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Employment
Tax deductions for truck drivers
If you are a driver, such as a bus driver, taxicab driver, or truck driver, you should have received a Form W-2 for your job and none of your job-related expenses are deductible. If you are self-employed you should receive a Form 1099-MISC, Miscellaneous Income and you should report that income, and any expenses, on Schedule C, Profit and Loss from Business.
If you are a self-employed driver, like a taxicab driver or an Uber/Lyft/Via driver report your income on Schedule C. You must account for all self-employment income you received, including what is reported on IRS Form 1099-MISC, Miscellaneous Income, and the income that is not reported by the payer on an IRS form. Also, any tips you receive are taxable income. If you are self-employed and your net earnings are $400 or more, you must pay self-employment tax on your net profit from self-employment. Use Schedule SE to calculate your self-employment tax and report the taxes on your Form 1040. In addition, you may need to make estimated payments to cover your total taxes during the year.
If you are an employee, you are no longer able to reduce your taxes by deducting unreimbursed, work-related expenses, due to tax reform. However, the new, almost-doubled standard deduction can, for many drivers, take the place of the deductions they used to itemize.
If you are a statutory employee or self-employed, certain items may be deductible on Schedule C. You should keep receipts to substantiate these expenses.
Examples of some items you may be able to deduct include:
- Vehicle expenses (for example, parking fees and tolls; standard mileage rate if not deducting actual expenses; and actual expenses such as maintenance and repairs, fuel, oil, registration fees, insurance, tires, loan interest, and depreciation if you own the vehicle). You must keep a log book to substantiate the vehicle expenses
- Log books, lumper fees, business use of cell phone
- Travel expenses, including lodging, meals (with limitations), and laundry expenses if incurred while traveling away from home
- Union and trade association dues
- State or local government licenses and regulatory fees
- Flat-rate occupational taxes and excise taxes (for example, heavy highway vehicle use tax)
- Liability insurance premiums
- Subscriptions to trade publications
- The cost and upkeep (for example, cleaning) of uniforms if they are required for work and not suitable for everyday wear (for example, the cost of safety shoes and gloves for a truck driver carrying blacktop) Note: If you wear a company uniform but are not required to wear it, you cannot deduct uniform expenses
- Leasing costs (for example, a truck driver's trailer rental fees or a taxicab driver's rental fees paid to a cab company for the use of its vehicles)
- Fees paid for dispatch service
In addition, self-employed drivers of all stripes could be eligible for the new 20% Qualified Business Income (QBI) deduction. This deduction reduces your taxable income, which reduces your income taxes.
If these drivers are your employees (instead of independent contractors), you may be responsible for paying employment taxes, such as Social Security tax, Medicare tax, and federal unemployment tax.
When determining vehicle expenses, you cannot use the standard mileage rate for vehicles used for hire such as a taxicab, bus, or over-the-road truck.
Travel Expenses
To deduct travel expenses, you must be traveling away from home, which means your duties require you to be away from the general area of your tax home longer than an ordinary workday, and you need to sleep or rest to meet the demands of your work while you are away from home. You cannot satisfy this rest requirement by merely napping in your vehicle or grabbing a quick bite to eat. Also, you do not have to be away for a whole day, or from dusk to dawn, as long as your break from work is long enough for you to get the necessary sleep or rest. Most local drivers do not have travel expenses. However, as a long-distance truck driver, you may deduct travel expenses if you can substantiate expenses. You need to keep receipts or maintain a log with such information as the amount, time, place, and business purpose of the travel expenses incurred. Maintaining a log book with cities, distance, and driving time or keeping track of the number of hours driven and the number and duration of the stops may not be enough to support a deduction for travel expenses.
You must determine the location of your tax home before you can determine whether you are traveling away from it.
- Generally, your tax home is your regular place of business. It does not matter where you live.
- Your tax home includes the entire city or general area in which your business or work is located.
- If you have more than one regular place of business, your tax home is your main place of business.
- If you do not have a regular or a main place of business because of the nature of your work, your tax home may be the place where you regularly live.
- If you do not have a regular place of business or post of duty and there is no place where you regularly live, you are considered a transient and your tax home is wherever you work.
For example, the tax home of a driver usually is where they begin and end a trip, even if they live somewhere else. A self-employed truck driver's tax home may be at the headquarters where the trucking assignments are given out, even if that is far from where they live.
Meal Allowance
Self-employed truck drivers may also deduct 80% of the special standard meal allowance rate or their actual expenses. The 2023 special standard meal allowance is $69/full day within the US. The special standard meal allowance is applicable if you work in the transportation industry, which includes those whose work directly involves moving people or goods by bus or truck, regularly requires them to travel away from home – and, during any single trip, usually involves travel to areas eligible for different meal allowance rates. Using the special rate for transportation workers eliminates the need for you to determine the meal allowance rate for every area where you stop for sleep or rest. If you choose to use the special rate for any trip, you must use the special rate for all trips you take that year instead of using the regular standard meal allowance rates. The latest rates are published online by the IRS in Publication 1542, Per Diem Rates. This publication is only available online and is updated throughout the year as new rates are announced by the General Services Administration.
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The Money Today Guarantee is only available to clients who (i) are approved for an Early Tax Refund Advance loan; and (ii) elect and are eligible to receive loan funds on a prepaid card. Loan available during hours of operation. Hours vary by location. Loan application must be submitted by 11pm local time. If funds are not credited to your card before 12am local time, Jackson Hewitt will credit $50 within 2 weeks to your card if available or provide you a $50 eGift card. Fees, terms, and conditions apply to the prepaid card. The Early Tax Refund Advance (ETRA) is a loan secured by, and paid back with, your tax refund and is offered by First Century Bank, N.A. Loan amounts are determined by your expected federal refund, less authorized fees and underwriting. Loan amounts are $300, $500, $1,000, and $1,500. To be eligible for the $1,500 ETRA loan, your expected federal refund, less authorized fees, must be at least $5,000. Most common ETRA loan amount approved is $300. ETRA loan is subject to underwriting and approval. Loan proceeds are typically available on the same day of approval, if disbursed on a prepaid card offered at Jackson Hewitt offices, or in 1-5 business days with direct deposit. Terms and restrictions apply. For details visit jacksonhewitt.com/loans. Jackson Hewitt is a Rhode Island Licensed Loan Broker and holds other relevant licenses for the locations where this product is offered. If approved, a finance charge applies except for residents of CT and NE.
