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As an owner-operator truck driver, your tax situation is challenging yet unique. You must file and pay texes like a business owner while also being eligible for truck driver tax deductions. Truck drivers pay many taxes, including income taxes, payroll or self-employment taxes, or excise taxes. However, with proper tax planning, you might be able to lower your tax bills considerably.
Simplex Trucking Tax Services can help you understand your tax situation to ensure you don’t have to worry about the IRS knocking on your door.
What Taxes Do Truckers Pay?
As a truck driver, you must fill out a tax return with the IRS and pay taxes to the state where your business is registered and any state you operate. As a result, trucking companies pay more taxes than any other businesses.
In addition to income or excise taxes, you must pay fuel taxes, 2290 road taxes, and weight distance taxes in some states, or — depending on your case — independent contractor truck driver taxes or self-employment taxes. Staying on top of your trucker taxes is vital if you want to remain in business and out of trouble.
On the other hand, when you file your trucker taxes, you can minimize your tax liability by claiming legal tax deductions and credits available. Knowing and understanding all credits and deductions will help you avoid penalties, minimize the amount you need to pay in taxes, and reduce the risk of an audit.
What Are Some Tax Deductions for Truck Drivers?
Tax deduction occurs when you have a reduction of taxable income, such as a business expense. This reduction will result in less tax money due. As an owner-operator truck driver, you might be eligible for multiple tax deductions, including the following:
- Fuel
- Truck payment
- Bookkeeping and accounting fees
- Insurance
- Uniforms
- Maintenance fees
- Office Supplies
- Licenses and permits
- Tolls, laptops, and phones used for work
- Truck storage fees
- Truck license plates
- Cleaning supplies
- Meals
- Gloves for a truck
In fact, any expense you keep a record of that is “necessary and ordinary” for your trucking business could be considered tax deductible.
On the other hand, tax credits work entirely differently. These will reduce your liability dollar-for-dollar, meaning if you owe $6,000 in taxes and receive a $5,000 tax credit, you will be responsible for paying only $1,000 in taxes.
Understanding tax preparation and tax planning is challenging and time-consuming. If you run a trucking business, it is critical to know that there are several tax reports you must complete at the end of every year. The key to keeping your business running is knowing how to manage your taxes or when to get help.
If you feel overwhelmed with tax preparation and planning, you can get help from tax experts to register your trucking business with the state while helping you stay compliant. After all, compliance is the first thing you need to consider for the success of your trucking company.
