Truck Driver Taxes 2024 [Tips and Tricks]

Tax Day is April 15. Have you filed yet?

The number one tip for filing your taxes each year: Actually file your taxes. 

Taxes are confusing, certainly, but failing to file them entirely — or doing it incorrectly — can lead to some major issues for you. Issues that will follow you.

No one loves filing their taxes each year, but it’s a necessary part of being a working adult.

It can seem intimidating to file taxes — especially as an independent contractor — but it doesn’t have to be. There are ways to keep yourself organized all year and get help from professionals. That way, you can return to doing what you do best: driving. 

I work in the driver settlement department here at Anderson Trucking Service (ATS) and I’ve seen plenty of wage garnishments come across my desk after drivers failed to pay their taxes or file properly. I don’t want that to happen to you. 

In this article, I’ll help you understand: 

• The differences between filing as a company driver and an independent contractor
• Tips for tax success
• The documentation you need for taxes
• Truck driver tax deductions
• Who can help you file your taxes

Truck Driver Taxes: Company Drivers vs. Independent Contractors

Taxes are often one of the last things truck drivers consider when switching carriers. Sure, you fill out tax paperwork, but you won’t be affected by those decisions until a year later, as the tax year is so delayed. But, you need to keep it in the back of your mind all year round and keep your documents up-to-date. A potential tax issue can bring the IRS’ attention to you — and not in a good way.

Company Drivers

Company drivers are considered employees of the trucking company. As company employees, generally speaking, state and federal taxes are taken out of their paychecks. Federally mandated expenses, like Medicare and Social Security, are also taken out of their checks. 

The amount that’s taken out of your check is dependent upon the state you live in, not the state you operate in. For instance, if you work at ATS, which is headquartered in Minnesota, but you live in Pennsylvania, your taxes will be deducted according to Pennsylvania regulations. 

You’ll file taxes with a W-2 form. This form is given to you by your employer at the start of each year.

Independent Contractors

If you’re a lease operator or an owner-operator, you won’t have state or federal taxes taken out of your checks. Your settlements won’t include tax deductions. Instead, your checks will be strictly gross income. 

You’ll file your taxes with a 1099 form given to you by the company(s) you contract with to haul freight. 

Filing taxes as an independent contractor may be more complicated, sure, but it’s by no means impossible. You shouldn’t avoid leasing or purchasing a truck because taxes are more complicated; it simply means you’ll have to complete a few extra steps. For you and your business, it may be worth the extra work — and that decision is entirely yours.

How to Successfully File Taxes

Company Drivers

You need to know what you’re withholding on your tax forms. You’ll fill these forms out as soon as you start driving for a company, most likely in orientation. Make sure you keep this form updated as it changes. 

For example, if you claim two dependents and one dependent moves out on their own, you need to update your tax form to only claim one dependent. You can update the form with the human resources or accounting department at most trucking companies. 

Throughout the year, monitor your pay stubs. You shouldn’t only look at them come tax time. Looking at them year-round will help you ensure your earnings and deductions are correct. 

Be aware of all your potential deductions for things like health insurance, per diem and dependents. Determine which tax bracket you fit into and establish a threshold income for when you’ll go to a professional. For some drivers, it’s when they reach $50,000. For others, it’s $100,000 and higher. 

Typically, the more money you make, the more complicated your taxes can become. Understand your comfort level and seek additional help as needed. A mistake can be costly.

Taxes are different every year; something is always changing. Just because you filed one way one year doesn’t mean you’ll do it the same way the next year. Many drivers decide to work with a tax professional because of this.

Independent Contractors 

Independent contractors should keep a record of every penny they spend on the road throughout the year. The more you earn, the more you need to track your expenditures. Keeping track of these details will be helpful when you file your taxes and you’ll be especially pleased with yourself if you stay organized all year. 

Truck driver tax deductions can add up; the more you deduct from your gross earnings, the more you lower your taxable income. Save all your receipts and document your purchases over the road to ensure you’re only paying what you should be paying taxes on — nothing more and nothing less.

Know how your business is set up and how taxes apply to that business. Have an understanding of who owns the tax responsibility within the business. Keep any record of business done over the road that pertains to that business. 

If you’re filing as a sole proprietor, not a business, it’s important to keep the receipts for items you’re spending money on. Like company drivers, establish a threshold for when it’s time to get professional tax help. 

