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It feels like the new year still has just begun, but tax season is coming up faster than you may think. Filing taxes as a truck driver - whether you’re an owner-operator or a company driver - can often feel confusing and overwhelming. The good news? Taking the time to understand the ins and outs of tax obligations and deductions can save you money and make tax season a lot less stressful. We will break down key things you need to know about taxes for truckers, including essential deductions, tax credits, and tips to help you file correctly.

Your specific type of employment will determine how your taxes are filed. You will receive a W-2 form from your employer if you are a company driver, and use the information from the statement to then file your tax return with an IRS Form 1040. As an independent contractor or owner-operator, you're classified as a self-employed individual. Self-employed individuals are required to file an annual income tax return and pay estimated taxes quarterly. Owner-operators receive 1099-NEC forms from companies that pay them for hauling freight. You’ll track all business income with these forms, as well as any additional trucking-related earnings. Typically, you will need to complete the IRS Form 1040 along with Schedule C (Profit or Loss from Business) and Schedule SE (Self-Employment Tax) when filing your taxes.

It’s important to keep meticulous records of your earnings throughout the year to give you an accurate picture of your profits and expenses, which will directly influence your tax bill. Do not pass up on all possible deductions when you file your tax return! We have previously gone over the most common deductions for independent drivers here, including:

• Meal expenses through the Per Diem rate
• Medical expenses related to work (including health insurance premiums)
• Vehicle-related expenses such as maintenance and repairs, as well as depreciation and loan interest
• Business-related expenses such as dispatch fees, insurance, association dues, bank fees, accounting and bookkeeping, and licensing fees
• Tools and equipment for your truck
• Cell phone and communication device expenses
• Travel expenses such as fuel, tolls, accommodations, and parking
• License and permit costs
• Continuing education and training costs
• Workwear
• Office supplies

Tax deductions and tax credits are both ways to reduce a tax bill, but they work differently. Tax deductions work by lowering your taxable income. When you reduce your taxable income, it decreases the amount of tax you owe based on your tax bracket. Tax credits directly reduce the amount of taxes you owe. Credits lower your actual tax liability dollar-for-dollar. For example, if you owe $2,000 in taxes and have a $500 tax credit, you will only need to pay $1,500. Tax deductions are non-refundable, and credits can be refundable or non-refundable. Below, we go over some tax credits and another deduction you may be able to use as an independent driver.

Commercial Clean Vehicle Credit

If you purchase a qualified electric or hybrid commercial vehicle, you might be eligible for a tax credit under the Clean Vehicle Credit program. This includes semi-trucks, with a maximum credit of $40,000 for vehicles 14,000 pounds or larger.

Fuel Tax Credit

If you buy off-road fuel (e.g., for reefer units or auxiliary power units), you may be eligible for the Federal Fuel Tax Credit. This does not apply to fuel bought to move your vehicle. The IRS Form 4136 is used to claim this credit.

Education Tax Credits

If you take courses to improve your trucking skills (such as CDL endorsements or business courses), you may qualify for education tax credits. You cannot qualify for both of these in the same year! The Lifetime Learning Credit (LLC) covers 20% of tuition and fees (up to $2,000). This credit can be applied to courses taken to improve job-related skills. The American Opportunity Tax Credit (AOTC) covers up to $2,500 for education expenses (if enrolled at least half-time in an eligible program). Qualifications for this credit are more restrictive, as it is only available for the first four years of college or trade school.

Self-Employment Tax Deduction

Self-employed and independent workers who file a Schedule C tax form also have to file a Schedule SE tax form for the self-employment tax. Since independent truckers pay both employer and employee portions of Social Security and Medicare taxes (15.3%), they can deduct half of this amount when calculating their adjusted gross income.

April 15^th remains the universal deadline for submission. If you are a beginner with filing taxes or still unsure about the process, consider consulting with a tax professional who understands the unique aspects of the trucking industry. They can guide you through the overwhelming process, ensuring you maximize your deductions and credits. Although tax season is not quite here yet, organization and preparation now will make it easier to send it all in when the time comes!