Are Independent Contractor Truck Driver Taxes Different?

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Are Independent Contractor Truck Driver Taxes Different?

Understanding Independent Contractor Truck Driver Tax Deductions

Truck drivers incur a significant amount of business expenses and the IRS offers several truck driver tax deductions for drivers’ use. Most of the company’s truck driver tax deductions are also available to independent contractor truck drivers. However, be aware that any employer-reimbursed expenses are not deductible.

It is recommended that you always double check W-2 for income from wages you receive as an employee. As a self-employed or independent contractor, you may receive Form 1099-MISC. Keep receipts of expenses to substantiate when taxes are filed. Take a photo or scan receipts for work and keep them in a folder on your computer. This will declutter workspaces and ensure safekeeping for receipts when you need them for your truck driver tax deductions.

Tax Deductions for CDL Drivers

The big issue in question is what expenses can a truck driver deduct? As a truck driver, you may be able to reduce taxes by deducting unreimbursed, work-related expenses. If you are a truck driver employee, expenses can be claimed as Miscellaneous Itemized Deductions on Schedule A, Itemized Deductions. If you are self-employed or an independent contractor, these types of expenses can be deductible on Schedule C.

Truck drivers are required to maintain a tax home to claim deductions. Without a tax home, some trucker tax deductions may not be allowed.

Typically, the tax home is the regular place of business. It does not matter where the truck driver lives. The tax home includes the entire city or general area in which a business or work is located. If there is more than one workplace, the main place of business would be considered the tax home. If there is not a regular place or main place of business, the tax home would be where the truck driver lives. Additionally, if there is not a regular place of business or post of duty and there is no place where the truck driver regularly lives, the truck driver is considered a transient and the tax home would be wherever work is conducted.

Determining the appropriate tax home can save you money. In one instance, a Missouri truck driver did not require the employee to return to base. The Missouri truck driver used his mother’s address as his permanent address and tax home. However, the Missouri truck driver did not live there or help pay rent or other living expenses. The IRS disallowed over $19,000 of per diem hotel expenses he deducted on his tax return. Ensure you have the appropriate tax home noted, and if there is any question about your tax home, contact a tax advisor.

Tax Deductions for Truck Drivers List

The best way to take advantage of the truck driver tax deductions that are available is to be prepared and organized. Knowing what expenses you can and can’t deduct will make it much easier to stay organized come tax season. Check out this list of common trucker tax deductions so you can make sure you’re keeping track of all of these throughout the year.

Truck Driver Tax Deduction Examples:

Vehicle Expenses:
- Parking fees, tolls, and standard mileage rates can be deducted if you are not deducting actual expenses. Also, vehicle maintenance, repairs, fuel, oil, registration fees, insurance, tires, and if you own the truck, depreciation can be deducted

Cleaning Supplies:
- Hand cleaner, paper towels, portable vacuum, trash bags, window cleaner, and the like can be deducted if solely used for work

Electronics:
- CB radio & repair, phone, GPS unit, GPS Map Updates. The IRS recognizes that mobile phones and laptops are necessary for truck drivers. The IRS also knows that these devices will also serve personal uses while drivers are working. Therefore, the IRS only allows truck drivers to deduct up to 50% of the cost of access fees. The entire cost of the actual phone or laptop required for work is deductible. If the phone and or laptop are used only for work, then the cost can be deducted

Tools:
- Duct tape, electrical tape, flashlights, hammer, pliers, screwdrivers, tire iron, and wrenches can be deducted if used only in the workplace

Travel Expenses:
- Lodging at hotels and motels meals, laundry expenses while traveling away from home, alarm clock, bedding, cab curtains, coffee maker, first aid supplies, refrigerator, and Tupperware can be deducted.

Union and Trade Association Dues:
- Most truck drivers are required to be affiliated with unions or other collective trucking groups. The dues required for membership are entirely deductible. Voluntary memberships may also be deductible, but only if the employee can show that the dues assist in their career or are a regular membership in the industry

State or Local Government Licenses and Regulatory Fees

Office Supplies
- clipboard, logbooks, maps, notebook paper, pens & pencils, stapler, and related items can be deducted

Load Expenses:
- bungee cords, load chains, load straps, locks, wide load flags

- Flat-rate occupational taxes and excise taxes – heavy highway vehicle use tax

Liability Insurance Premiums:
- Truck drivers are required to undergo medical examinations for employment which can be deducted. Also, any out-of-pocket costs these examinations occur can be deducted. These deductions are considered truck driver business expenses and not medical expenses.

Subscriptions to Trade Publications:
- The IRS allows truck drivers to deduct the full cost because these publications frequently discuss new regulations and information relevant to the workplace. A truck driver should be able to demonstrate that the main or only reason they subscribe to the publication is that of the publication’s importance to their employment.

Uniform Cleaning and Maintenance:
- The cost and upkeep of uniform cleaning if it is required for work and not suitable for everyday wear – like the cost of safety shoes and gloves for a truck driver carrying blacktop. One thing to keep in mind: if you wear a company uniform but are not required to wear it, you cannot deduct uniform expenses. Clothing such as hangers, laundry bag, laundry soap, uniform alterations, boots gloves, hard hat, rain gear, and safety glasses for work are also deductible

Leasing Costs:
- A truck driver’s trailer rental fees can be deducted

Additional costs related to truck drivers include cargo losses and damage claims if cargo costs were included in income and pay to other drivers who assist you with your job. If these drivers are your employees, instead of independent contractors, you may be responsible for paying employment taxes, such as Social Security tax, Medicare tax, and federal unemployment tax.

