Tax season is coming, and so is the chance to make back some of your money! If you’re an owner operator or a 1099 contract driver, you need to be familiar with all of your deductible costs. You may know most of these already, but a few of these might surprise you.
We hope you’ve kept your 1099 form organized and updated throughout the year so you can identify ALL of your deductibles this April.
Gross Income Deductions
The most important type of deduction to think about are the ones that reduce your adjusted gross income. The lower your gross income, the less you pay in tax overall.
For instance, if you make $80,000 annually, and spend $10,000 on licensing fees and other work related expenses throughout the year, that adjusts your remaining gross income to $70,000. So instead of paying taxes on the $80,000 you made, you only pay taxes on your Adjusted Gross Income (AGI).
What can you claim?
Keep in mind that not ALL drivers are qualified for each type of deduction. Also keep in mind that anything that your company has reimbursed you for cannot be claimed again in your tax returns.
1 Food on the road
If you’re an OTR or Regional driver, you can deduct food expenses from your taxable income. You can either deduct a per diem amount (amount differs depending on where you are) or save all of your food receipts. At the end of the year, you can deduct 80% of what you paid in meals for the year. Note that this does not apply to Local drivers.
2 Medical exams
If you ever suffer a work-related issue and need to see a doctor, you can deduct it from your taxes. Not all medical expenses are deductible, however, so make sure you have a valid reason. As a truck driver, your health is your number one priority, so make sure all work related medical costs are accounted for.
3 Truck repairs and maintenance
Any repairs or maintenance that were not reimbursed by your employer can be claimed. Cleaning fees can also be deduced, as long as they come out of your pocket. You cannot claim time spent on labor if you repair / maintain the truck yourself.
4 Personal products
These include the small purchases that make your life on the road easier. These could include food storage, log books, specialized clothing, electronics, and more. These little expenses will add up fast, so keep good track of them and you might be surprised at how much you can deduct at the end of the tax year.
5 Phone plans and internet
The IRS is well aware of the significant role of your phone when you’re on the road. You can deduct 50% of your phone and internet costs. Any laptop or phone purchased during the year can also be fully deducted from your income.
6 License fees
Any and all costs relating to obtaining and maintaining your CDL can be claimed.
7 Fuel and travel costs
If you own your own truck, you can claim the miles you drove on the job.
8 Association and union dues
Union and collective fees deductible. You can even claim costs associated with other trucking group memberships if you can prove they are directly related to your career.
9 Other non-trucking deductibles
If you want to really maximize your tax refund, do your research on which other deductibles you qualify for. These could come in the form of child tax credit, earned income tax credit, lifetime learning credit, and much more.
Other deductibles you may be surprised you can claim. Chart obtained from taxslayer.com
What can’t you claim?
Clothing for everyday wear
Any expense reimbursed by your employer
Commuting costs to HQ
Home phone line
Time spent working on equipment
Lost income as a result of unpaid mileage
Make sure to file before April 15th and good luck!
Now that you know exactly what you can deduct, it’s time to finish all the necessary paperwork and send it off digitally or by mail. We hope this has been helpful to all of you owner ops and 1099 contract drivers!