Taxes for truck drivers can be complicated because there are many different rules and regulations that they have to follow. For example, truck drivers have to follow weight limits for their vehicles and take breaks after driving for a certain amount of time. Because of these different rules, truck drivers may need to hire a Tax Preparer’s to help them with their taxes.
Here’s what you should know about truck drivers’ taxes and deductions.
Truck Drivers as Employees
Self-employed truck drivers will have a more complex tax return than those employed. Self-employed individuals may be able to deduct work-related expenses that their employer does not reimburse on Schedule A. Still, if they take the standard deduction, they will not be able to deduct these expenses.
Since self-employed truck drivers usually own their own vehicles, they may have to pay the Heavy Highway Vehicle Use Tax. These drivers’ returns are usually more complex than the returns of any other W2 employee.
Taxes Paid By Truck Drivers
Many truck drivers are self-employed and own or lease their own trucks, which means they’re responsible for paying self-employment taxes and taxes specific to the trucking industry, like the ones listed below.
Self-Employment Taxes
Self-employed truck drivers must pay 15.3 percent of their taxable income in self-employment taxes. To avoid penalties, they should make estimated tax payments each quarter.
Heavy Highway Vehicle Use Tax
The highway use tax is a tax that is applied to vehicles that weigh 55,000 pounds or more. The vehicle’s weight calculates the tax, and the maximum tax applied is $550 per vehicle. Vans, pick-up trucks, and panel trucks usually do not have to pay the tax because they do not reach the minimum weight. Other variables included in the tax are logging or agricultural vehicles and those with minimum road use.
The filing season for Form 2290 (a tax form for truck drivers) is July 1 through June 30. Truck drivers might need help with their taxes during your typical off-season. The deadline for Form 2290 is based on the month that the truck was first used on public highways during the reporting period. The IRS’s chart, When Form 2290 Taxes are Due, can help you determine when or if your client needs to file and pay the monthly tax.
If you are a trucking company owner, you must ensure your drivers have an EIN (Employer Identification Number) to file Form 2290. The IRS takes about four weeks to process EIN applications.
Tax Home
Truck drivers must have a permanent work location to deduct certain expenses, considered their tax home. Their residence can be used as their tax home if they do not have the main work location. Travel expenses such as hotels are only deductible if the driver is away from their tax home.
If you don’t have a regular place of business or residence, it may be difficult to establish a tax home. Some people might try to use a relative’s address as their tax home, but this could cause problems with the IRS. If you can’t prove a true tax home, you might be better off taking the standard deduction.
Conclusion
The trucking industry provides an essential service to the American economy, and its workers are vital to keeping the wheels of commerce turning. However, the industry is also fraught with challenges, including a high turnover rate and a shortage of qualified drivers. As a tax preparer’s, it is important to be aware of these challenges and how they may impact your clients.
With the right preparation and understanding, you can help your clients navigate the trucking industry’s challenges and ensure that their businesses are successful.
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