National Tax Day is April 15th.
Every year, on this day, all truck drivers are responsible for paying taxes for the gross income their business made for an entire year.
However, some truck drivers don't know that they can return a portion of the taxable income by claiming for truck driver tax deduction.
Unfortunately, many truck drivers don't take the chance of this trucking business management opportunity.
Below, find a list of tax deductions that truck drivers can claim.
But first, let's see who is eligible for a truck driver tax deduction.
What are tax deductions?
Check out this video from LYFE Accounting where explain everything about taxes and tax deductions.
Who can claim trucker tax deductions?
Until a couple of years ago, most tax deductions were available to most truck drivers.
Today, employee truck drivers are no longer allowed to deduct taxes from their trucking-related expenses. And, at the end of the year, the type of tax documentation that they get is a W-2.
On the other hand, tax deductions are only available to self-employed truck drivers.
Today, only owner-operators and contract drivers can make money by building a trucking business and claiming their tax deduction.
In their case, they get one or more 1099s documents.
You can deduct taxes out of business-related insurance as an expense.
This may include commercial auto liability, property damage insurance, business interruption, or loss of cargo insurance.
2. Association fees
You can deduct your fees from being a member of a trucking association.
3. Cell phone plans
If you have a separate cell line used for work, you can deduct the entire cost of the plan.
If you use the device for business and personal purposes, you can only deduct the business percentage of your expenses.
4. Personal electronic devices
Like your cell phone plan, you can deduct the full cost of any phone, laptop, tablet, or other electronic device used only for work.
If you use these gadgets for both personal use and work, you can deduct the portion related to work.
If you pay for a truck driving school or other training related to trucking or CDL, you can deduct it.
As a self-employed trucker, this might include business courses to help you learn to manage your company.
6. Meal expenses
If you drive locally, you don't qualify for this deduction.
This deduction applies mostly to OTR (other the road) truck drivers who are away from home for weeks because, to take their meals, truck drivers have to stop and take a break.
To be able to claim meal expenses tax deduction, you can use the expense method or per diem allowance.
- Deducting the actual expense method requires keeping track of receipts for meals.
- The per diem method is less work. Instead of keeping expenses for every meal, you can deduct a set amount per day
The per diem method suggests that you can simply claim a set amount per day.
The IRS uses the General Services Administration (GSA) for per diem rates.
7. Medical expenses
If you’re required to get regular medical exams as part of your work, you can deduct the cost as a business expense.
Any medical exams or treatments that are not directly work-related are only deductible as personal expenses, not a business.
You can only claim them if you itemize deductions on Schedule A.
8. Specialty clothing expenses
The clothing that you wear every day at work doesn't count as specialty clothing or safety gear.
The tax deductible type of clothing used for work are things like a company logo shirt, a back brace, steel-toed boots, or safety goggles.
9. Dispatch fees
If you pay dispatch fees for your loads, you can claim them as a business expense. Just make sure to track them throughout the year.
10. Licensing fees
If your state or local government requires you to get a business license, you can deduct that cost. You can also deduct the cost of your CDL license and any other licenses required to conduct your business.
The same relates to the situation when the owner-operator is required to acquire the Heavy Highway Vehicle Use Tax or the cost of maintaining a CDL license.
11. Load expenses
These expenses include any specialized items you buy to help safely carry your loads. Examples include chains, locks, straps, and even wide-load flags.
12. Tools and equipment
Any tools or equipment you need for your trucking business are deductible, including:
- Ratchet straps
- Bungee cords
- Duct tape
- Tire irons
13. Fuel and travel costs
You probably already know that separately from your annual taxes, you’re required to file quarterly International Fuel Tax Agreement (IFTA) reports.
But did you know that the fuel taxes you pay, along with the rest of your fuel costs from the road, are deductible at tax time?
You can also claim related travel expenses, such as tolls, hotels or accommodations, and parking fees, as long as they are part of your work.
And if you’re away from home for work overnight, you can even claim hotel costs. Note that for truckers, there is no per diem for lodging. You’ll have to keep receipts and claim your actual expenses.
14. Office expenses
Trucking business office expenses are tax deductible as well. These things might include:
- Accounting software
If you subscribe to trucking-related publications, you can deduct the full cost of your subscription.
Generally, if a maintenance repair makes the equipment better, restores the equipment back to its normal condition, or modifies the property for a new or different use. These maintenance costs if done for the purpose to improve the business, these can be deducted.
Maintenance expenses that don’t fall under these categories can be deducted in full in the same year the expense was paid. A few examples of maintenance expenses that can be deducted are:
A simple rule of thumb when it comes to maintenance expenses is “If you repair stuff, you can deduct it”.
17. Sleeper berth expenses
In addition to claiming any hotel nights you pay for while on the road, you can also claim the expenses associated with setting up your sleeper berth.
Items that fall into this category include a mini-fridge, coffee maker, curtains, bedding, food storage containers, and even first aid supplies.
18. Personal products
Not all personal supplies are considered tax deductible. In order for personal supplies to be considered tax deductible they have to be ordinary and necessary for operating your business.
A lot of smaller purchases are necessary for life on the road. This might include a:
- Cooler or minifridge to store food and water
- Alarm clock
- Cleaning supplies
You can also deduct expenses for showering or doing laundry while traveling for business. Keep track of these expenses, as they can really add up.
19. Truck Supplies
Many of the truck supplies that you need can be deducted, lowering your taxable income. A few examples of the supplies that can be deducted are:
If the supplies are common to your profession and appropriate or helpful in developing or maintaining your business they can be considered tax deductible.
The IRS knows that truck drivers need a cell phone and wireless internet access while on the road, which can lead to expensive mobile and internet fees. However, this tax deduction only allows drivers up to 50% of their mobile and internet usage costs as these tools can be used for both professional and personal purposes. Don’t get disappointed, though, because the total cost of your mobile phone itself or your laptop is deductible as well.
Similar to the previously mentioned truck driver tax deductions, any technology needed for communication in order to run your business can be considered a deductible expense. As a truck driver, there are many methods of communication that you will be able to deduct from your taxes. A few examples of communication that can be deducted are:
- CB Radio
- Cell Phone
Keep in mind that these methods of communication need to be used strictly for business. If you use an item for both business and personal use, like your internet, you may have to identify how much you use your internet for business and how much you use it for personal purposes.
21. Casualty Financial Loss
If your trucks or other assets suffered damage from an accident or extreme weather conditions during the tax year, you can write off the expenses.