Tax season is right around the corner. It may not be your favorite time of the year, but we want to help make it as painless as possible. Truck driver tax deductions are a great way to save money on taxes. There are three golden rules of filing taxes.
The money you spend for work on the road might increase the money you get back from taxes. So, keep a careful record of any costs you have that are job related. Staying organized might bring you a big payoff in your taxes. Remember, if you have any questions or doubts, ask a professional. The Trucker’s Report made this list of trusted sources who know trucking. Many tax companies offer a first free conversation that can clear up your concerns. You can also use services like Turbotax or H&R Block to make filing easier. Let’s get started.
Step 1: Find your Form
If you are a company driver, you will likely receive a W-2 form by the end of January. A W-2 form reports a trucker’s income and annual wages. Most company drivers will then use the information from the W-2 to fill out a 1040 or 1040A for taxes. There is also a simplified version of this form called the 1040EZ, but you must meet several requirements:
- Make less than $100,000 annually
- Have a tax status of single or married filing jointly
- Choose not to itemize deductions
There are several trucking deductions that are likely to save you money, so consider carefully before choosing the 1040EZ.
If you are an owner operator, the easiest way to report your income is with a 1099 form. The 1099 form is used to report miscellaneous earned income. If you made the leap to become an owner operator, it’s important to stay very organized. This form allows you to carefully itemize the costs of your work and deduct them from your taxes. That’s money back in your wallet!
Step 2: Save Money with Truck Driver Tax Deductions
This is the good stuff. Claiming work-related tax deductions is important. It reduces your adjusted gross income, and that means you pay less in taxes.
Here’s how it works: John makes $75,000 annually as a company driver (his “gross income”). He is able to claim deductions for licensing fees and other work expenses that total $6,500. Since John already paid $6,500 for these expenses and wasn’t reimbursed, he can subtract $6,500 from his total income. Now, John only pays taxes on $68,500 (his “adjusted gross income” or AGI). A lower adjusted gross income means you pay less in taxes. You report your gross income and then calculate your adjusted gross income on your tax forms, but only the adjusted gross income is taxed.
Now, let’s find those truck driver tax deductions!
Who can claim these deductions?
Some tax breaks apply to only owner operators. Others are specific to company drivers. In general, local drivers can’t claim these deductions. To claim these deductions you must have a “tax home”—a place the IRS can contact you. Usually this is your home address. A good rule of thumb is that you can’t claim anything your company reimburses you for (you’ve already gotten that money back).
Here is a quick look at the deductions you might qualify for. Click each category for more details if you’re not sure whether you can claim that deduction on your taxes.
|Cell Phone Plans & Internet Fees||✔||✔|
|Food on the Road||✔||✘|
|Fuel & Travel Costs
(different for owner operators & company drivers)
|Non-trucking Standard Deductions||✔||✔|
Key Non-Deductible Expenses
We’re all for saving money, but there are a few common costs that are NOT deductible. Drivers are NOT allowed to deduct the following things from their annual income.
- Expenses reimbursed by your employer
- Clothing that can be adapted for everyday wear
- Commuting costs to the company headquarters. However many companies WILL reimburse for commuting costs to the truck yard. If you’re not sure, ask your company.
- Home phone line
- Owner Operators CANNOT deduct the time spent working on their equipment
- Owner Operators CANNOT deduct the income lost as a result of deadhead/unpaid mileage. But, Owner Operators CAN deduct the expenses incurred to operate the truck during that time such as fuel, tolls and scales. etc.
- Owner Operators CANNOT deduct for downtime
The 9 Deductions You Should Consider (the nitty gritty details)
1. Cell Phone Plans & Internet fees
No driver spends a significant amount of time on the road without using their phone and internet a lot. Luckily, the IRS agrees. Since most drivers use their phone for both personal and professional purposes, you are allowed to deduct 50% of your phone and internet costs. You can also deduct the entire cost of a new phone or laptop that you bought this year. Communication and technology costs add up and now you can show it in your taxes!
2. Medical Exams
Did your employer require a health exam? Deduct the out of pocket cost! Did you see a doctor for a work-related issue? Deduct the out of pocket cost! Normally medical expenses are not tax deductible, but in this case, they are actually considered business expenses. Your health is a top priority, and it’s nice to have that recognized during tax season.
3. Licensing Fees
Any costs that you pay to get and maintain a CDL license can be claimed! In addition, if your employer requests that you continue your education, all those costs are also deductible. Company jobs that offer to pay for your schooling have never looked so good!
4. Food on the Road
Drivers who are spending long hours on the road away from home are allowed to deduct a “per diem” rate of $63 per day. The IRS understands that you’re spending a lot of time behind the wheel and food costs add up! For each day you are on the road, you are allowed to deduct $63 dollars from your annual income. If you plan to claim per diem rates, get to know the details. Local drivers are not allowed to deduct food costs because you are able to eat at home after your route is complete.
5. Truck Repairs/Maintenance
Any expenses you paid to repair or maintain your truck that were not reimbursed can be claimed! Whether you are a company driver or an owner operator, cleaning and maintenance costs are deductible. This could include truck parts, cleaning supplies, etc., but NOT the cost labor if you repair the truck yourself.
6. Association Dues
Most drivers are required to be part of a union or other collective trucking group. Any required fees to take part in these groups is deductible. If you are part of additional trucking groups that are not required by your employer, you may still be able to deduct the cost. You can claim this deduction if you can demonstrate that it helps your career or is a regular membership in the trucking industry.
7. Personal Products
Personal products are typically the small purchases (that really add up!) that are necessary on the road. It could include food storage (think a cooler), logbooks, a flashlight, specialized clothing, electronic equipment you need for the road (ex. A GPS), and much more. Keep careful track of all these little expenses because they add to a big total, and you can deduct them on taxes!
8. Fuel & Travel Costs
If you own your own truck, you can claim the exact number of miles you drove on the job. You can also claim vehicle related costs including maintenance (see above), insurance premiums, and loan interest.
For most drivers, if your fuel costs are more than $100 out of pocket and your company does not reimburse you, you can deduct the expense. You can also claim any costs from toll booths, parking, and lodging that are not reimbursed by your employer. Especially with changing fuel prices, this is often a huge money savings on your taxes!
9. Non-Trucking Standard Deductions
In addition to the trucking specific deductions you get to claim as a trucker, don’t forget about the common deductions that aren’t related to your work. These could include things like child tax credits, lifetime learning credits, and child or dependent care among other things.
Step 3. File before April 15
It’s time. You’ve added costs and finished the paperwork. You’ll know by the time you submit your forms whether you need to send a check or will be getting a refund. You can file your taxes electronically or by mail as long as they are submitted by April 15.
And with that, kick back and relax! Your taxes are done for another year!