Here is a list of the most commonly asked tax questions we've received from owner-operators, and our answers.

Q: How much should I set-aside for business taxes?

A: It is recommended to set aside 25-28% of your weekly net income for quarterly taxes.

Q: I cannot get my taxes done on time. What should I do?

A: Let ATBS know as soon as possible. We will file an extension for you.

Q: Will I receive a tax refund?

A: This is very dependent on your individual situation, however, it’s not likely if you are an owner-operator. ATBS works hard to keep you as close to owing nothing as possible. Remember, if you are getting a refund, you have given the government an interest free loan.

Common Tax Questions For Owner-Operators

Q: Will my tax preparer send me my 1099 Misc form?

A: No, your carrier will send you your 1099 Misc form.

Q: I did not pay my quarterly tax estimates this year. What is going to happen?

A: The IRS will charge underpayment penalties and interest for the tax not paid. At ATBS, our tax department will calculate that charge and include the penalties and interest on your year-end tax return.

Q: What tax forms do I need to complete for a contract laborer, (for example an employed team driver)?

A: If you have an employee, you should be running payroll and issue them a W-2 at the end of the year.

Q. Do I need to file a separate tax return for owner-operator earnings and company driver earnings?

A: No. As a sole proprietor, you will file one return, Form 1040. The 1040 will contain a Schedule C, listing business earnings and expenses.

Per Diem Questions

Q: How does the Per Diem tax deduction work?

A: Per Diem is a tax deduction for meals and incidental expenses on the days you are working away from home. The current rate is 80% of $63 per full day, and ¾ of this amount for partial days. Visiting family or friends for a few days do not count as Per Diem days. If you are using a motel/hotel while on the road, Per Diem is still deductible, but not during home time.

Q: Can I use my e-log records to count the days for Per Diem?

A: You can if you have the full year of e-log records. Contact your carrier every 3-4 months and ask for a copy of your e-logs. Many carriers delete e-logs every six months; so do not wait until the end of the year to ask for a copy.

Read More: Seizing The Per Diem Tax Break

Family Related Questions

Q. Should I file my tax return separately from my spouse?

A. As a married taxpayer, you have two choices, Married Filing Jointly and Married Filing Separately. Generally Married Filing Jointly will work out better for a taxpayer, but not always. ATBS can prepare the return both ways, and then provide you with the results so that you can decide which you prefer.

Q: Can I claim a parent as a dependent on my taxes?

A: To meet the support requirements necessary to claim your parent as a dependent on your tax return, you must cover more than half of your parent’s support costs – meaning 51% or more of their support costs must be covered by you. These costs include food, housing or lodging expenses, clothing, and medical services and/or equipment costs. To be a “Qualifying Relative” the person you’re caring for can be your parent, in-law, or grandparent.

Q: How much of my (or my spouse’s) Social Security income is taxable?

A: How much Social Security income is taxable depends on your total income and marital status.

If you file a federal tax return as an individual and your income is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits. If your income is more than $34,000, then up to 85 percent of your benefits may be taxable. If you are married and you file a joint return, and you and your spouse have a combined income that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.

Q: Should I claim a dependent on my quarterly estimated taxes?

A: No, you should claim dependents only on your year-end tax return.

Deduction Questions

Q: Is fuel tax deductible for truck drivers?

A: Yes, fuel tax is a part of the cost of fuel, so it is deductible as an outgoing owner-operator fuel expense.

Q: Can I claim the home office deduction?

A: It is very rare that an owner-operator can pass the home office test. To claim the home office deduction, your office at home has to be your principle place of business. This is often a challenge for owner-operators as their truck is generally the "principal place of business". If you have your own operating authority with a spouse at home brokering loads every day, you may pass this test. Claiming the home office deduction can be a large red flag to IRS and cause an audit because it is so rare that a truck driver will qualify for this deduction.

Q: Is clothing tax deductible?

A: Generally, gloves, steel-toed boots, etc. that are required as part of the job are deductible, but not general everyday clothing that everyone needs to buy.

Q: Is a gym membership tax deductible?

A: Yes, but only if the membership is prescribed by a doctor to treat a specific medical condition. You must also join the gym after the diagnosis.

Q: Are medical expenses deductible?

A: If medical expenses exceed 10% of your Adjusted Gross Income you can deduct the amount over 10%.

Q: I purchased an Auxiliary Power Unit this year. Can I receive a tax credit for this purchase?

A: Yes. Send your tax preparer the receipt for the APU. If you do not have the receipt, write down the purchase price and the date of purchase. Also, write down the hours it was used or gallons of fuel used so we can provide the tax credit.

Q: Are truck dog expenses deductible?

A: Yes, if a dog is acting as a security for the truck it is considered a guard dog and its expenses (food, veterinary bills) can be deducted from your taxes.

Other Miscellaneous Questions

Q: If I sold a home this year, is the profit taxed?

A: It depends on how long you owned and lived in the home before the sale and how much profit you made. If you owned and lived in the place for two of the five years before the sale, then up to $250,000 of profit is tax-free. If you are married and file a joint return, the tax-free amount doubles to $500,000. The law lets you "exclude" amount from your taxable income. (If you sold for a loss, though, you can't take a deduction for that loss.)

Q: If I rented out a home this year, do I have to claim it on my taxes?

A: Yes, you will need to fill out a Schedule E form.

Q: What is the penalty for not having health insurance?

A: As of 2016, the penalty is $695 per adult person, and $347.50 per child, or 2.5% of the total family income, whichever is greater.

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Mike Calahan, ATBS Tax Services Manager

Mike Calahan joined ATBS in July of 2014 with more than 11 years of tax and accounting experience. He has a diverse background in tax with an emphasis in individual taxation, partnership taxation and several years experience with small businesses. As Manager of Tax Services, Mr. Calahan oversees the tax return preparation process, tax resolution services and supervises a large staff of tax professionals. He graduated from Regis University in 2004 with a Bachelor of Science Degree in Accounting and is an Enrolled Agent with the IRS.

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