As an owner-operator, you pay truck driver taxes differently than you would a company driver. You're running a trucking business. That means you don't get taxes withheld from a paycheck as company drivers do. It also means that you don't have an employer contributing to the Federal Insurance Contributions Act (FICA) taxes.
We made this truck driver tax guide to be as accurate and helpful as we can. It's meant to provide general info about trucking taxes. You should consult a certified public accountant (CPA) for specific tax issues.
Truck Driver Self-Employment Tax
Because you are a business owner, you don't have an employer contributing to your FICA tax (Social Security and Medicare). You pay the whole thing.
And you don't have taxes deducted from your paycheck as company drivers do. Instead, you make estimated payments throughout the tax year.
The fiscal tax year for the IRS runs from January 1 to December 31 of each calendar year. The quarters are the four payment periods for which you pay estimated taxes.
But the IRS doesn't divide the year into even quarters.
Instead, Q1 is the first 3 months of the year (January, February, March). The Q2 is the next 2 months (April and May). Q3 is June, July, and August. The final quarter, Q4, is September through December.
The due date for each quarter's estimated tax is on the 15th day of the month following the quarter. So the due dates are:
- Q1 (Jan, Feb, Mar): April 15
- Q2 (Apr, May): June 15
- Q3 (Jun, Jul, Aug): September 15
- Q4 (Sep, Oct, Nov, Dec): January 15
If the due date falls on a weekend or national holiday, the payment is due the next business day.
For example, for the tax year 2021, the Q4 due date is on a Saturday. The next weekday is Monday, January 17. But that's Martin Luther King Day, which is a federal holiday. Therefore Q4 estimated taxes are due on Tuesday, January 18.
The federal government may give extensions to people affected by disasters such as hurricanes, floods, wildfires, pandemics, etc.
Federal Income Tax
The IRS has a tiered system for taxing income. The amount you pay in taxes depends upon which tax bracket you fall into.
For example, the IRS tax brackets for 2021 are:
- 37% for incomes over $523,600 (single) and $628,300 (married, filing jointly)
- 35% for incomes over $209,425 (single) and $418,850 (married, filing jointly)
- 24% for incomes over $86,375 (single) and $172,750 (married, filing jointly)
- 22% for incomes over $40,525 (single) and $81,050 (married, filing jointly
- 12% for incomes over $9,950 (single) and $19,900 (married, filing jointly)
- 10% for incomes less than $9,950 (single) and $19,900 (married, filing jointly)
As you can see, the more you earn, the higher your tax rate. As a rule, plan on making payments of about 20% to 30% of your income for the quarter.
State Income Tax
If you live in a state like Texas or Florida, you have the benefit of no state income tax. Otherwise, you will also pay estimated taxes to your state.
Truck Driver Tax Deductions
The good news is that expenses on the road are tax-deductible. That doesn't mean that you should go on a spending frenzy to get all the deductions you can. You can only deduct part of your expenses. It's better to find out what expenses can help your bottom line after taxes.
Meals
You can deduct your meal expenses while you're on the road, but not all of them. They can only be meals on the road on days you spend the night away from home.
You're allowed to deduct a percentage of meals for the year. It varies in different tax years, but for truck drivers, it's usually around 80%. The per-diem allowance for meal deductions also varies, but it's usually $60-65.
Lodging
If you're a super trucker who lives on the road, it might not be practical to pay for a house or apartment. But if you don't have a permanent address, you can't deduct lodging expenses.
Why?
Because you can only write off lodging while you're away from home. If you have no permanent address, your home is wherever you are.
It's like the Metallica song says, "Wherever I may roam‚ where I lay my head is home."
You could use your parents' address, a friend or family member's address (with their permission of course) as your home base.
Other Expenses
If it's essential to do your job, it's most likely deductible.
- Cost of doing laundry while on the road
- Maps and mapping software
- CB radio
- Safety gear
- Association dues
- Computers
- Cleaning supplies
- Office supplies
- DOT physicals
- Postage
Be sure to keep receipts. If you're not sure whether something is a legit business expense, consult a CPA or tax professional.
Depreciation of Truck and Equipment
The IRS allows businesses to write off the depreciation expense of business assets. That is, you can write off the decline in value of your truck, trailer, and other operating equipment to lower your taxable income. We discuss these tax benefits in our post on Buying a Used vs New Truck.
How To File Truck Driver Taxes
Keep a record of your income and expenses. You can go old school and write them in a ledger book, or use a spreadsheet or accounting software.
You can get accounting software from Quickbooks, Wave, and other accounting software companies. You do all your entries online, and you can use an app on your smartphone to access all your data.
Most bookkeeping and accounting software will integrate with IRS tax forms. They can usually complete the form from your ledger's entries.
You will use the IRS Schedule C to report your income and expenses.
You'll show total income and expenses on Form 1040.
Use the Schedule SE to calculate your FICA or self-employment tax.
On Form 1040, you will calculate the taxes you owe or the amount you're due in a refund.
If you're filling out paper forms, you can mail them to the IRS office in your state or jurisdiction.
Most accounting software will integrate with the IRS electronic filing system.
If you file Form 1040 electronically without accounting or tax-filing software, follow the instructions on the IRS website for uploading forms.
Truck Driver Tax Penalties
The IRS is the most vicious, brutal collection agency in the world. In fact, when you have unpaid taxes, they have a lot more power over you than any other collector.The IRS can put a tax lien on your personal and business property, using your property as collateral for the taxes owed. A tax levy is when the IRS takes money from your bank accounts or seizes your property to sell to pay the taxes you owe. They can levy your home, investments, and even your truck.
Conclusion
Truck driver taxes can seem overwhelming. It takes some discipline to keep your income and expense records straight. This guide can help you get the deductions you deserve — and let you keep more of your hard-earned dollars, instead of giving them to the IRS.
You might also be interested in:
Fuel and Highway Use Tax -- You pay fuel taxes to each state you operate in. When you pay for fuel, taxes for the state where you make the purchase are included. But if you operate in other states (and Canadian provinces), the taxes get redistributed through the International Fuel Tax Agreement (IFTA). Read more our post on IFTA taxes and filings.
Heavy Vehicle Use Tax (HVUT) -- The HVUT is a tax on commercial trucks operating on public highways. A Form 2290 is the HVUT return, and t must be filed and paid in advance annually for each truck weighing over 55,000 lbs. Fees for a single truck range from $100 to $550 depending on gross taxable weight of the vehicle. For more information, read our tips on Form 2290 filings.