Trucking comes with a lot of tax liability. To say filing tax returns as a driver is tricky would be an understatement. Truck driver tax deductions also are a big deal when filing your tax returns.
The silver lining here is the fact that a lot of expenses on the job are tax-deductible. The only thing that must be met is for these expenses to be “ordinary and necessary” to the job.
However, it is important to note that some of these deductions are specific for owner-operators, as you can not claim deductions for expenses covered by your employer.
Here is how to file for your your tax returns, what deductions you can make, as well as all the form you may require to file for it.
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Quarterly vs Yearly Truck Driver Taxes
It is recommended for owner-operators to file both quarterly estimated tax payments and an annual return. The IRS considers all truckers who own their truck to be self-employed. Truckers who take on additional freelance hauls are also considered to work for themselves.
It is a general rule for all independent workers who have not opted in for pre-paying their tax by having it deducted from their earnings to pay a self-employment (SE) tax, as well as pay regular income tax. Corporate fleet drivers, on the other hand, have taxes taken out from their earnings and are only required to file annual reports.
How to Make Quarterly Tax Payments?
To make estimated quarterly payments, the IRS form 1040-ES is used. This form contains similar information to the annual 1040 forms. The form works on installments, or periodic income tax payments, and they are based on the 1040-ES forms from the previous year (in some cases, annual reports are used, as it depends on which matches your current income the closest).
Company drivers receive a W-2 form. This form reports their salaries and income. This is an annual report which must be mailed by the employer to the employee by the end of January. The income is reported on the annual 140 forms (1040 or 1040A), and optionally, there is a short form named 1040EZ, but it does not allow deductions from the trucking industry.
More on IRS forms at the end of this post.
Tax home is defined by the IRS as the entire city of the general area of your workplace. The home is not your actual home, but the workplace location itself.
For many truckers, the tax home is a base or dispatch center.
This designation exists for one purpose – to deduce 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. Needless to say, the IRS is smart to prevent this from happening.
As an exception, your actual home can be your “tax home”, and this is for work-at-home people with travel assignments directly from home. However, if you do not have a permanent address and a fixed workplace, you can become an itinerant in the eyes of the IRS, and this means that you will not be able to deduce any taxes because you technically are never away from home.
Both of the above are exceptions that are important for owner-operators, and the former comes with a trick – if you have your actual home as a “tax home”, you must help maintain the property by paying bills, or you might end up becoming the latter, and be disallowed deductions.
Truck Driver Tax Deductions
Truckers are allowed to deduct “ordinary and necessary” business expenses. Although they can vary based on an individual level, there are general deductions that apply to every driver.
This truck driver tax deduction is applicable when you pay out-of-pocket for vehicle maintenance and supplies. Such expenses include:
- Oil changes,
- Tire change,
- Cleaning supplies,
- Washer fluid,
- Brake fluid changes.
Please note that you can not apply for a deduction for these expenses if you were reimbursed by your employer.
Association Membership Fees
Paying to become a member of a union or organization related to the trucking industry is deductible from your taxable income.
This is where the “tax home” becomes important. You can deduct expenses related to work travel, like per diem expenses that include special meals and incidental expenses (meals, hotel rooms, laundry, gratuities.)
Yes, for drivers who use their sleeper berth, additional tax deductions apply. These include bedding, alarm clocks, curtains, mini-fridge, and first aid supplies.
Office supplies that are a part of each trucker’s inventory are also tax-deductible. This includes writing supplies, hard copy maps, staplers, logbooks, paper sheets, clipboards.
Work Uniforms & Gear
Uniforms are deductible only when they are mandatory and your employer does not cover their cost. Under this deduction additional gear is also included, like protective gloves, boots, goggles, safety vests, and hard hats. And as we mentioned with the travel expenses, cleaning services for work uniforms and gear is also tax-deductible.
Any cost associated with a work cell phone is tax-deductible. You can also deduce the costs for your GPS unit, CB radio, ELD, and internet you use while on the road.
Tools that are necessary for the operation and maintenance of the vehicle are also usually tax-deductible. Some such tools include wrenches, spanners, hammers, mallets, ratchet straps, chains, tarps, pliers, tire irons, and bungee cords.
Other Work-Related Fees
Other work-related fees that are tax-deductible include
- CDL License renewal fees
- DOT physicals
- Drug testing fees
- Sleep apnea study costs
- Tollbooth fees
- Parking fees
- Fuel and fuel cards paid out-of-pocket (for company drivers)
- Personal care items and cleaning supplies (soaps, toothpaste, razors, even vacuum cleaners)
The common deductions are not less important for truck drivers, as they can help alleviate the truck driver’s tax liability further.
Earned Income Tax Credit
This is an income-based refundable credit that can reduce your tax liability by $6,000 and above. This tax deduction was originally introduced for low-income individuals but has since been expanded to encompass some middle-class individuals.
Child and Dependent Care/Child Tax Credit
The first deduction helps you get some of the costs back that are associated with child or dependent care. Your child must be 13 or less to be eligible for a child and dependent care, however, there is an exception: disabled children, as well as disabled spouses, are eligible for this deduction no matter their age.
The second deduction, child tax credit, gives you the ability to claim a credit of up to $1,000 per child that is under the age of 17. To become eligible, the child must live with you most of the year, and you must cover for more than half of their expenses.
Lifetime Learning and American Opportunity Credits
You become eligible for these credits if a member of your family is taking college classes. These deductions are designed to reimburse students for fees and tuition they paid for. However, the student must not have won grants and/or scholarships for their expenses to be eligible.
IRS Forms for Truck Driver Tax
Here all IRS forms a truck driver may have to deal with:
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.
Then, the employee takes the W-2 Form and uses it to report their taxes on the standard 1040 form.
You can find the W-2 Form here.
This form is used by US taxpayers to file their annual income tax returns. There are two options for submitting this form: without schedules, and with required schedules. The latter is required when the return has deduction claims, credits, or additional tax liabilities being owed. In this case, the form must be completed within a required schedule.
You can find Form 1040 here.
The Misc Annual Income form, the Form 1099 is used by owner-operators and drivers who have taken freelance loads to report miscellaneous annual income.
You can find Form 1099 here.
This form is used to deduct all trucking-related employee business and travel expenses. It also covers the per diem deductions. It requires itemization of the work expenses to being completed.
You can find Form 2106 here.
This form is known as the HVUT form (or Heavy Highway Vehicle Use Tax Return) and is used to assess tax on heavy vehicles that operate on public roads. The vehicle must be 55,000 pounds or more.
HVUT must be paid for and proof must be submitted to the Bureau of Motor Vehicles each year. Not doing so will lead to a penalty.
If you exceed 5,000 miles during the tax period (or 7,500 miles if you are driving an Agricultural & Logging vehicle), you must pay HVUT. If you do not meet this mileage, you can file for the vehicle to become Tax-Suspended, and you will not be required to pay this tax.
You can find Form 2290 here.
Form 8849 Schedule 6
This form is used for several purposes, including when you do not meet the HVUT form mileage limit. Other uses for this form include:
- Overpaid tax claims,
- Refunds for stolen vehicles,
- Refunds for sold vehicles,
- Reimbursements for destroyed vehicles.
You can find Form 8849 Schedule 6 here.
The latest truck driver tax form, Form 8936 covers electric drive motor vehicle credit for plug-in electric vehicles that are in service during the tax year.
You can find Form 8936 here.