Common Tax Questions for Owner-Operators

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.

Q: Will my tax preparer send me my 1099-NEC form?

A: No, your carrier will send you your 1099-NEC form. However, if you are a corporation, there is a possibility that you will not receive a 1099-NEC; advice with your carrier if that is the case.

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 for 2023 (as of October 1, 2021) is 80% of $69 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 are unable to drive due to on-the-road repairs. Visiting family or friends for a few days does 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.

Temporarily for 2021 and 2022, the Taxpayer Certainty and Disaster Relief Act of 2020, allowed a 100% deduction on Per Diem. That means when you file your 2021 or 2022 taxes, you can deduct 100% of the Per Diem rate per full or partial day.

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.