Being a truck driver is not easy. You face many challenges on the road, such as long hours, traffic, weather, regulations, and customers.
And still, you have to pay so much tax on your income!
But did you know you can save money on your taxes by claiming many deductions as a truck driver?
Whether you’re an employee or an owner-operator, you can reduce your tax bill by taking advantage of these tax breaks.
What Are Tax Deductions and Withholdings?
Tax deductions are expenses you can take away from your taxable income. By lowering your taxable income, you pay less in taxes. Simple!
Let’s say you earn $50,000 annually and claim $10,000 in deductions; your taxable income is $40,000. If your tax rate is 20%, you’ll pay $8,000 in taxes instead of $10,000.
There is also another concept called tax withholding.
It’s the amount of money that is taken out of your paycheck or your employer’s or customers’ payments to pay for your taxes.
As an employee truck driver, you don’t have much control over your tax withholding.
If you’re a self-employed truck driver or an owner-operator, you’re responsible for withholding and paying your own taxes throughout the year.
However, we’ll only talk about tax deductions in this article.
You can check out this Trucker CFO’s guide to tax withholding if you want to learn more about the tax withholding process.
What Are the Eligibility Criteria for Truck Driver Tax Deductions?
Unfortunately, you can’t deduct any expenses related to your job if you work for a trucking company and get a W-2 at the year-end.
That’s because the Tax Cuts and Jobs Act of 2017 eliminated the deduction for unreimbursed employee expenses.
However, if you’re a self-employed driver or an owner-operator, you can deduct expenses related to your work.
If you are an owner-operator, any customer who paid you over $600 in a year should send you a 1099-NEC form at the end of the year.
You may also need to complete Schedule SE to report self-employment taxes. You must include both tax forms when you submit your Form 1040 tax return.
Which Expenses Are Deductible As a Truck Driver?
As a self-employed truck driver or an owner-operator, you can deduct any expense that is ordinary and necessary for your business.
This means that the expense is common and accepted in your industry and that it helps you earn income.
Here are some examples of common truck driver tax deductions:
Cell Phone/Computer
You can deduct the entire cost of your work devices along with your monthly data or internet plan.
If you also use the device for personal reasons, you can only deduct the portion of your expenses that are related to your business.
Clothing
You can’t deduct the cost of your regular clothes — even if you wear them exclusively for work.
But you can deduct the cost of work-specific clothing and protective equipment you need for your work, such as back braces or goggles.
Education
Training is a common expense for many drivers who want to acquire or maintain a CDL license or other advanced certifications.
You can deduct the cost if you use this education to improve your skills in your current line of work or if it’s required for your job.
Tools and Equipment
As a truck driver or owner-operator, you use many essential tools and pieces of equipment like duct tape, chains, bungee cords, etc.
You have the option to claim deductions for these tools.
Insurance
Generally, you must mandatorily maintain insurance that covers both property damage and damage to other vehicles (commercial auto liability).
You might also consider getting insurance for your cargo or income loss in case of a business disruption.
These premiums are deductible as a business expense.
Fuel
Truck drivers spend a lot of money on fuel. And fortunately, you can deduct this expense from your taxable income.
The fuel taxes you pay are also deductible.
Maintenance and Repairs
Your truck needs regular maintenance and repairs to run smoothly and safely.
You can save money on your taxes by deducting your expenses for your truck’s upkeep, such as oil changes, tires, brakes, etc.
Depreciation
Depreciation is the loss of value of your truck over time due to wear and tear.
You can deduct a portion of the cost of your truck each year as depreciation using a method approved by the IRS.
Meals and Lodging
You need to eat and sleep somewhere when you’re on the road. You can deduct the cost of meals and lodging you incur while away from your tax home (the general area where your main place of business is located).
However, this deduction has some restrictions:
- You can only claim 80% of what you spend on meals, not the full amount.
- You can only deduct meals and lodging if you’re traveling overnight or for longer than a normal workday.
- You can only deduct the actual cost of your meals and lodging or use the standard meal allowance set by the IRS, whichever is lower.
The standard meal allowance is a fixed amount that varies by location and covers all meals and incidental expenses (such as tips and fees) for a day.
According to the U.S. General Services Administration (GSA), for 2023, the standard meal allowance is $59 for most locations in the continental U.S.
You can find the rates for each location on the IRS website.
Per Diem
Per diem is a daily allowance that some employers pay to their drivers to cover meals and lodging expenses.
If you receive per diem from your employer, you don’t have to report it as income or deduct it as an expense if it doesn’t exceed the standard meal allowance.
Tolls and Parking Fees
You can deduct any tolls and parking fees you pay while driving your truck for business purposes.
You can’t deduct tolls and parking fees for personal use of your truck or for commuting to and from work.
Licenses and Permits
You can deduct any fees you pay for licenses and permits required for your trucking business, such as CDL license, DOT number, IRP registration, IFTA license, etc.
Taxes and fees
You can deduct any taxes and fees you pay related to your trucking business, such as:
- Highway use tax
- Heavy vehicle use tax
- Property tax on your truck
- Sales tax on your truck
- Excise tax on tires
- Registration fees
- Inspection fees
- ELD subscription fees
Professional Services
Do you hire professionals like accountants, lawyers, bookkeepers, or tax preparers to help you maintain your trucking business?
You can deduct their fees as valid business expenses. That means you can save money by spending on delegations!
Optimize Your Tax Planning – Hire a Professional
As you can see, you have many opportunities to lower your tax bill as a truck driver. But how do you make sure you’re maximizing your savings and minimizing your hassle?
You should consult a tax professional who has expertise in trucking taxes. Because there are things you may not know about tax.
They can keep track of your income and expenses throughout the year, file your quarterly estimated tax payments on time, file for an income tax extension (if needed), and plan for future tax years for you.
Take action today and reap the benefits tomorrow!
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