If you work as an independent contractor for a truck driving company, you will receive a form 1099. A 1099 is used to report miscellaneous income and is untaxed. 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. When filing with 1099 income, you are expected to pay 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 net over $25,000 a year after deductions and exemptions, the IRS expects you to file and pay taxes quarterly. A rule of thumb is to save 25% of net income to save 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.
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. Also, if your employer reimburses you for business expenses, you are not able to deduct it on your tax return. The IRS can audit tax returns up to seven years old; store your receipts for at least five 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 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, flash lights, 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, log books, clipboards, pens, maps, and staplers are tax-deductible items.
Sleeper Berth
If you use a sleeper berth, you can deduct items such as bedding, cab curtains, 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. The standard meal allowance varies by location. If you do not have a stay over, you are not allowed to declare your meals.
Work-Related Fees
Several work-related fees are tax deductible. All costs with obtaining and maintaining a commercial driver’s license are tax deductible.
They include, but not limited to:
- Driver license renewal fees
- DOT physical exams
- Drug testing fees
- Continuing education
- Subscriptions to Trucking-Related Publications
- Sleep apnea study
Other Common Deductions
Several tax deductions are available to the public but are no less valuable to drivers. It’s important to not overlook these common deductions.
Lifetime Learning and American Opportunity Credits
If you, your spouse, or your child are 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. For income below $66,000, the IRS allows you to file free using their software. In addition, there are other free file software options out there. Please view the free file software list of trusted companies. 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.