Common Tax Questions for Owner-Operators

Updated: May 5

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

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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 a one-time 6 month extension for you. It is an extension to file not an extension to pay.

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-NEC form?

A: No, your carrier will send you your 1099-NEC 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, run them through payroll and issue them a W-2 at the end of the year. If you have a contractor laborer issue them a 1099-NEC.

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 $66 per full day, and ¾ of this amount for partial days. Partial days are the day you leave home and the day you return. Full days are any day you need to stop driving due to the hours of service rules or unable to drive due to on the road repairs. 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 them both to indicate the best tax outcome for you.

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.