Every year there are changes to tax laws that may go under the radar for some 1099 truck drivers. Not knowing what these changes are may cause people to miss out on significant savings when it comes time to file their taxes. That's why we wanted to provide a few pieces of advice to make sure you aren't making the same common mistakes other owner-operators are making.
Are you a self-employed truck driver that needs help with your taxes? Click here!
1. The Standard Deduction increased again, make sure to take it if it’s greater than your Itemized Deduction
An estimated 90% of taxpayers use the Standard Deduction. This percentage is not expected to change due to the Standard Deduction increasing to $13,850 for single taxpayers, up from $12,950, $27,700 for married couples filing jointly, up from $25,900, and $20,800 for head of household, up from $19,400.
2. The Student Loan Payment Moratorium has been lifted
Beginning September 1, 2023, payment of student loans resumed. You may be able to deduct $2,500 of student loan interest paid. The deduction is subject to income limitations which have gone up for 2023. For joint filers, the deduction begins to phase out with a modified AGI of $155,000 and reduces to zero at $185,000. For single and head of household filers, the phaseout begins at $75,000 and reduces to zero at $90,000. For married filing separately filers, the deduction is not allowed.
3. You may receive Form 1099-K
The 1099-K is not likely to affect the trucking business per se, but if your spouse has a business or you have a side business you may see one this year. Many platforms such as eBay, Venmo, Zelle, Etsy, PayPal to name a few, will potentially be issuing these forms. The threshold for issuing 1099-Ks has changed from $20,000 and 200 transactions in 2022 and prior years to $600 in 2023 and future years. While the 1099-K should only be issued for business transactions, given the recent change, it is possible you could get one for reimbursing your friend for concert tickets or similar transactions. This can be corrected by contacting the issuer of the 1099-K, or, if all else fails, it can be corrected on the tax return at the time of filing.
4. There's been a key change for Retirement Income
For those in, or approaching, retirement, the age for taking required minimum distributions (RMDs) has increased to 73. RMDs are required for retirement plans like 401(k), 403(b), 457(b), traditional IRAs, SEP, and SIMPLE IRAs. For those who turn 73 in 2023, you must take your first RMD by April 1, 2024. The penalty for failing to take the RMD has decreased from 50% to 25%, and that penalty is decreased to 10% for timely corrections.
5. Don’t miss out on the QBI Deduction
77% of owner-operators received a QBI Deduction for 2022 because they had a net profit. If a business operates at a loss for the year, a QBI Deduction can't be claimed. The average amount of deduction received was $7,700. As an owner-operator, chances are you will qualify for this deduction, so if you didn't take this deduction last year make sure you look into it this year.
6. Don’t Wait
The most important aspect of tax time is paying tax due by April 15th. For self-employed individuals, quarterly tax payments are critical to the process of paying tax in full by April 15th. Extensions can be provided for additional time to file, however, extensions are not available for deadlines to pay your taxes. Organize and send all your tax documents as early as possible to get a head start on filing. filing.