Tax season doesn’t have to be stressful. With Truckstop’s detailed checklist, you can approach it with confidence and organization.
Taxes for Truckers Made Easier
“Many truck drivers and independent owner-operators can feel overwhelmed because they most likely did not sign up to do loads of paperwork and play CPA in their spare time,” explains Truckstop. “It is imperative to know the basics and be prepared when the IRS comes knocking. It doesn’t have to be stressful. When you know the deductions owner-operators are allowed to claim, keep track of your expenses throughout the year with some basic record keeping, and plan ahead, you can face tax time with a lot more confidence and a lot less dread.”
Stay Organized Throughout the Year
According to Todd Amen, president and CEO at ATBS, “You can’t manage your business if you’re not keeping track of it throughout the year… keep up with it every day, every month, and at the end of the year.”
Truck owner-operators deal with additional taxes, including the International Fuel Tax Agreement (IFTA). Registering in your base state and staying up to date on these quarterly fuel tax requirements is essential. Although IFTA can sometimes be confusing, gaining a solid understanding helps avoid mistakes.
“You can always hire a tax professional to help you, depending on your comfort level,” advises Truckstop. “Even so, careful and thorough record keeping on your part will ensure a smooth process and help you avoid over-paying or owing money when you least expect it.”
Understanding Tax Deductions
If you’re employed as a driver and receive a W-2 form, job-related expenses aren’t deductible. However, for self-employed owner-operators, nearly all work-related costs are eligible for deductions. Keeping meticulous records of income and expenses is essential, as these serve as documentation to back up your claims and protect against audits.
Vehicle Expenses Eligible for Deduction
- Fuel Costs: Deduct expenses for road fuel and the fuel taxes covered in your IFTA report. Don’t forget costs like tolls and parking fees.
- Maintenance and Repairs: Repairs, oil changes, tire replacements, or even truck washes are all fully deductible. Keep every receipt, no matter how small.
- Truck Payments & Lease Costs: Whether you lease or own your vehicle, these payments are deductible. If you own your truck, you can also claim depreciation on it.
- Insurance Premiums: Almost all business-related insurance, such as equipment and liability insurance, can be deducted.
- Registration Fees & Taxes: Deduct costs for vehicle registration, CDL renewals, heavy highway use taxes, and other business-related taxes or permits.
Business Travel Expenses
- Lodging: Overnight stays during work are deductible, as are sleeper cab furnishing costs, such as mini-fridges or bedding.
- Meals: Meals qualify for an 80% deduction if you’re subject to hours-of-service regulations. Choose either the actual meal cost (with receipts) or the federal per diem allowance. Note that the per diem rate increased to $80 for full days as of October 1, 2024.
- Showers at Truck Stops: Hygiene necessities like paid showers qualify as a deductible expense.
Equipment and Supplies
- Technology Investments: GPS devices, laptops, or smartphones used for work are deductible. If used for personal and business purposes, only the work-related portion qualifies.
- Safety Gear: Items like steel-toed boots or safety glasses, as well as company logo clothing, can be claimed. Regular everyday clothing, like jeans, isn’t deductible.
- Office Supplies: Whether you run your business from a desk at home or your cab, items like stationary, printer paper, and staplers are all eligible deductions.
Communication-Related Costs
- Phone Bills: If you use a dedicated work phone, deduct the entire bill. For mixed-use devices, estimate your work-related percentage.
- Internet Charges: Expenses for on-the-road Wi-Fi or home internet used for work purposes can be claimed.
Healthcare and Medical Costs
- DOT Physicals: Out-of-pocket exam fees required by the Department of Transportation are deductible.
- Medical Tests: If required for work, such as sleep apnea testing, these also qualify.
- Health Insurance Premiums (for self-employed drivers): These can be claimed on your tax return, although they’re claimed differently from business expenses.
Professional Memberships & Fees
- License Renewals: The cost of renewing state or local licenses can be deducted.
- Membership Fees: Any memberships to trucking associations or industry organizations are eligible deductions.
- Subscriptions: Costs for trucking magazines or websites relevant to your industry can also help reduce your taxable income.
Keep in Mind
While most business-related expenses are deductible, there are exceptions. For instance, any reimbursed expenses or costs not directly tied to business operations cannot be claimed.
Plan Ahead for Peace of Mind
Tackling taxes becomes much less daunting when you stay organized year-round. Whether you enlist help from a tax professional or handle everything in-house, tracking your expenses and understanding applicable deductions will make tax time simpler and more efficient—keeping more money in your pocket.
Take the first step toward stress-free taxes with Truckstop’s complete checklist.
Source: The Trucker
