Deduction Checklist for Truck Owner-Operators
When it comes to preparing tax returns for truck owner-operators, consider the following outline of what constitutes the most important deductions and check out an interesting note on Social Security and Medicare benefits at the bottom.
Truck owner-operators generally file their U.S. Individual Income Tax Returns on Form 1040 and attach Schedule C for their business where they report gross income (generally reported on the Form 1099-NEC) and all ordinary and necessary business deductions.
Business deductions for truck owner-operators include the following, in the order of their importance:
- Cost of fuel, along with fuel surcharges,
- Cost of equipment (if it is leased, or depreciation deduction for the truck / trailer, interest expense on the loan),
- Costs of equipment maintenance (truck repairs and all maintenance expenses),
- Cost of insurance (cargo insurance, if paid by the operator), and insurance for the equipment,
- Dispatch charges (range from 8% to 12%),
- Meals / per diems (individuals subject to DOT hours of service rules are allowed $52.80 in 2020 (80% of $66) for a full day worth of work away from their home, and a slightly smaller amount for the days of arrival / departure),
- Cost of lodging (if any),
- Tolls, parking, scales, Pre-Pass,
- Load board,
- Tools, supplies, uniform-type items and costs for their upkeep, communication expenses,
- Licenses, accounting fees, business entity renewal fees, association dues,
- HHVUT (from the Form 2290),
- Any other expenses associated with the business.
Net profit (that is the difference between gross revenue and the tax deductions listed above) is subject to income taxes (Federal and state), and self-employment taxes (currently, at 15.3%).
As a reminder, self-employment taxes reported on Schedule SE of the Form 1040 are used by the Social Security Administration to compute social security and Medicare benefits for the truck owner-operators. They are also used to compute work credits for Social Security benefits.
For more details on this point, please read the following:
