Truck drivers have to follow many rules and regulations that are unique to their profession, including their taxes. Many Truck Drivers – Taxes are self-employed, so they have to deal with the complexities of running a small business on top of the unique tax rules that apply to them. When their taxes get too complex and overwhelming, they may seek out the help of a tax professional.
To help truck drivers stay compliant and reduce their tax liability, here is what every tax pro needs to know about taxes and deductions for truck drivers:
For Employed Truck Drivers – Taxes
Employed truck drivers who get a W2 will have a much simpler tax return compared to self-employed drivers. Employees could potentially deduct work-related expenses their employers have not reimbursed on Schedule A. However, if they take the standard deduction, they won’t be able to make those deductions.
Since employees typically don’t own the vehicles they’re driving, they won’t have to deal with the Heavy Highway Vehicle Use Tax. Employed drivers’ returns are often as straightforward as the returns of most other W2 employees.
For Self-Employed Truck Drivers
Because most self-employed truck drivers own or sometimes lease their trucks, they are subject to self-employment taxes and taxes that are trucking-industry specific.
Self-Employment Taxes and Tax Payment Estimates
Self-employed individuals, including truck drivers, are responsible for paying 15.3% of their taxable income. This is imposed through self-employment taxes. It’s vital to make estimated tax payments every quarter to avoid incurring penalties.
Heavy Highway Vehicle Use Tax
The federal government imposes a Heavy Highway Vehicle Use Tax (HVUT) on particular commercial trucks, buses, and other vehicles operating on public highways. This tax is imposed on vehicles with a gross vehicle weight (GVW) of 55,000 pounds or more.
The HVUT is imposed annually and is paid by the vehicle owner when the vehicle is registered with the state. The tax is based on the vehicle’s weight and the miles the car is driven on public highways. The tax rate for vehicles with a GVW of 55,000 pounds or more is $100 per year, while for vehicles with a GVW of 60,000 pounds or more, the tax rate is $550 per year.
The HVUT is in addition to the federal fuel tax and the state and local fuel taxes. The tax is being imposed on the use of the highway, not on the purchase or operation of the vehicle.
Keeping a Tax Home
As a truck driver, it’s crucial to maintain a tax home. This is where you file your taxes and where your tax liability lies. If you move around frequently, keeping track of your tax home is essential so that you don’t end up owing taxes in multiple states.
There are a few different ways to maintain a tax home. The most common is to maintain a permanent residence in one state and file your taxes there. This can be tricky if you move around frequently, but you should be fine as long as you keep your permanent residence in one place.
Deducting Truck Business Expenses
Like any profession, truck drivers – taxes can also submit deductibles for potential reimbursement. Here are some expenses that you can deduct as a truck driver:
- Maintenance and Repairs: You can deduct the cost of maintenance and repairs for your truck. This may include things such as oil changes, tire rotations, and brake repairs. Keep track of your receipts to deduct the amount you spend on maintenance and repairs accurately.
- Depreciation: You can deduct the depreciation of your truck from your taxes. This is an important deduction for truck drivers. Keep track of all your receipts so that you can accurately deduct the amount that you spend on depreciation.
Conclusion
Familiarizing yourself with the complexities of tax regulations for truck drivers can equip you with the knowledge you need to help drivers make informed decisions about their taxes and help them avoid penalties. In addition, you must use the best professional tax software to ensure you provide the best services to your clients.
Keystone Tax Solutions is a trusted professional tax preparation software that can make it easier for tax preparers to provide reliable services. Browse its features to learn more about our software!
