Whether you’re just starting as an owner-operator or already a seasoned over-the-road (OTR) driver, it’s often confusing to know what you can and cannot write off on your taxes. The IRS fine print is always changing as well, so it can be easy to miss some less-obvious deductions.
You likely have a stack of invoices and receipts piling up, and a bunch of concerns regarding whether you’re filing your taxes correctly. Make sure you store these important documents and track all of your expenses, even if it’s in a filing cabinet, spreadsheet, or glove compartment.
Or, better yet, track them digitally in an app like RoamHR (get your free 30-day trial here). Centralizing all your annual invoices, taxes, and expenses in a single place can give you the peace of mind you need to stay on top of things.
To help you keep as much of your hard-earned pay as possible, we talked to three experts about some of the top deductions for self-employed drivers — especially the write-offs that are often overlooked.
According to CPAs Tim Cistone and Brandon Masters and attorney Demetrius J. Robinson, you’ll want to check if these deductions apply to each of your quarterly tax payments.
When you’re your own boss, your taxes look different than those with a W-2. Out-of-pocket purchases are frequent and can add up. Tracking all of your business-related purchases (and the use of your home in some cases) lowers your taxable income, meaning you keep more of your money.
Mobile and internet: The IRS lets you deduct 50% of the cost for your mobile phone and internet data plans. You can claim a deduction on 100% of the cost of the devices.
- Do you need a new phone? Getting a new one is a business expense that you can write-off. Keep everything itemized and sorted by downloading the RoamHR app.
Per-diem rates: Truck drivers can deduct 80% of the cost for meals, travel expenses, and incidentals while spending the night away from home.
- The current per-diem rate set by the IRS is $66 per day.
Personal items: Any necessities of being on the road are tax-deductible. This can include satellite radio subscriptions, laundry costs, purchases of a GPS, and logbooks.
- Purchase a pair of sunglasses or gloves? These are examples of expenses you can deduct on your taxes. You can even write-off the RoamHR app, which automatically calculates your anticipated income.
Maintenance and upkeep costs: Regardless if you own or lease, you can deduct the cost of maintaining, cleaning, and repairing your truck. Note: if you do the work, you can only deduct the cost of the parts and not labor.
- Need to replace your tires? What about new straps, load locks, or tarps? All of these can be written off on your taxes.
Driving expenses: This includes business-related tolls, fuel, and parking fees.
- Did you have to pay more than $100 out-of-pocket for fuel and fuel cards? All of that can be deducted from your taxes.
Make sure you save those receipts and itemize your write-offs. We make tracking your deductions easy. Get your free 30-day trial here.
Business use of home expenses: You can deduct a portion of your housing expenses if you have a dedicated home office. These expenses include homeowners’ insurance, rent, repairs and maintenance, utilities, and security systems.
- Is your home office the primary place where you manage your trucking business?
Bonus depreciation: According to Trucks.com, “starting with the 2018 tax year, a business can deduct 100% of a commercial truck or other business equipment purchase as a bonus depreciation.”
- In this change of legislation, purchases of used equipment also now qualify for this deduction.
Health insurance and retirement plans: You can deduct the cost of your health insurance, but only if you are not a W-2 worker that gets coverage from another employer. The same goes for any contributions you make to a retirement plan.
- You can deduct your health, dental, and long-term care insurance premiums, as well as the cost of premiums that cover your spouse or dependent.
Self-employment tax deductions: Any 1099 worker is required to pay both parts of FICA (Federal Insurance Contributions Act) taxes. However, you can deduct half of those payments as self-employment taxes. Luckily, the RoamHR app instantly calculates a projection of your annual earnings, so you always know how much you owe.
Qualified Business Income Deduction: If you file your tax return as a sole proprietor, partnership or S-Corporation, you may be eligible for a deduction of 20% of your profit.
When you’re a self-employed OTR driver, figuring out deductions and optimizing your finances falls squarely on your shoulders. Not anymore: RoamHR manages all of your finances in one location and can help you get an instant raise. Our easy-to-use, easy-to-understand platform was created to put money back in your pocket. Get your free, 30-day trial of RoamHR here.