When figuring your vehicle expenses, you cannot use the standard mileage rate for vehicles used for hire. If these expenses are reimbursed or paid for by an employer, they would no longer be valid deductions.

$7500 Tax Credit for Truck Drivers

Through the Strengthening Supply Chains through Truck Driver Incentives Act of 2022, a $7500 tax credit for truck drivers is now available for 2023 and 2024. With the goal of reinforcing supply chains, this tax credit is aimed at retaining current drivers and attracting new drivers to join the industry. Drivers with a current CDL who drove a minimum of 1,900 hours over the course of the year would be eligible for the tax credit.

Additionally, new truck drivers or those enrolled in a registered trucking apprenticeship could be eligible for a tax credit of up to $10,000. Similar to the $7,500 tax credit for truck drivers, this $10,000 tax credit would be available for 2023 and 2024.

There are additional tax credits for truck drivers that may be worth exploring. One of which is the Credit for Federal Tax Paid on Fuels. Using Form 4136, drivers can claim “a credit for certain nontaxable uses (or sales) of fuel during your income tax year”. The Disabled Access Credit and the Energy Efficient Vehicle Credit also may be worth looking into for eligible drivers.

1099 Tax Deductions for Truck Drivers – Travel Expenses

In deducting travel expenses, truck drivers must be traveling away from their home. This means, that the truck driver duties require travel away from home and the general area of your tax home longer than an ordinary workday, and truck drivers need to sleep or rest to meet the demands of work away from home.

Truck drivers cannot satisfy this rest requirement by merely napping in your vehicle or grabbing a quick bite to eat. Also, truck drivers do not have to be away for the entire day, or from dusk until dawn, as long as your break from work is long enough for you to get the necessary sleep or rest.

Most local drivers do not have travel expenses; however, as a long-distance truck driver, you may deduct travel expenses if the expenses substantiate. Truck drivers must keep receipts or maintain a log with such information: amount, time, place, and business purpose of the travel expense incurred. Keeping a logbook of cities, distance, duration of stops, and drive time may not be enough in supporting a deduction for travel expenses. This will prove to be helpful when determining your 1099 truck driver tax deductions.

Truck Driver Tax Deductions – Meal Allowance for Truck Drivers

Truck drivers may use the standard meal allowance instead of actual meal expenses when calculating deductions for meal expenses while traveling away from the tax home. The standard meal allowance rate for most small localities in the United States is $46 per day. Most major cities and many other localities in the United States qualify for higher standard meal allowances.

Truck drivers can use a special standard meal allowance of $59 per day if work is regularly away from the home and during any single trip usually involves travel to areas eligible for different standard meal allowance rates.

Truck drivers using the special rate eliminates the need to determine the standard meal allowance for every area where a truck driver stops for sleep or rest. If the special rate is chosen for any trip, it must be used for all trips taken that year instead of using the regular standard meal allowance rates.

Meal expenses for truck drivers are published online by the IRS in Publications 1542, Per Diem Rates. This publication is only available online and is updated throughout the year as new per diem rates are announced by the General Services Administration. The M&IE per diem for truck drivers in 2023 is $69 per day within the continental US and $74 per day outside of the continental US.

Usually, truck drivers can deduct only 50% of business-related meal expenses, although, truck drivers can deduct 80% of meal expenses while traveling away from the tax home if the meals take place during or in conjunction with any period subject to the Department of Transportation’s “hours of service” limits. For example, interstate truck drivers who are under the Department of Transportation regulations are subject to these limits. If fuel is purchased, truck drivers may qualify to claim a fuel tax credit.

Independent Contractor Driver Tax Deductions – Owner-Operators

Independent contractor driver tax deductions are nearly aligned with all truck driver standard tax deductions. However, there are some caveats independent contractors should be aware of. Independent contractor drivers cannot deduct time incurred from working on owned equipment. Moreover, independent contractor drivers cannot deduct income lost as a result of unpaid mileage, only the expenses incurred to operate the truck during the time. For example, in times of fueling, tolls, and scales. Independent contractor driver tax deductions do not include downtime.

For self-employed truck driver tax deductions, pay close attention to Schedule C. Expenses on Schedule C can be deducted, by subtracting them from business income.

Independent Contractor Truck Driver Taxes – Purchased Vehicle

Independent contractor truck driver taxes can include the loan taken out to purchase the vehicle. These drivers can deduct the interest on the return if a loan was taken out. The independent contractor truck driver must depreciate the purchase price of the truck itself over several years, taking into consideration the loss of value as the truck ages.

Is CDL School Tax Deductible?

Many of you must be wondering, “Can you claim driving school on your taxes?” According to tax experts at Intuit, in some cases, it is possible to deduct the costs associated with CDL school. Trucking school would fall under the lifetime learning credit program and may allow for a nice deduction on your tax bill. Additionally, independent contractor drivers or others who are considered self-employed can also deduct the cost of school. For these drivers, CDL school tuition could be considered a business expense.

There are also truck driver expenses deductions available on taxes that are specifically designed for employment. It is also important to note that it is possible that new tax laws for truck drivers in 2021 have been put in place or updated, so please seek legal and/or financial advice if you are unsure what deductions apply to the workplace.

Request information on how you can become a commercial truck driver. We offer classes to get your class a license and class b license through our CDL training. Call Truck Driver Academy today for a free training session.

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January 27, 2019

Are Independent Contractor Truck Driver Taxes Different?