Tax Deduction List for Owner Operator Truck Drivers in 2019

owner operator truck driver tax deductionsProfessional truck drivers are enjoying a high growth period with wages rising and more truck driving jobs than the industry can handle. The national driver shortage and booming economy have been a pleasant perfect storm for truckers who are seeing an uptick in annual salaries. There is a huge national demand for drivers, making 2019 a great time to enter or advance in the industry.

While earning improved incomes is more than welcome, it’s critically important that professional drivers keep a detailed account of their work-related expenses. More time on the road means you are likely to cover additional expenses out-of-pocket. While funding the government is important, Uncle Sam might be entitled to a lot less if you include these and other items in your truck driver tax deductions worksheet.

Why Many Truckers Should Pay Quarterly Taxes

Before delving into the best ways to save money through tax deductions, it’s important that Owner Operator truck drivers file both quarterly estimated tax payments and an annual return. Truckers who own their rig are considered self-employed by the Internal Revenue Service (IRS). Also, those who take on freelance hauls are viewed as independent contractors who, technically, work for themselves.

Independent workers who do not have taxes taken out of their earnings are generally required to pay an SE (self-employment) tax as well as a regular income tax. The SE tax runs along the same lines as the Social Security and Medicare withholdings in weekly checks earned by people working for a company. Or, in the case of truckers, corporate fleet drivers usually have taxes taken out and are only required to file an annual report.

Estimated quarterly payments can be made by using IRS form 1040-ES and it contains similar information as the annual 1040 forms. The quarterly installments can be based on the previous year’s 1040-ES forms or annual report, whichever more closely mirrors your current income.

Although filing quarterly estimated taxes seems tedious and unnecessary, the IRS motivates self-employed individuals by tacking on interest for truckers and others who wait until the annual filing to pay. It’s generally to a trucker’s benefit to pay quarterly rather than pay interest at the end of the tax cycle.

Little-Known Items To Include In Your Truck Driver Tax Deductions Worksheet

The men and women that keep the nation running by delivering goods and materials are fully aware that the rugged life of a trucker comes with plenty of expenses. Traveling from place to place means you don’t always have the luxury of a home-cooked meal or kicking back on the sofa.

It would be fundamentally unfair for the country’s vital truck drivers to pay all of those road expenses without some level of a tax deduction. For that reason, the IRS allows these deductions that sometimes fly under the radar.

  • Per-Diem Deductions: The IRS generally allows truck drivers who are unable to stop home for meals and other necessities to claim the special meals and incidental expenses (M&IE) deduction of about $66 within the U.S. and $71 for travel outside the country. The IRS has also designated “high-cost” areas in the U.S. and drivers may deduct $70 per day in those regions. The M&IE deductions include things such as cooked meals, room service, laundry expenses, and even $5 for associated gratuities.
  • Industry-Related Reading Materials: The IRS generally allows truckers to fully deduct industry publications. This includes one-time purchases or annual subscriptions related to the freight industry.
  • Internet And Telephone: The IRS takes a common sense approach to allow cell phone and internet connectivity deductions. While traveling the open road makes devices and service a necessity, they are also routinely used for personal entertainment. That’s why the IRS allows a 50 percent deduction of associated costs.
  • Paying Dues: Decades ago, truck drivers fought an uphill battle to secure collective bargaining through unions and other organizations. The IRS allows association fees and union dues to be fully deducted.
  • Personal Needs: Operating a truck on the open road requires certain specialized items such as flashlights, sunglasses, gloves, coolers and log books among others. These are generally 100 percent tax deductible.
  • Cleaning Supplies: Unlike material needed to sanitize your home, truck-related supplies are generally a business expense.
  • Tools: Wrenches, hammers, and power tools necessary to the smooth operation of the vehicle are usually deductible.
  • Clothing: Uniforms, steel-toes boots, hangers, rain gear, and other clothing-related items are generally tax deductible.

There is no reason that professional drivers should pay for business-related expenses without enjoying a reduction in their applicable tax liability. It would be wise to create a spreadsheet that details your ordinary work-related expenses in categories and keep receipts. 

Big Ticket Items To Include In Your Truck Driver Tax Deductions Worksheet

The basic concept of truck driver tax deductions is that they are associated with the ordinary expenses of doing business. Each industry has its own unique expenses required to get a job done. Outside of the somewhat niche items listed above, truckers would be wise to include the following major expenses. By keeping track of these, you may be able to significantly lower your tax liability.

  • Fuel: Depending on the fluctuating cost of diesel, it is not uncommon for a full-time driver to spend upward of $70,000 per year on fuel.
  • Insurance: Truck drivers may spend between $2,000 and $8,000 on commercial insurance annually, depending on driver history.
  • Health Insurance: Self-employed drivers are generally tasked with securing their own health insurance plan. That expense can generally run upwards of $3,400 on average. Fleet drivers may deduct costs and any co-pays as well.
  • License Fees: When it comes to truck driver training, licensing and fees, these are all things that are considered “the cost of doing business.” Remember to include them as tax deductions.
  • Repairs and Maintenance: The average cost to a full-time trucker can run as high as $15,000 or approximately $0.12 per mile.
  • Tires: This expense runs about $0.03 per mile or upwards of $4,000 annually.

Beyond these big-ticket expenses, it’s important for drivers to keep an accurate accounting of things such as tolls, depreciation, and interest payments if you have a loan on your vehicle. The average cost of operating an 18-wheeler runs about  $1.38 per mile or $180,000 annually when all things are included.

In terms of tax-deductible expenses on a daily basis, a driver is generally considered traveling if you leave the terminal and do not return home the same day. That’s why it’s essential for drivers who are employees to also keep track of ongoing expenses.

Owner Operator and company drivers alike can lower their tax liability by creating a truck driver tax deductions worksheet that includes all of the expenses you incur in the course of doing business. For more trucking industry news, information and high paying trucking jobs, continue to visit CDLjobs.com for up-to-date information and job postings.

CDLjobs.com does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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