Are you thinking about joining the trucking industry as an owner-operator? Being your own boss and setting your own hours may sound enticing, but the life of a long-hauler isn’t easy. You’ll spend many weeks on the road and may find that you have little energy (or time) to handle tasks when you finally get home. On the upside, you won’t be stuck in an office and can earn an average of $194,007 annually. As an owner-operator, you’ll also be responsible for paying self-employment taxes, as well as state and federal income taxes. Although the 2021 tax filing deadline has already passed, it’s never too early to start planning for next year. Check out these five tax tips for self-employed truck drivers to ensure you are setting yourself up for success.
1. Implement an Expense Tracking System
One of the most important things you can do to make tax filing less painful is to create a good expense tracking system. It doesn’t matter if you go old school and use a spreadsheet or logbook, or if you use an app. Just be sure your system tracks every expense related to your trucking job and you save your receipts (hard copy or scans). The IRS is a stickler when it comes to documentation, especially when claiming deductions and credits. If you’re ever audited, a good tracking system can help keep you out of trouble.
2. Don’t Forget to Pay Heavy Highway Vehicle Use Tax
Another thing that gets truck drivers into trouble with the IRS is neglecting to pay the Heavy Highway Vehicle Use Tax. If you are required to register a heavy highway motor vehicle with a taxable gross weight of 55,000 pounds or more, you’ll need to file IRS Form 2290. The form must be filed for the month the taxable vehicle is first used on public highways during the current period, which runs from July 1 (current year) until June 30 of the following year. Form 2290 must be filed by the last day of the month following the month of first use. If that date falls on a weekend or legal holiday, it must be filed by the next business day.
For example, let’s say you purchase a taxable vehicle, register it in your name, and put it into use on September 22, 2022. You would need to file your Form 2290 by October 31, 2022.
How to File Form 2290
You can file your Form 2290 electronically or by mail (must be postmarked by the due date). Just be sure to have the following information on hand:
- Your Employer Identification Number (EIN). You can’t use your Social Security number on this form,
- Vehicle Identification Number (VIN), and
- The taxable gross weight of your vehicle.
If you aren’t using e-file, mail Form 2290 to:
|Form 2290 with full payment and|
that payment is not drawn from
an international financial institution
|Internal Revenue Service|
P.O. Box 932500
Louisville, KY 40293-250
|Form 2290 without payment due|
or if payment is made through
EFTPS or by credit/debit card
|Department of the Treasury|
Internal Revenue Service
Ogden, UT 84201-0031
|Form 2290 with a check or|
money order drawn from an
international financial institution
|Internal Revenue Service|
1973 Rulon White Blvd.
Ogden, UT 84201-0038
3. Make Quarterly Tax Payments
If you expect to owe more than $1,000 when you file your annual income tax return, don’t risk getting hit with an estimated tax penalty. Instead, make quarterly estimated tax payments to the IRS. This not only helps you avoid penalty fees, but also allows you to make smaller payments throughout the year versus one lump sum. As an owner-operator, you’ll also need to make quarterly payments to pay your Social Security and Medicare taxes since you don’t have an employer withholding them for you.
You can figure your self-employment and federal income taxes by using Form 1040-ES. Quarterly payments can be sent by mail or you can pay online. You may also be able to pay your state income taxes quarterly. Just check with your tax authority to see if you meet the income requirements.
4. Take Advantage of Available Tax Deductions
One definite tax perk for self-employed truck drivers is the ability to take various deductions that aren’t generally available to those who receive a W-2 unless they itemize. Below is just a small sample of what you may be able to claim on your tax return.
- Personal products – This may include bedding, cleaning supplies, a mini-fridge, sunglasses, or other smaller purchases necessary to make life on the road a little easier.
- Office expenses – Pens, paper, ledgers, calculators, etc.
- Travel expenses – You can deduct the cost of accommodations, parking, and toll roads if your work requires you to be gone long enough to require rest.
- Maintenance & repairs – Any maintenance service or repairs needed to keep your truck in working order are deductible.
- Union or association fees – If you are required to pay union dues or association fees, you can deduct them on your tax return.
- Specialized clothing – Although everyday clothing is not deductible, any specialized items needed for your profession are tax-deductible. This could include, but is not limited to, back or knee braces, specialized shoes, or eyewear.
- Licenses or certifications – Any training courses or fees associated with obtaining or maintaining required licenses and certifications are deductible.
- Insurance – Auto (business expense) and medical (personal expense) insurance premiums are deductible when you are self-employed and cover these expenses yourself.
- Meal Per Diem – If you’re self-employed and travel long distances, you may be able to deduct $69 (daily per diem for 2022) for each full day and up to $51.75 per partial day you are away from your tax home.
- Cell phones and laptops – Any phones or computers you use exclusively for business purposes are tax-deductible. This includes not only the cost of the item, but also any monthly service or internet plans. If you use the item for both personal and business needs, you can only deduct the percentage used for business.
As we mentioned previously, it’s important to keep good records and save receipts if you plan to take any tax deductions.
5. Get Help From a Tax Professional
The best way to ensure your taxes are filed correctly and on time is to work with a tax professional. Whether it’s submitting quarterly taxes, state, and/or federal income taxes, a tax pro can help you complete the necessary forms and make sure you’re taking all available deductions and credits. Many also offer bookkeeping services and can suggest expense tracking options that work for your particular lifestyle. To learn more about our affordable tax services for self-employed truck drivers, call Tax Defense Network at 855-476-6920 for a free consultation and quote.