There are some very unique rules that apply to OTR Truck Drivers. I could write a whole book on this topic but let me hit some of the highlights.
As with other independent contract or business owners, Truck driver tax deductions may include any expenses that are ordinary and necessary to the business of being a truck driver. Taxes and deductions that may be considered “ordinary and necessary” depends upon.
Deductions Unique to Truckers
- Telephone or Internet Access Fees: The IRS recognizes that mobile phones and wireless internet laptops are necessary for most truck drivers. However, it also believes that these tools will also be used for personal purposes while drivers are on the road. Therefore, it only allows drivers to deduct up to 50 percent of the cost of access fees. The entire cost of the actual phone or laptop required for work is deductible.
- Subscriptions to Trucking-Related Publications: Because these publications often discuss new regulations and information relevant to the field, the IRS allows drivers to deduct their full cost. In general, a driver should be able to demonstrate that the main or only reason they subscribe to the publication is because of its pertinence to their employment.
- Association Dues: Most truck drivers are required to be affiliated with unions or other collective trucking groups. The dues required for membership are entirely deductible. Voluntary memberships may also be deductible, but only if the employee can demonstrate that they assist in their career or are a regular membership in the industry.
- Medical Examinations: Drivers required to undergo medical examinations for employment can deduct any out-of-pocket costs they incur. These deductions are taken as a business expense and not a medical expense, and, as such, do not need to meet the minimum threshold required to deduct a medical expense.
- Licensing Fees: The costs associated with obtaining and maintaining a commercial driver’s license (CDL) is entirely deductible. Similarly, the costs of any continuing education required to maintain a license with an employer, state or federal agency are deductible.
- Personal Necessities: Personal items a driver requires to work on the road are deductible. These include: flashlights, binders, calculators, overalls or other specialized clothing, luggage, log book papers, coolers for food, gloves and sunglasses.
Mileage vs Actual Expenses
The IRS considers a semi-truck to be a qualified non-personal-use vehicle. As a truck driver, you must claim your actual expenses for vehicles of this type. So, you can’t use the standard mileage method.
To deduct actual expenses for the truck, your expenses can include (but aren’t limited to):
- Fuel
- Oil
- Repairs
- Tires
- Washing
- Insurance
- Any other legitimate business expense
Other unreimbursed expenses you can deduct include:
- Log books
- Lumper fees
- Cell phone- Business use portion
- License and fees for truck and trailer
- Interest paid on loan for truck and trailer
Depreciate your truck and trailer:
- Over three years for a semi-truck for regular tax — or over four years for the Alternative Minimum Tax (AMT)
- Over five years for a trailer for regular tax — or over six years for AMT
Travel Cost:
If you’re an employee, you can also deduct the expenses of traveling away from home. You’re traveling away from home only if both of these are true:
- You’re required to be away from your tax home for substantially longer than a day’s work.
You need to sleep or rest to meet the demands of your work while away from home.
Tax Home
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.
Meal Allowance
You may use the standard meal allowance instead of actual meal expenses when calculating your deduction for meal expenses while traveling away from your tax home. The standard meal allowance rate for most small localities in the United States is $46 per day. Most major cities and many other localities in the United States qualify for higher standard meal allowances. You can use a special standard meal allowance of $59 per day 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 standard meal allowance rates. Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance 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 meal 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 per diem rates are announced by the General Services Administration. Generally, you can deduct only 50% of your business-related meal expenses. However, you can deduct 80% of your meal expenses while traveling away from your tax home if the meals take place during or in conjunction with any period subject to the Department of Transportation’s “hours of service” limits. For example, interstate truck operators and bus drivers who are under Department of Transportation regulations are subject to these limits. If you purchase fuel for buses used in certain ways, you may qualify to claim a fuel tax credit. For example, if you are a bus driver and purchase gasoline for a bus available for chartering by the general public, you may qualify for this credit.