US tax deductions for truck drivers
Handling your taxes as a truck driver can be challenging, particularly if you’re running your own business. However, understanding the tax deductions available to you and staying on top of them can make the process easier and reduce your overall tax burden. As a truck driver, you likely have a wide variety of job-related expenses, which often translate into tax deductions you can take. Here’s what truck drivers in the US need to know about available tax deductions.
What are tax deductions and why are they important?
A tax deduction is any amount that you can legally deduct from your total taxable income to reduce your overall tax burden. These deductions are often based on work-related expenses.
For example, if you spent $100 on a work-related meal, you would no longer be taxed on $100 of your income.
In the US, individuals have the choice between taking a standard deduction or itemize their deductions based on expenses. Truck drivers typically have a high volume of expenses related to their work, so it often makes more sense to take an itemized deduction in this scenario. Understanding how tax deductions work and which ones you can take is key, because it will reduce the overall impact of taxes on your finances.
Tax deductible expenses for truck drivers
There’s no shortage of tax deductible expenses available for truck drivers. Here are just a few tax deductible expenses that any driver should consider.
- Meals and lodging expenses: When you’re out on the road, you often pay for your own food, as well as the cost of staying at a hotel, motel, or truck stop overnight. All of these expenses are tax deductible.
- Union and trade association dues: Many drivers benefit from being part of a union or trade association, but these groups come with membership fees. Luckily, these fees are tax-deductible.
- Licensing and regulatory fees: Depending on where you operate and the type of cargo you carry, you’ll likely need to pay fees for licensing and other regulatory compliance measures, which are tax-deductible.
- Personal protective equipment: In order to work safely with certain types of cargo, you’ll need to spend money on personal protective equipment (PPE), which is a tax-deductible expense. This includes items like gloves, helmets, goggles, masks, or anything else you need to wear in order to work safely.
- Communication equipment: You’ll need to communicate with clients or other truckers while you’re on the road. Communication equipment like cell phones, computers, or radio equipment are all tax-deductible. Even if your cell phone is also for personal use, you may still be able to deduct part of your phone bill if you use it for work in any capacity.
- Work-related tools and supplies: If you use supplies like tarps, bungee cords, chains, or tapes to keep your cargo in place, you can deduct these expenses from your taxes.
- Continuing education and certifications: If you invest in courses or certifications to further your career, these are tax-deductible.
- Insurance premiums: Truckers are required to carry auto liability, cargo liability, and general liability insurance. The cost of insurance can get pricey, but the premiums are tax deductible.
- Truck depreciation: Your truck will inherently lose value as you drive it, but the government actually allows you to deduct this depreciation on your taxes. A tax professional can help you calculate depreciation rates appropriately.
- Interest on truck loans: If you took out a loan to buy your truck, the interest you pay on that loan is tax deductible.
- Repairs and maintenance costs: Whether you’re having a professional maintain your truck or are paying someone else to do it, the costs associated are tax deductible.
- Health insurance: If you run your own trucking business and pay for your own insurance out of pocket, the premiums are tax deductible. You’ll need to make sure you have the correct forms from your health insurance provider in order to claim this deduction.
Common pitfalls when claiming deductions
Unfortunately, the tax system can be very overwhelming, particularly if it’s your first time filing your return as a truck driver. Here are some of the most common pitfalls drivers encounter when claiming deductions and how to avoid them.
- Missing available deductions: If you don’t take a deduction you’re entitled to, you’re missing out on savings. This is why it’s so important to look over every aspect of your finances and take your time researching all of the deductions that are available.
- Incorrectly claiming deductions: Before claiming any deduction, it’s also important to make sure you truly qualify for it. Claiming the wrong deductions can have negative consequences later on, so it’s important to double-check this.
- Inadequate record keeping: Because truck drivers make so many deductions, they’re often audited by the IRS. It’s extremely important to keep detailed records of all of your income and expenses to ensure you’re prepared in this situation.
- Not seeking help: Don’t feel like you have to do your taxes alone, especially if you’re in over your head. Working with a tax accountant is a worthwhile investment for any trucker.
Strategies to maximize your tax deductions in the US
There are several strategies you can use to maximize your tax deductions in the United States. If you have a retirement account set up, contribute to it when you can - these contributions are tax-deductible in most cases. Charitable donations are also a way to maximize your tax deductions. You should also make sure you don’t forget any small office expenses related to your business. Even if you’re not sure, check each expense to see if it’s a legitimate deduction.
While taxes can certainly be frustrating, understanding deductions will help you reduce the amount you pay overall. Looking for more ways to streamline your trucking business? Get started with Rose Rocket, the #1 rated TMS.