Owner-operators are not just responsible for calculating and paying their own taxes, they’re also responsible for deducting expenses, which can significantly lower their tax burden. Because of this, we often get asked about the common tax deductions that owner-operators can take advantage of. In this article, we will help answer this question by discussing some of the most overlooked owner-operator truck driver tax deductions.
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Insurance
Business-related insurance can be deducted as a business expense. This could include cargo insurance, physical damage insurance, bobtail insurance, etc. Some health insurance related expenses can also be deducted.
Meal Expenses
The Per Diem deduction is a tax deduction that the IRS allows to substantiate ordinary and necessary business meal and incidental expenses paid or incurred while traveling away from home. The current rate (as of October 1, 2021) is $69 per day and $51.75 per partial day in the Continental US.
Temporarily for 2021 and 2022, the Taxpayer Certainty and Disaster Relief Act of 2020, allowed a 100% deduction on Per Diem. Starting in 2023, the deduction has returned to 80%.
If you are an owner-operator, the rule is simple, you get to claim the tax deduction for each day that you are away from your “tax home”. On the days that you depart and the days that you arrive at home, you must claim a partial day allowance instead of a full day allowance. That is ¾ of the standard allowance. However, you can't claim the deduction if you depart and arrive home on the same day.
Fuel and Travel
Any of the fuel costs that you face on the road along with any of the fuel taxes you have to pay when filing your quarterly IFTA report are tax deductible. You can also claim other fees like tolls and parking if they are incurred while traveling for work.
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:
Chains
Fire Extinguisher
Ice Scraper
Coffee Pot
Microwave
TV
Refrigerator
Mattress
If the supplies are common to your profession and appropriate or helpful in developing or maintaining your business they can be considered tax deductible.
Trucking Business Fees
Any expense that is directly related to your business can be deducted when it comes time to file your taxes. Some of the more common trucking business fees to make sure you remember are:
Dispatch Fees
Licensing Fees
Subscriptions
Association Dues
Factoring Fees
Bank Fees
Remember, all of these have to do directly with your trucking business. That means subscriptions, associations, or any education that is outside of trucking can’t be deducted.
Medical Expenses
Truck drivers are required to get regular DOT medical fitness exams in order to maintain their CDL. You can deduct the cost of these exams as a business expense. Any medical exams or treatments that are not directly work-related are only deductible as personal expenses, not business, and you can only claim them if you itemize your deductions.
Maintenance
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, then the expense can be depreciated over several years. 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:
Repairs
Parts
Labor
Oil
Tires
Tools
A simple rule of thumb when it comes to maintenance expenses is “If you repair stuff, you can deduct it”.
Office Supplies
Office supplies are tangible and traditional items regularly used in offices by businesses or organizations. A few examples of the office supplies that can be deducted are:
Calculator
Paper
Pens
Envelopes
Stapler
Any office supplies that were used during the year that were needed to help run the business side of your trucking operation can be considered tax deductible.
Personal Supplies
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 few examples of personal supplies that can be deducted are:
Uniforms
Gloves
Motel
Boots
Showers
Reflective Vests
Sunglasses
Fire-resistant Clothing
This is a broad tax deduction category that you will really have to think about. Keeping in mind the words ‘ordinary’ and ‘necessary’ will make it easier to decide whether or not an item is tax deductible. However, items such as shirts and jeans are considered everyday clothing and are not deductible.
Communication
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
Electronic Logging Device (ELD)
Cell Phone
Internet
Radio
Keep in mind that these methods of communication need to be used strictly for business.
Non-Deductible Expenses
Here is a list of some of the common expenses that aren’t tax deductible:
Commuting expenses
Clothing that isn't part of your uniform
Personal trips
Reimbursed expenses
Make sure you aren’t claiming these examples or any other expenses that aren’t necessary and ordinary for your business.
Want to know more about owner-operator truck driver tax deductions?
Keep in mind that there are many other overlooked tax deductions that truck drivers aren’t aware they can take advantage of. For our complete list of owner-operator truck driver tax deductions, check out our Tax Deductions for Truck Drivers List. If you have any questions, give us a call at 866-920-2827 or visit our website at www.atbs.com.
