Owner-operators can save money in many ways. One way to save money is filing your taxes correctly. By doing so, you must know about all the different tax deductions. Knowing which deductions, you can use can be confusing. Continue reading below to find information on owner-operator tax deductions, tax tips, and more.
Types of Owner-Operator Taxes
As an owner-operator, it is your responsibility to pay your own taxes when the time comes. This is different from a company driver; your taxes are automatically deducted from your paycheck as company drivers. There are three types of taxes an owner-operator must file.
Self-Employment Taxes – These are like the Social Security and Medicare taxes paid out as a company driver. As an owner-operator, you are considered self-employed. The self-employment rate is 15.3% – this is 12.4% for Social Security and 2.9% for Medicare. For more information about self-employment taxes, visit the IRS website.
Federal Income Tax and State Income Tax – These taxes are added to your tax return. Company drivers Federal and State taxes are automatically withheld from their checks. However, as an owner-operator, you are responsible for estimating these taxes and making your own payments.
Estimating Tax Payments
As a self-employed owner-operator, it is your job to calculate your own estimated taxes and send your payments to the IRS. It is recommended that owner-operators set aside approximately 25-28% of your weekly net income. You then should send in your payment quarterly to the IRS.
If you do not pay your quarterly taxes, you will be charged a late payment penalty. Also, if you do not file your taxes – you can have another penalty tacked on. Currently, the interest rate is 3%, which you will be charged on top of the taxes you owe.
Owner-Operator Tax Deductions
While you are not only responsible for calculating and paying your taxes, but you are also responsible for deducting any expenses throughout the year. Deducting expenses can help lower your tax responsibility.
Recently, beginning in 2021, you can deduct up to $300 for charitable cash contributions made before December 31, 2021. This is even if you do not itemize your deductions. You can deduct $600 if you are married.
Below are some common owner-operator tax deductions.
Owner-Operator Taxes
- Daily Meal Allowance
- Mileage
- Overnight Hotel Costs
- Truck Repair – Maintenance Costs
- Union Dues
Administration / Office Expenses
- Accounting Services
- Calculators
- Clipboards
- Computer Supplies
- Education
- Envelopes
- Legal Costs
- Paper and Pens
- Photocopies and Faxes
- Postage, FedEx, and TripPak
- Receipt Book
- Stapler and Staples
- Trade Magazines
Electronics / Communications
- CB Radio, Repairs, Antennas, Cables
- Cell Phone and Accessories
- Pager
- Phone Cards
- Qualcomm, Satellite, Internet
- Satellite Radio
- GPS Units
- GPS Map Updates
Insurance
- Bobtail / Liability
- Cargo Insurance and Claims
- Disability
- Dental, Health, and Vision
- Occupational Accident
- Physical Damage
Permits / Fees
- Door Signs, Decals, and Lettering
- Fuel and Road Taxes
- Federal Highway Use Tax (Form 2290)
- IRP, Licenses, and Permits
- Parking and Scales
- ATM, Bank, and Credit Card Fees
- Broker Fees
- Fuel Card Fees
- Ledger Book
- Trade Memberships
- Transaction Fees
Personal
- CDL Fees
- Caps, Coats, Shirts (with carrier logo)
- Drug Testing
- Eye Exams, Glasses, Sunglasses
- Laundry Expenses
- Mileage on personal vehicle
- Motels
- Rain Gear
- Safety Shoes / Boots
- Uniforms and Alternations
- Hangers
- Hard Hat
- Safety Glasses
Tractor-Trailer – Exterior
- Chains, Tarps, Bungee Cords
- Chrome
- Fuel and Fuel Additives, Filters
- Coolant & Antifreeze
- Headache Rack
- Kingpin Lock and Padlock
- Load Locks
- Oil and Lube
- Power Washer
- Repairs, Parts, and Labor
- Shop Equipment and Power Cords
- Tires and Repairs
- Trailer and Tractor Wash
- Vacuum
- Wax
- Straps
- Wide Load Flags
Tractor-Trailer – Interior
- Accessories
- Air Fresheners
- Alarm Clock
- Appliances
- Atlas and Maps
- Bedding
- Bunk Heater
- Camera
- CD Player
- Cleaning Supplies
- Coffee Pot
- Coolers
- Crockpot
- DVD Player
- Flashlight
- Batteries
- Flyswatter
- Hoses and Cables
- Ice Scrapper
- Luggage
- Paper Towels
- Rugs and Floor Mats
- Seat Covers and Cushions
- Storage
- Hand and Power Tools
- Trash Bags
When filing your taxes, be sure you are truthful; this will lower your chance of being audited by the IRS. However, being audited is completely out of your control in some situations. It is important to keep all your business-related expenses in one place throughout the year. This will help make filing taxes easier and less stressful. If you do not feel confident in filing your taxes on your own, be sure to reach out to a tax professional.