Truck Driver Tax Deductions You Need to Know
Being a truck driver or owner-operator is no easy feat. From obtaining your trucking business license or commercial driver’s license to long hours on the road to handling vehicle maintenance and repairs, you can ultimately spend more money out of pocket than many professionals do for their careers. When tax season comes around, you may not know all your options for tax deductions or write-offs.
Medical expenses, lodging, education, meals, fuel and even clothing are some items that may be eligible for tax deductions. Below, we’ll assess whether you qualify for specific tax deductions and provide eight different truck driver write-offs you may not have known about.
Who Is Eligible for Trucking Tax Deductions?
Due to recent changes in the tax code, known as the Tax Cuts and Jobs Act, only self-employed truck drivers can claim expenses on their taxes. To qualify, you must be a contract driver or owner-operator, not a company driver. To determine whether you’re eligible for these deductions, you must look at the tax documents you receive at the end of the year.
If you get a W-2 Form, you’re a company driver and, unfortunately, none of your job-related expenses are deductible. However, if you receive one or more 1099 Forms, you can use these forms and your income and expense records to claim these trucker tax deductions. You must complete a Schedule C Form for your income and expenses.
Tax Deductions and Tax Credits
Tax deductions lower your taxable income, while truck driver tax credits reduce the amount of tax you owe. At the moment, self-employed truck drivers do not qualify for tax credit.
How Much Can Truck Drivers Write Off on Taxes?
With the right knowledge and excellent organizational skills, contract drivers and owner-operators can write off a substantial amount on taxes. Armed with knowledge about tax deductions, you will know which expenses are tax deductible. Understanding tax laws can also help you file the correct expense documentation and help you apply for the correct standard deductions.
Keeping track of your expenses and organizing and filing your expense documentation while you’re on the road can save you quite a few Dollars when tax season rolls around.
8 Types of Truck Driver Tax Deductions
As a truck driver or owner-operator, you may not realize how many aspects of your daily work life are eligible for tax deductions. Here are eight tax write-offs for truck drivers.
1. Insurance
You can deduct property damage insurance, commercial auto liability and loss of cargo insurance for business interruptions. Essentially, any trucking-related insurance counts as a business expense. If you pay for health insurance, you can also subtract this separately from your business expenses. Use Schedule 1 Form 1040 to deduct the cost of health, vision, and dental insurance for you and your dependents.
2. Medical Expenses
Many truck drivers must undergo regular medical and fitness exams as a requirement for their work. These costs are eligible for deductions as a business expense. For tax purposes, any medical exams or treatments, such as personal hospital visits or medication needs, count as personal expenses, not business expenses. These general medical expenses are only deductible if you itemize deductions on Schedule A instead of taking the standard deduction.
3. Work Clothing, Meals, and Personal Products
You can deduct any clothing, body or safety gear you must buy for work as a business expense. This category could include a back brace, safety goggles, steel-toed boots or a company-branded shirt. Your personal clothing doesn’t count, even if worn while driving.
Truck drivers can claim tax deductions on meal expenses if they are away from home long enough to stop for a rest and a meal. This deduction usually applies to long-haul or regional truck drivers, who can claim up to 50% of their meal expenses. If you need to comply with the “hours of service” limits stipulated by the Department of Transportation, you may claim up to 80% of meals purchased on the road. You can claim your actual expenses by keeping your meal receipts.
Additionally, you can use a per diem method, which allows you to claim a set amount each day — though this varies by location. The IRS maintains various rates for each city and state but uses the General Services Administration per diem rates. Generally, truck drivers who drive locally won’t qualify.
As for personal products, you can write off most items that are necessary for long hours on the road, such as paying for showering or doing laundry while traveling. These expenses might also include:
- Cooler or mini-fridge for food and water
- Cleaning supplies
- Sunglasses
- Logbook
- Alarm clock
- GPS
- Bedding
- Gloves
- Flashlight
4. Dispatch and Licensing Fees
You can claim dispatch fees for your truckloads, but be sure to track them throughout the year, as with your other eligible deductions. In addition to dispatch fees, you can deduct the cost of your licensing fee if your local or state government requires you to have a business license. You can also subtract the cost to maintain any other essential licensure to conduct your business, including your commercial driver’s license.
5. Travel-Related Costs
Fuel taxes are handled quarterly through a separate process. Truckers must file quarterly International Fuel Tax Agreement reports for these processes. You can also deduct other work-related travel costs such as parking and toll fees.
When you’re working long hours, and delivery takes more than a day, you can also claim hotel costs. However, remember that there is no per diem for lodging as there is for meal expenses, so be sure to keep your receipts to claim your expenses.
Related: How to Calculate Your Trucking Cost Per Mile
6. Truck/Vehicle Expenses
Consider how expensive it can be to keep your truck or vehicle in top condition for constant use. Truck driver expenses include maintenance, repair, depreciation, and many other costs that are eligible for a tax deduction. Because trucks are non-personal-use vehicles, you can deduct all the costs to maintain and repair your truck.
Some of these costs might include washing your truck or getting new tires. As a business owner, you can also deduct loan interest if you financed one or more trucks. Though some industries offer a standard mileage deduction, truckers must deduct the actual costs.
7. Education
You can deduct the costs of your CDL, but you can also write off the expenses if you have to pay for a truck driving school or other training or certifications to obtain and maintain your CDL. If you undergo other education directly related to your career, it may also be tax-deductible.
For instance, if you’re a self-employed trucker, you might be able to write off the business courses you took to help you learn how to start and manage your small business. As long as you use your education to improve your abilities and skills in your line of work, or if it’s necessary for your job, you can deduct these expenses.
Related: How to Increase Your Income as a Truck Driver
8. Association Dues
Many truck drivers are part of a trucking association or union. If so, you can deduct your dues, membership fees, or other required expenses from these groups if they directly relate to your career as a truck driver.
Contact Porter Freight Funding for Help With Your Trucking Cash Flow
Managing your day-to-day business operations and keeping track of your receipts and actual expenses for taxes can get complicated. At Porter Freight Funding, we know it can be tricky to monitor your essential invoices and paperwork while trying to stay on top of timely deliveries. That’s why we connect trucking companies with a network of reliable partners who offer various services to help truck fleets and owner-operators improve their cash flow and grow their business, including:
Apart from connecting you to our reliable partners, we can streamline your billing service to offer you consistent cash flow with freight factoring services. A well-operating billing system will also simplify your tax process. When you trust us with your billing, you’ll receive:
- Dedicated client representatives
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Request a free quote today if you’re ready to streamline your freight operations. For more information about our service offerings and how they can benefit your trucking business, contact our helpful staff online.