5 Questions a CPA Must Know About Owner-Operator Taxes

Updated: May 6

When was the last time your CPA or tax professional updated you on the current Per Diem rates you are entitled to? Have they ever explained why you need to deduct actual expenses instead of using the standard mileage deduction? Did you know that you can deduct expenses for your dog as security for your truck in many cases?

Taxes, in general, are complicated, but taxes for owner-operators are even more complicated. It’s crucial to have a tax professional who knows the trucking industry handle your business’s taxes. Unfortunately, the reality is that most tax professionals and CPAs are generalists - meaning they file taxes for people across many different industries, but they aren’t experts in any single industry or area.

This lack of specific industry knowledge can lead to you paying more than you should in taxes. Or, in some cases, incorrectly taking deductions on your tax return that you shouldn’t have... which may put you at risk in the event of an IRS audit.

Don’t get us wrong. Many CPAs or tax professionals can do a fine job of handling taxes for owner-operators. Still, their knowledge often doesn’t go deep enough to truly minimize your money owed to the IRS - simply because they don’t know the industry inside and out. One way to determine if your CPA or tax professional really knows the trucking industry is to ask some trucking-specific questions related to taxes.

Here are five trucking questions that your CPA should know the answers to for their owner-operator clients. If they don't know the answers, maybe it's time to open up the conversation about finding a better, trucking-specific solution for your business' tax needs.

Question #1) What Per Diem rate am I entitled to as an over-the-road Owner-Operator?

Correct Answer: As of October 1st, 2018, you are entitled to 80% of $66 ($52.80) per day in the continental United States. The rate increases to 80% of $71 ($56.80) for days in Canada.

How most CPAs/Tax Professionals answer: You are entitled to 50% of $66 ($33) per day because that’s the standard rate for most other professionals who are allowed to claim Per Diem - or, even worse, many CPAs will give you 50% of actual meal receipts, which is most likely not even close to $66/day in actual meal spending.

Truckers are allowed to take 80% of the allotted amount, which tends to be one of the biggest missed deductions truckers face every year. If you claim 300 days per year of Per Diem, the difference between the full 80% deduction vs. the 50% deduction is nearly $6,000 of missed tax write-offs!

Bonus Question: Can my spouse claim a Per Diem deduction if they ride in the truck with me?

Correct Answer: Yes! Non-CDL riders who perform other duties related to your business operation (bookkeeping, dispatching, assisting loading, and unloading) may deduct 50% of the $66, which is $33/day.

How most CPAs/Tax Professionals answer: No!

This is another huge deduction that is often missed and leads to thousands of dollars in unclaimed deductions come tax time.

Question #2: Can I use the standard mileage deduction method for my trucking business?

Correct Answer: No, the IRS considers a tractor to be a qualified non-personal-use vehicle, which means you need to claim actual expenses instead of the standard mileage method. That means you need to track all of your reasonable and necessary business expenses and deduct them when you file your taxes.

How most CPAs/Tax Professionals answer: Unfortunately, many tax professionals (especially at large-chain tax offices) will offer to use the mileage method to keep things simple for them when filing your taxes.

This is a huge mistake since you aren’t allowed to do so! This could put you in serious trouble in the event of an IRS audit.

Question #3: I’m a driver trainer. Can I deduct the meals I pay for my student drivers?

Correct Answer: Yes! Many times trainers end up footing the bill to keep their students fed on the road, and you can claim this as a deduction.

How most CPAs/Tax Professionals answer: Many times they say no because they figure the company you contract with will reimburse you for the expense.

If you are not reimbursed for the meals you pay for, you can deduct those expenses on your tax return!

Question #4: Can I deduct expenses for my dog that travels in the truck with me?

Correct Answer: Yes! Many times your furry companion can be classified as a security system for your