on-the-job expenses are tax deductible for an owner-operator. The IRS requires only one thing: that these expenses be “ordinary and necessary” to the job. We like to put this in these terms: if it relates to business, it is business and it should be expensed.

There are a lot of do-it-yourself owner-operators. So if you fall into that category, here are the deductions you could make.

Owner-operator truck driver tax deductions

Truckers are allowed to deduct “ordinary and necessary” business expenses. These are general deductions that apply to every owner-operator. Note that if you were reimbursed for any expense you cannot apply for a deduction for these expenses.

Vehicle maintenance

This truck driver tax deduction is applicable when you pay out of pocket for vehicle maintenance and supplies. Examples of such expenses:

Oil changes
Tire repair or change
Cleaning supplies
Washer fluid
Brake fluid changes
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Association membership dues

Paying to become a member of an association such as OOIDA, a union or organization related to the trucking industry is deductible from your taxable income.

Travel expenses

You can deduct expenses related to work travel, like per diem expenses that include special meals and incidental expenses (meals, hotel rooms, laundry and gratuities). This is where the “tax home” becomes important as we discuss in the OOIDA Foundation Truck to Success seminar. Don’t forget the next Truck to Success seminar is Oct. 26-28.

What is a tax home?

As defined by the IRS, a tax home is the entire city of the general area of your workplace. The home is not your actual home but the workplace location.

For many truckers, the tax home is a base or dispatch center.

This IRS designation exists for one purpose – to determine your work-related travel expenses. It is what it is because if you were to put your actual home as the tax home, then any expense out of said work home could be considered a work-related travel expense. The IRS is determined to prevent this from happening. As always consult with a professional tax expert.

Sleeper cab expenses

For drivers who use their sleeper berth, additional tax deductions apply. These include bedding, alarm clocks, curtains, mini fridge, coffee pot and first aid supplies.

Electronics

Any cost associated with a work cellphone is tax deductible. You also can deduct the costs for your GPS unit, CB radio, ELD, and internet you use while on the road.

Office supplies

Office supplies that are a part of each trucker’s inventory are also tax deductible. This includes hard copy maps, staplers, logbooks, paper sheets, clipboards, pens, pencils, paperclips, envelopes, folders and rubber bands.

Tools

Deduct the tools that are necessary for the operation and maintenance of the vehicle are also usually tax deductible. Some such tools include wrenches, hammers, mallets, ratchet straps, chains, tarps, pliers, tire irons, ice scrappers and bungee cords.

Work gear uniforms

Under this deduction, additional gear is also included, like protective gloves, boots, goggles, safety vests, steel toe boots and hard hats. And as we mentioned with the travel expenses, cleaning services for work uniforms and gear is also tax-deductible. Uniforms are deductible only when they are mandatory, and your employer does not cover their cost.

Other work-related fees

CDL renewal fees
DOT physicals
Drug testing fees
Load board fees
Trucking magazine fees
Sleep apnea study costs
Tollbooth fees
Parking fees
ATM fees
Postage
Business loan interest
Fuel and fuel cards paid out-of-pocket (for company drivers)
Personal care items and cleaning supplies (soaps, toothpaste, razors and even vacuum cleaners)

Always please consult with you tax preparer on the deductibility of your expenses.

Most common IRS forms for owner-operators

The W-2 Form

This form is specifically for company drivers, and it reports the trucker’s annual income. The employer must give the W-2 form to the employee by the end of January. As an owner-operator, if you are employing drivers you must file this and pay the payroll taxes accordingly. We strongly suggest a payroll company to do this for you.

Form 1040

We should all be aware of this form because it is used by U.S. taxpayers to file their annual income tax returns. For owner-operators, this will usually include Schedule C unless their business is incorporated and reporting as a partnership or S-corp.

Form 1099

The Misc. NEC Annual Income form, Form 1099, is used by owner-operators and drivers who have taken freelance loads to report miscellaneous annual income.

Form 2290

The Heavy Highway Vehicle Use Tax form is used to assess tax on heavy vehicles that operate on public roads. The vehicle must be 55,000 pounds or more. LL

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