By Reagan Payne
Being an owner operator opens up a multitude of opportunities for truckers. Taking charge in business always comes with a price: taxes.
Owner operators should set aside around a quarter of their weekly net income in order to pay quarterly taxes. Although it might be tempting to wait and handle this annually, underpayment penalties and interests can pile up from neglecting to pay quarterly tax estimates.
The Per Diem tax deduction is one of the largest deductions for an owner-operator. It includes meals and other relevant expenses on days these drivers spend working away from home.
The rate for this deduction is 80% of $66 per full day and $50 for partial days. Partial days are the day you leave home and the day you return. Per Diem is even deductible if drivers use a hotel or motel while on the road, just not during home time. E-logs can be used for this if a full year of records is available.
In order to claim the home office deduction, it must be used regularly and exclusively for the business. It must also be the principal place of business. The IRS is known for disputing this by considering a truck the primary place of business for most owner operators.
Some clothing items such as gloves and boots are deductible considering the job explicitly requires these. However, everyday clothing cannot apply to this deduction.
As of 2019, the insurance mandate no longer exists. There is no penalty for being without health insurance. Also, if any medical expenses exceed 7.5% of a driver’s Adjusted Gross Income, any amount over that percentage is deductible.
Reagan Payne is a staff writer for Wright Media. She can be reached at email@example.com.