Taxes — especially those attached to your on-the-road expenses like fuel and food — can greatly dent your income. It’s why you should be more aware of the tax deductibles available to you. These tax deductions can substantially reduce your taxable income, lower your tax liability, and also increase your savings. Tax deductions aren’t to be confused with a tax credit, which reduces how much taxes you need to pay. Continue reading to learn how to qualify for tax deductions as a truck driver and which ones to avail yourself of.
Which Truck Drivers Can Claim Tax Deductions?
Tax deductions for truck drivers list only self-employed drivers — owner-operators, contract drivers, or “independent contractors”— as eligible to claim tax deductions. It’s why the “Job-Related Travel Expenses” or Form 2106 is no longer available in the income tax return for most taxpayers.
One way to tell if you’re eligible for tax deductions is to pay attention to what type of tax documents you receive at the end of the year. A W-2 form means you’re a company driver working under someone and, therefore, unqualified to claim tax deductions. Conversely, a Form 1099 means you’re self-employed and eligible to claim tax deductions.
9 Tax Deductions Truck Drivers Can Take
Once you’ve determined you’re eligible to claim tax deductions, the next step is to select which ones. You can choose from numerous tax deductions — but there’s a catch. The only expenses that qualify are the ones strictly for business purposes. As such, items used for personal activities cannot be tax deductible.
Check out the tax deductions for truck drivers list below to better understand what you can write off on your tax liability.
Tax deductions for meal expenses may not be as simple as you think. You’ll only qualify for this deduction if your trip was a long-distance trip from your “tax home,” which is typically the home address of your corporate headquarters.
“Long distance” has two meanings here: Trips qualify as “long distance” if you were away from your tax home overnight or if the trip was so long that you needed to make a stop to rest or sleep. Hence, local drivers aren’t likely to qualify for this tax deduction.
If you want your meal expenses to reduce your taxable income, you have two options: the actual cost of the items or your per diem allowance. You need to track your meal expenses — tips and tax included — if you decide to take the actual expense route. The per diem route is less tedious since you only need to deduct a set amount per day.
Fuel and travel cost
Your expenses on a long-distance trip are tax deductible, as long as they’re work-related. These include parking fees and tolls.
Additionally, if you need to spend the night in a hotel, the expenses for your accommodations can also be tax deductible. To claim your actual expenses, you’ll need to keep the receipts.
Cost of office supplies and equipment
As a self-employed truck driver, you may have to spend on office supplies and equipment to maintain your business operations. Thus, what you spend on these — postage, faxes, accounting software, electronics, even pens — are tax deductible.
Vehicle repair and maintenance
Your truck qualifies as a nonpersonal-use vehicle. Therefore, all the expenses associated with maintaining and repairing it will be tax deductible. These include:
- Truck wash services
- Vehicle depreciation
- Loan interest from truck financing
Unions and other trucking associations are popular groups that many truck drivers join. If you’re part of one, you can deduct the required fees for being part of the group from your taxes. Note that the “required fees” that qualify are the ones that support your business or further your trucking career.
This tax deduction only refers to particular types of clothing. Everyday clothes don’t qualify. The only clothing that qualifies is business clothing or clothing you need for work. Some examples of this include:
- Safety goggles
- Steel-toed boots
- Shirts with your brand logo
If you’re paying for training for your commercial driver’s license (CDL) or attending truck driver school, those costs can be tax deductible. The courses you take to advance your trucking career or learn how to manage a small business will also count toward your business expenses as a self-employed truck driver.
Business-related insurance, such as the following, is tax deductible.
- Commercial auto liability insurance
- Property damage insurance
- Cargo insurance
- Insurance for lost income from business interruptions
However, foreign-provided personal health insurance may only qualify as a personal expense.
Some truck drivers must go through medical exams for work. These are tax deductible only if they are directly work-related, such as a physical exam to determine whether you’re physically fit for the job.
Nevertheless, personal check-ups will only be deductible as a personal expense, not a business one. You can only claim medical expenses if you itemize your deductions.
Lighten Your Tax Load with Tax Deductions
The most important thing to remember about tax deductions is they only apply to business expenses. But regardless of which tax deduction you take, it starts with tracking your expenses. A personal record of your spending throughout the year will make filing your taxes a breeze comes tax time.
If you aren’t sure how to manage your taxes or navigate foreign taxation, consider working with tax preparation services such as Tax Samaritan. Tax Samaritan experts have provided quality tax resolution services to expats since 1997. We ensure you don’t miss a single tax deduction so you can get the most savings from your taxes.