If you work as an independent contractor for a truck driving company, the business you drive for will issue a Form 1099 by January 31st. Businesses issue Form 1099s to report payments made to independent contractors. Recipients use the information on their Form 1099 to accurately report income when filing their own tax return. You are still required to fill out a yearly 1040/1040A tax return; however, this income is reported on a separate sheet of the tax return, Schedule C.
When driving as an independent contractor and filing using a Form 1099, you are expected to pay your own income taxes, including Medicare and Social Security. Depending on your state, you may also need to file a state income tax return.
Tips for Filing Truck Driver Taxes
- If you expect to owe $1,000 or more in federal tax (after withholding and credits) when you file your return, you’ll generally need to make quarterly estimated tax payments. You can use Form 1040-ES to figure your estimated tax. A rule of thumb is to save 25% of your net income for federal taxes.
- The IRS allows drivers to deduct any business expenses deemed ordinary and necessary. There are many expenses that qualify as allowed deductions. With some planning and record keeping, you can be in more control of your earnings and lower your tax bill. Remember: If your employer reimburses you for business expenses, you cannot deduct them again on your tax return.
- Be sure to pay with a check or debit/credit card and keep all the receipts for items that you plan to deduct. Anything you pay cash for without a detailed receipt or bill of sale is treated as a non-deductible personal expense, not a business income deduction.
- The IRS can audit tax returns up to seven years old; store your receipts for at least seven years to be safe.
- When filing taxes, it is important to know the rules and what deductions you can take. For truck drivers, there are specific rules for claiming deductions. If you need additional help, ask a tax professional to review your accounts. ATBS is a business that specifically helps self-employed CDL drivers and owner operators with tax accounting and filing. Call (866) 920-2827 for enrollment information.
Common Truck Driver Tax Deductions
- Truck Maintenance. If you pay out-of-pocket for any truck maintenance, tools, and supplies, you may be able to deduct these costs come tax time. These expenses can include oil changes, washer fluid, duct tape, flashlights, hammers, and cleaning supplies (trash bags, hand cleaner, paper towels).
- Union or Professional Association Fees. If you pay fees as part of a union or trucking industry organization, you can deduct them on your tax return.
- Uniforms. Uniforms are deductible as a business expense. This includes work gear like protective gloves, sunglasses, rain gear, goggles, or boots. Cleaning expenses for your clothing are also deductible when you spend a night away from home.
- Office Supplies. If you use office supplies to keep track of your route or your day, they are deductible. For example, logbooks, clipboards, pens, maps, and staplers are tax-deductible items.
- Sleeper Berth & Onboard Items. If you use a sleeper berth, you can deduct items such as bedding, cab curtains, an alarm clock, and first aid supplies. As a local driver, you may be able to deduct any items you bought specifically for your overnight bag should you reach your HOS limits.
- Electronic Devices. If you have a cell phone, GPS, or CB Radio that you use solely for work, you can deduct those costs on your tax return.
- Travel Expenses. If you have an overnight away from home, you can deduct expenses for overnight stays, including hotel rooms and per diem expenses.
- Truck drivers who meet the DOT hours-of-service rules receive special per diem M&IE rates, and meal expenses are deductible at 80%. Publication 463 explains special per diem rates and the 80% provision for truck drivers who meet the hours-of-service criteria.
- Keep in mind that tax laws, thresholds, and rates are adjusted annually so be sure to check the latest IRS guidance or consult a tax professional familiar with trucking and owner-operator issues.
- CDL & Compliance Costs. Several work related fees are tax-deductible. All costs of obtaining and maintaining a commercial driver’s license are tax-deductible. They include, but are not limited to:
- Driver’s license renewal fees
- DOT physical exams
- Drug testing fees
- Continuing education
- Subscriptions to Trucking-Related Publications
- Sleep apnea study
Other Common Deductions
Be sure to check the common tax deductions that are available to the public.
- Lifetime Learning and American Opportunity Credits. If you, your spouse, or your child is taking college classes, you may be eligible for these credits. They are designed to reimburse students for some of the tuition and fees they paid. Keep in mind that if grants or scholarships covered your expenses, you cannot use these credits.
- Child and Dependent Care. This credit helps you recoup some of the costs associated with child or dependent care. Most children must be under age 13 to qualify for the credit. However, disabled children or spouses are eligible, regardless of age.
- Child Tax Credit. You may be able to claim a credit of up to $2,000 per child under the age of 17. The child must live with you most of the year, and you must pay more than half of their living expenses.
- Earned Income Tax Credit. This credit can provide you with $6,000 or more in reduced tax liability. The amount of your credit is reflective of your income.
How to File Your Tax Return
Depending on your income or tax return needs, you may be able to file for free through the IRS. For income below $84,000, you can use the IRS Guided Tax Software for free or use Free File Fillable Forms for any income level. Some of these companies also offer free state tax return services. If your state is not listed, be sure to check your individual state’s website for any tax filing programs they may offer.