Knowing and applying tax deductions at the end of the year as an owner-operator reduces the amount of self-employment tax and income tax reported to the IRS. As an owner-operator, your tax situation is different than others. You are allowed certain allowances for meals and other write-offs for equipment. So, what are the tax deductions, and who is eligible? Continue reading below.
Who is Eligible?
Truck drivers can claim several different tax deductions. However, you need to make sure you deduct your business expenses related to your work situation. As a self-employed driver, you may be eligible for some deductions that may not apply to other drivers who work for a company.
Also, local drivers can claim per diem meal cost deductions since they can eat at home. There are some requirements that you should know before filing for any deductions. First, you should be aware of your “tax home”; this doesn’t have to be your family home or residence, and instead, your “tax home” is the location where you primary work.
Now let’s talk about tax deductions eligible for owner-operators.
Owner-Operator Tax Deductions
ATM and Bank Fees
Casualty Financial Loss
Depreciating Property
Electronic Devices
Fuel
Leasing Costs
Licenses and regulatory fees
Loans and Mortgages
Lodging
Office Expenses
Over-the-Road Expenses (tolls, parking, maintenance, registration fees, and tires)
Per Diem
Phone and Internet Fees
Retirement and Insurance
Satellite Radio
Sleeper Berth Equipment (alarm clock, bedding, curtains, cooking equipment, first aid supplies)
Specialized work gear, such as goggles, boots, or protective gloves
Subcontractor Payments
Truck Lease and Maintenance Costs
Vehicle and Tractor Cost
Work-Related Fees for drug testing, DOT physical, sleep apnea testing
Maintain Good Records
Tax deductions are a good way to help lower your tax expenses. However, you will need to keep good records of these expenses. Below are some suggestions on staying organized for the end of the year.
Keep receipts together by month or by trip. Just throwing your receipts into a folder and having to sort them out at the beginning of the year can add unwanted stress. Instead, spend a few minutes each week and file your receipts neatly.
Keep your logbooks on the Cloud or a hard drive. Google Drive and Dropbox are both good secure resources to store all your information.
Use a mobile application to help maintain your receipts and trip information. You can make notes regarding each receipt, so you know what it is for if your original filing system gets out of order.
Each year tax rules can change. Be sure to check the rules at the beginning of the year and know your requirements as an owner-operator. Staying organized and on top of the new and forever changing tax rules can lower your chances of being audited by the IRS.