Trucking owner operator tax deductions list

As an owner operator truck driver, you know how important it is to keep track of your expenses and income. Not only does it help you manage your cash flow, but it also affects your tax liability. The good news is that you can deduct many of the costs associated with running your trucking business from your taxable income. This can lower your tax bill and increase your profit margin.

However, not all expenses are deductible, and some have limitations or special rules. You also need to keep accurate and organized records of your expenses throughout the year to support your deductions. 

What Are Trucker Tax Deductions?

Tax deductions are expenses that you can subtract from your gross income to reduce your taxable income. The lower your taxable income, the less tax you have to pay. For example, if you earn $100,000 in a year and have $20,000 in deductible expenses, your taxable income is $80,000. Depending on your tax bracket, this could save you thousands of dollars in taxes.

There are two types of tax deductions: standard and itemized deduction. The standard deduction is a fixed amount that you can claim regardless of your actual expenses. The itemized deduction is a list of specific expenses that you can claim based on your invoices and records. You can compare the two options and choose the one that gives you the most benefit.

For 2023, the standard deduction for single filers is $13850 and for married filing jointly is $27750. However, as an owner operator truck driver, you may have more than that amount in deductible expenses. Therefore, you may benefit more from itemizing your deductions.

Who can claim?

Self- employed status

If you’re a self-employed truck driver, specifically an owner-operator receiving a 1099-NEC from customers who paid you more than $600 during the year, you qualify for tax deductions. Employees receiving W-2 forms from trucking firms generally don’t qualify for these deductions. 

Filing Requirements

To claim your tax deductions, both Schedule C and Schedule SE (Form 1040) should be filed with your Form 1040 tax return.

Trucking owner operator tax deductions list

As an owner-operator truck driver, you can deduct any expense that is ordinary and necessary for your business. Here is a list of some of the common tax deductions for owner-operator truck drivers:

Vehicle Expenses

As an owner operator you are eligible to claim 100% deduction for all the expenses related to operating your semi-truck. 

1. Repairs and maintenance

As an owner operator any expense incurred for vehicle repairs or maintenance is 100% deductible. You can deduct the entire amount of the expenses incurred in the year or depreciate them out over a number of years, depending on the expense cost. Such expenses include:

• Tire Changes
• Oil change
• Any other repairs cost

2. Truck and Trailer Interest

If you lease a semi truck, you may typically write off the truck lease payment as an expense incurred by your firm.  Similarly if you own your truck or trailer, you can claim the leased cost spent.

3. Truck Expenses

Truck expenses are considered as a mandatory expense and it is fully deductible. Such expenses include:

• Fuel
• Insurance premium paid like cargo insurance, property damage insurance, bobtail insurance etc.

4. License and permits

Licenses and permits are official approvals granted by government authorities that allows to legally conduct businesses. Any license and permit cost you pay for your business are fully deductible.

• IFTA license cost
• Heavy Vehicle Use Tax
• Vehicle registration fees
• Cost of obtaining CDL and other business licenses

5. Depreciation

Owner operators can now deduct the depreciated amount of an asset from their taxable income over several years, reducing their tax liability. The IRS allows you to claim up to 20% in the truck’s first year and 40% in each following year as depreciation. For example: 

Travel expenses

1. Per diem for truck drivers

As an owner operator you are eligible to deduct per diem costs for meals. You can deduct this expense only when you’re away from home. The per diem for truck drivers is $69 if within the US or $74 if outside the US. It’s possible to deduct 80% of this rate. Apart from this, there is a $5 per day for incidental expenses.

However you need to keep records of the dates, locations, and purposes of your trips to claim truck driver per diem deduction.

2. Travel Costs

Travel expenses you incur while spending the night away from your tax home are fully deductible. This includes:

• Hotels and other lodging fees
• Parking fees
• Tolls and scales
• Sleeper berth costs – mini-fridge, coffee maker, curtains, bedding, food storage containers, and even first aid supplies.

Business expenses

These include the costs of running your business. You can fully deduct the actual expenses as long as they are reasonable and necessary for your business. You also need to keep receipts and invoices to claim your deduction.

• Cell Phone bill (50% if used for both personal and office work)
• Carrier admin fees
• GPS and its related costs, monthly fees associated with dash cams
• Accounting and book-keeping service fees
• Bank service charges
• Office supplies like printers, paper logs, clipboard, stationery etc.
• Miscellaneous expenses like tools, gloves, safety boots and driving glasses
• Subscriptions cost if related to trucking
• Office space – Mortgage, utilities, and property taxes (only a potion if used home office)

Non-deductible Expenses

While many expenses related to your trucking business are deductible, there are certain expenses that are generally non-deductible, like

• Commuting cost from your home to your business location
• Personal travel and meal expenses
• Anything you wear that’s not part of your uniform

Example

Let’s consider Zoya, an owner operator with a gross income of $120,000. She carefully keeps record of all the receipts in order to claim her rights. Lets see how much she can save

Particulars	USD	USD
Gross Income		120,000
Less: Deductible Expenses
Fuel costs	10000
Per diem for truck drivers	10000
Insurance premium paid	500
Dep – new truck worth $100,000	20000
Travel cost	500
Business expenses: Cell phone used for both personal & office (1000*50%) = 500Others = 11500	12000
Total deductible expense		53,000
Taxable Income		67,000

Tips on How to Claim Your Trucker Tax Deductions

To claim trucker tax deductions, you need to file Schedule C (Form 1040) with your tax return. This is where you report your business income and expenses and calculate your net profit or loss. You also need to file Schedule SE (Form 1040) to calculate and pay your self-employment tax. To make the process easier and avoid any errors or audits, here are some tips on how to claim your tax deductions:

1. Effective tracking: Keep track of your income and expenses throughout the year using a spreadsheet, an app, or a software. Categorize your expenses according to the types of deductions and separate your business and personal expenses.
2. Record-keeping: Keep all your receipts, invoices, statements, logs, and records in a safe place and organize them by date and category. You may also want to scan or take pictures of your documents and store them electronically for backup.
3. Professional Guidance: Consult with a tax professional to help you prepare and file your tax return. They can help you maximize your deductions, minimize your tax liability, and comply with the trucking tax laws and regulations.

Conclusion

As an owner-operator truck driver, you can take advantage of many trucker tax deductions that can lower your taxable income and save you money. However, you need to be aware of the rules and requirements for each deduction and keep records of your income and expenses. You also need to file and pay your trucking taxes on time. By following these steps, you can make tax season less stressful and more rewarding for your trucking business.