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Learning how to file taxes as an owner-operator can be stressful while trying to run a successful trucking business. Since you own your trucking business, you are responsible for preparing your trucking company’s tax return. Here are some general tips on filing taxes for your trucking company, answers to questions that are typically asked, and everything you need to know about write offs to ensure you’re filing your taxes right as a trucking business owner.
Tax Filing Tips, Questions and Write Offs for Owner-Operators
General Trucking Company Tax Tips
- Estimated payments- it is recommended that you should make your estimated payments monthly because it makes it easier to come up with a payment for one month rather and a whole quarter and you can estimate what your payment should be based on your month’s success.
- Keep receipts- Have a folder or shoe box handy for putting receipts in. This will make it a lot easier to figure your tax deductions, which we’ll get to later.
- Consider hiring a professional- tax professionals can help you make sure everything is filed right and on time, which could end up saving you more money. If you don’t want to pay to hire an account or tax professional, you can get a tax preparation software to make it easier, or just prepare a paper return yourself.
How to File Taxes for Owner-Operators
- Compile a list of your total income and expenses
Compiling a list of all your threads of income and expenses is the most important step to ensure you have all your paperwork in order.
- Report this list with a Schedule C form for the IRS
Schedule C (Form 1040) is used to report income or loss from a business operated or a profession practiced as a sole proprietor.
- Transfer the result to Form 1040
Form 1040 is the base tax form that all filers must use when they file federal income taxes. There were multiple versions of 1040 in the past but they were consolidated into one version starting in the 2018 tax year.
- Complete the Schedule SE form to figure your self-employment tax
You will need to fill this out if you had net earnings from self-employment from other than church employee income
- Calculate the tax you owe/the amount you will be refunded
To calculate the tax you owe/the amount you will be refunded, enter all income, credits and deductions on Form 1040
- To file your taxes, it depends on how you completed the steps above
If you used paper and filled out Form 1040 by hand, you will mail it and the processing period can take up to eight weeks. If you used an accountant or software, you can file your taxes electronically and the results will take around 20 days, depending on the accuracy of your return
For more information and to get the forms you need, visit the IRS website.
What Are Some Tax Deductions for an Owner-Operator?
Meals away from home
If you need to stop to get rest to perform your duties on the road, it’s deductible. For 2021 and 2022, the IRS’ standard meal expense is $69 per day, but only 80% of the total for the year is deductible. Even though it isn’t 100%, you should have employees keep track of all expenses and keep receipts to make adjustments during the tax prep.
Lodging
There is no standard allowance for lodging like there is for meals, but lodging expenses are deductible. This makes it extremely important to keep receipts for lodging expenses. In order for this to be deductible, the employee must have a permanent residence. If they don’t, their home is wherever they work, so the lodging would be their home in a way.
Additional on-the-road expenses
For other expenses to be deductible, they must be necessary for you to perform your job. For truckers, these would be laundry, maps, CB radios, safety gear, etc. Usually, receipts are a requirement but if the expense is under $75, a receipt is probably not necessary if the expense is on record. An easy way to do this do would just be to keep receipts to be safe.
Vehicle repairs and maintenance
Because your truck is a non-personal-use vehicle, the expenses for maintenance and repairs are fully deductible. You can also deduct interest paid on your truck (if applicable) and vehicle depreciation.
General business expenses
Typically, truck drivers can deduct association dues, computers, cleaning supplies, office supplies, DOT physicals for drivers and postage to name a few.
What Are Non-Deductible Truck Driver Expenses?
- Expenses reimbursed by your employer
- Clothing that can be worn every day (not a uniform)
- Home phone lines
- Commuting costs
- Personal vacations
- Interest on personal loans
- The time you spend working on your own equipment
- Downtime
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