As owner-operators, you must take care of some tax questions. From what deductions you can claim to how to file your return, you will have all the necessary information to ensure you are paying the minor taxes possible.
We have put together a list of the tax questions that owner-operators usually ask.
Common Tax Questions
Q: How much should I need to save for taxes on my business?
A: It is suggested that you save 25–28% of your net weekly income for taxes every three months.
Q: Will I get my tax money back?
A: This depends on your situation, but it is unlikely to happen if you own and drive your truck. If you are getting a tax refund, you have given the government a loan with no interest.
Q: Will my tax preparer send me the 1099-NEC form?
A: No, your 1099-NEC form will be sent to you by your carrier. But if you are a corporation, it is possible that you will not get a 1099-NEC.
Q: What would happen if I did not pay my quarterly tax estimates?
A: If you do not pay all of your taxes, the IRS will charge you penalties and interest.
Q: For a contract worker, what tax forms do I need to fill out?
A: If you have an employee, put them through payroll and give them a W-2 at the end of the year. Give a 1099-NEC to a contract work if you have one.
Q: Should I file a separate tax return for the money I make as an owner-operator and company driver?
A: No. As a sole proprietor, you only have to file one tax return, Form 1040, which has a Schedule C section that lists your business’s income and costs.
Per Diem Questions
Q: How does Per Diem tax deduction work?
A: Per diem tax deduction is for meals and other expenses when traveling for work. As of October 1, 2021, the full-day fee is $69, and the half-day rate is $39. Leave-and-return days are parts of days. Full days are days you cannot drive because of service hours or roadwork rules.
Q: Can I use my e-logs to figure out how many days I have worked per diem?
A: You can if you have e-log records for the whole year. Call your carrier every three to four months and ask for a copy of your e-logs. It is always better to ask for a copy of e-logs by the earliest, as any carriers delete their e-logs every six months.
Q: Can truck drivers deduct the cost of fuel tax?
A: Fuel tax is included in the fuel cost, so it is deductible as an outgoing fuel expense for owner-operators.
Q: Can I get the deduction for a home office?
A: An owner-operator may be able to get a home office deduction, but they must pass two tests:
● The home office must be used every day and only for business purposes, and;
● Your principal place of business must be your home office.
Work outside your home, like an over-the-road trucker, but use office space at home to make business calls, organize receipts, and take care of other business tasks. You may be eligible for a home office deduction.
Q: Are medical expenses deductible?
A: If your medical costs are more than 7.5% of your adjusted gross income, you can deduct the amount which is more than 7.5%.
For example, if your adjusted gross income is $50,000 and your medical costs are $6,000, multiply $50,000 by 0.075 (7.5 percent) to find that you can only deduct expenses that are more than $3,750. You can deduct $2,250 for medical costs (6,000 – 3,750).
Q: I bought an Auxiliary Power Unit. Is this purchase tax-deductible?
A: Yes. Send your tax preparer the APU invoice or receipt. It would be helpful if you also wrote down the hours or gasoline spent so we may issue a tax credit.
Q: Dogs on trucks: deductible?
A: Yes, if you have a dog guarding a truck, the expenditures like food and vet bills can be deducted from taxes.
As an owner-operator, it is essential to know about the latest tax news and deductions, which means you need to know what questions to ask your accountant and how the tax code changes. By taking advantage of all the tax breaks you are eligible for, you can keep more of your own money.