At 2290Tax.com we help owner operators, companies, and paid preparers complete the necessary unpleasantness of paying the IRS as quickly and painlessly as possible. We’re also big believers in never paying the taxman more than you legally have to, so we thought we’d share some advice on what truckers can, and cannot, deduct on their taxes.
Keeping a Receipt Logbook
It probably goes without saying, but save all your receipts for potential tax deductions. You’ll need them if the IRS ever glances your way and wants an audit.
Some drivers keep their receipts in a logbook, but increasingly drivers are using travel expense apps that allow you to either scan or take photos of receipts and export expense reports.
Fuel and Vehicle Expenses
The IRS considers a semi-truck a “qualified nonpersonal-use vehicle,” which means you cannot use standard mileage calculation methods to determine your vehicle expenses. Instead, you have to claim actual expenses, which include (but are not limited to):
- Fuel
- Insurance
- Oil
- Repairs
- Tires
- Washing
- Any other legitimate business expense.
“Any other legitimate business expense” can cover a lot of ground. Keep receipts for any vehicle-related expense, but be sure to confirm you can claim the expense before adding it to your deductions. Additional expenses can include:
- Cell phones used only for business use
- Interest paid on loans for trucks and trailers.
- Licenses and other fees for trucks and trailers
- Log books
- Lumper fees.
You can also claim depreciation for trucks and trailers. For a semi-truck you can claim depreciation over three years, or over four years for the Alternative Minimum Tax. For trailers, you can claim depreciation on trailers over five years, or over six on the Alternate Minimum Tax.
Travel Expenses
If you’re a driver, you should also claim travel expenses which meet IRS requirements. For tax purposes, travel away from home is only deductible if you have to be away from your tax home for “substantially” longer than a day’s work. You cannot claim travel expenses for trips where you leave and return to your terminal on the same day and if you have an hour off for lunch in between terminal visits.
For long-distance driving, however, you need to sleep, rest, and eat to fulfill your work obligations. As such, keep all receipts for lodgings and meals. Entertainment can be claimed if you’re entertaining a client, customer, or employee, circumstances many truckers usually don’t encounter. In other words, you can claim your dinner, but not the movie ticket you bought to relax before sleeping in your tax-deductible hotel room.
Resources
https://www.hrblock.com/tax-answers/services/jsp/article.jsp?article_id=56971
https://www.irs.gov/publications/p463/ch02.html
https://www.aicpa.org/publications/taxadviser/2015/february/pages/tax_trends_01.aspx