You can easily keep your receipts organized in a few different ways. You can keep them all together in one place and sorted according to category. If you’re worried about opening your truck door and having receipts fly away or blow around, you could rely on an app. For a small monthly fee, you can take a photo of the receipt, catalog it and save it in your records.

The deductions the IRS allows change every year, so it’s difficult to pinpoint what you should and shouldn’t keep track of; after all, it may change. Therefore, it’s a good idea to contact a professional to discuss the deductions you can take or work with a tax professional who specializes in independent contractor taxes.

If you do work with a tax preparer, stay in contact with them year-round. They’re often busiest during tax season, but the best time to contact them is in the offseason. Each month, send them your receipts and potential deductions. Open up the conversation and make them earn the money you pay them. When you have your finances together, you’ll end up being one of the first people to have your taxes done during tax season.

As an independent contractor, you may decide to file your taxes quarterly. If you do this, it’s highly recommended that you work with a tax preparer. It can be over complicated and you may have to jump through hoops to figure out how much you owe each quarter. Any good tax preparer will give you the option to pay a little throughout the year, so make sure it’s something you bring up to them.

Paperwork Needed for Truck Driver Taxes

Company Drivers

As a company driver, you’ll need your W-2 to file your taxes — it’s federally mandated. On the state level, however, there are different requirements. Your state may require specific paperwork depending on its regulations. For instance, you may need to provide proof of health insurance payment. 

Independent Contractors 

If you’ve earned more than $600 with a carrier, you’ll need a 1099 form to complete your taxes. If you earned less than $600, you don’t need a 1099. 

Additionally, if you’re a sole proprietor or a single LLC, you’ll probably get a 1099, but if you’re a business, like a corporation, you aren’t required to receive a 1099 from the carrier you’re contracted with. 

If that’s the case, you can reach out to your carrier for a year-to-date settlement summary, which provides all your earnings. You’ll also need the summary of your miles driven, fuel purchased, itemized deductions taken out of your settlement and the miles you ran in each state. 

Who Can Help Me File My Taxes?

Wondering who can help you with your taxes? If you aren’t comfortable doing your taxes yourself, as either a company driver or independent contractor, that’s fine. Make sure you understand your comfort level and seek help when you need it. 

A certified personal accountant (CPA) or tax preparer can help you file your taxes. Try to work with someone well-versed in 1099 drivers or truckers. 

There are also services out there designed specifically for drivers. For instance, ATS works with American Trucking Business Services (ATBS). They help 1099 truck drivers file and prepare for taxes. 

While it’s ultimately your decision, I highly recommend working with a tax professional. The money you pay them will pay for itself. They can help you find deductions you didn’t know applied to you and help you only pay for what you should pay for, nothing more. You should focus on the road, not what’s changing with taxes every year. 

If you happen to file your taxes incorrectly, you may have to pay in when you actually shouldn’t have. If you don’t pay in and you should have, you can get fines and penalties. And the penalties aren’t usually small. The IRS will go for the highest penalty possible with the highest interest rate. 

You can’t ignore the money you owe on taxes, either. It never goes away. When companies report a W-2 or 1099, the IRS gets a copy too. It’s filed under your social security number or your Employer Identification Number (EIN). They see how much money you make. 

If you don’t file your taxes, the IRS will file for you. They’ll only take your gross income; they won’t look for things like deductions and per diem that’ll lower your taxable income. Then, they can garnish your wages and charge interest. You can have your entire paycheck go toward back tax payments.

And if you are behind on your taxes, it’s better to pay late than never. Reach out to a tax professional to help get it resolved.  

Successfully Manage Your Finances

Taxes are overwhelming, but you’ll end up in a much more overwhelming situation if you don’t do them or if you do them incorrectly. 

By keeping your tax forms updated, keeping and organizing your receipts, understanding your deductions and consulting a professional for help, you can file your taxes easily once the time comes. Don’t forget to reach out to a tax professional or a business professional who specializes in consulting truck drivers if you’re uncomfortable managing your finances on your own. 

There are other ways you can manage your finances year-round to ensure you’re making a profit and making the best business decisions for yourself. For instance, a profit and loss statement (P&L) helps you compare your revenue to your expenses so you can determine if you’re making a profit month-over-month.

These 10 tips will help you run a successful trucking business.