Do you drive a vehicle, like a school bus, semi-trailer, truck, or taxi for work? Drivers will receive Form W-2, Wage and Tax Statement, for income from wages you obtain being an employee. In the event that you received a Form W-2 and the ‘Statutory employee‘ check box in Box 13 is marked, report that income on Schedule C, Profit and Loss from Business. Statutory employees include certain agent or commission drivers.
As a self-employed driver, report your income on Schedule C. You might take into account self-employment income yourself or you could receive Form 1099-MISC, Miscellaneous Income. Also, any tips you obtain, like tips received as a taxicab driver, are considered taxable income. Self-employed drivers with net earnings of $400 or maybe more have to pay self-employment tax on the income reported on Schedule C. Additionally, you may want to produce estimated payments to cover the total amount of self-employment tax or income tax related to the income you report on Schedule C.
You are able to lessen your taxes by deducting unreimbursed, work-related expenses. If you’re a worker, these expenses might be claimed as miscellaneous Itemized Deductions on Schedule A, Itemized Deductions. If you’re a statutory employee or self-employed, they could be deductible on Schedule C. You need to keep receipts to substantiate these expenses.
Types of some items you are in a position to deduct include:
- Vehicle expenses (for example, parking fees and tolls; standard mileage rate or even deducting actual expenses; and actual expenses such as for example maintenance and repairs, fuel, oil, registration fees, insurance, tires, and depreciation if you possess the vehicle)
- Travel Expenses, including lodging, meals (with limitations), and laundry expenses if incurred while traveling abroad
- Union and trade association dues
- State or local government licenses and regulatory fees
- Flat-rate occupational taxes and excise taxes (for example, heavy highway vehicle use tax)
- Liability insurance premiums
- Subscriptions to trade publications
- The price and upkeep (for example, cleaning) of uniforms if they’re necessary for work and not ideal for everyday wear (for example, the expense of safety shoes and gloves for a truck driver carrying blacktop)
- Leasing costs (for example, a truck driver’s trailer rental fees or perhaps a taxicab driver’s rental fees paid to a cab company for the usage of its vehicles)
Other expenses linked to truck drivers include cargo losses and damage claims if cargo costs were a part of income and pay to other drivers who assist you together with your job. If these drivers are your employees (instead of independent contractors), maybe you are accountable for paying employment taxes, such as for example Social Security tax, Medicare tax, and federal unemployment tax. Taxicab drivers may deduct fees paid to a cab company for dispatch service.
When determining vehicle expenses, you can’t utilize the standard mileage rate for vehicles useful for hire like a taxicab or perhaps a bus.
To deduct travel expenses, you have to be traveling abroad, this means your duties need you to be far from the typical section of your tax home more than a regular workday, and you will need to sleep or rest to generally meet the demands of your projects when you are far from home. You can’t satisfy this rest requirement by merely napping in your car or truck or grabbing an instant bite to eat. Also, you may not need to be away for an entire day, or from dusk to dawn, provided that your break from work is good enough for you really to get the required sleep or rest. Most local drivers do not need travel expenses. However, as a long-distance truck driver, you could deduct travel expenses if you’re able to substantiate expenses. You will need to help keep receipts or maintain a log with such information as the quantity, time, place, and business intent behind the travel expenses incurred. Maintaining a log book with cities, distance, and driving time or monitoring the amount of hours driven and the amount and duration of the stops might not be enough to aid a reduction for travel expenses.
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.
For example, the tax home of a driver usually is where they begin and end a trip, even if they live somewhere else. A self-employed truck driver’s tax home may be at the headquarters where the trucking assignments are given out, even if that is far from where they live.
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. 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.