Following are examples of tried and proven tax-reduction tips:
Get help. The U.S. Internal Revenue Code is 3.4 million words long. It changes every year, often in ways that directly affect owner-operators. That’s why owner-operators need a business services provider who specializes in owner-operator trucking.
Save money tax-free. If you don’t have retirement accounts, start one. Up to a point, the money you put into an IRA, SEP or 401(k) is tax-exempt until you start drawing it out many years later. Put money into it regularly.
Track personal-vehicle miles. You cannot deduct mileage on your personal vehicle to get to and from work, but you can deduct it if you make a business-related trip to the bank, the post office, a business meeting, a truck show, a dealership, a supply store or a parts yard -- even to a grocery store, if your purchases were business-related.
Keep a log in which you note the date, mileage and purpose of each business-related trip.
For tax year 2025, the IRS deduction for business miles is 70 cents/mile. There are also smaller deductions for other personal-vehicle miles: 21 cents for medical-related trips, and 14 cents a mile for charitable trips such as Meals on Wheels deliveries.
Give to good causes. Donations to churches, charities such as the Red Cross and the Salvation Army, and nonprofits such as Trucker Buddy and many others all are tax-deductible if you itemize them.
Hire the kids. If you put an adolescent child on the payroll and pay her, say, $4,000 for the year, she pays no taxes on the income because she didn’t make enough -- but you pay no tax on it, either. Make sure the child is doing age-appropriate work, and keep documentation of it, including filing a W-2.
Claim tuition tax credits. If you’re paying tuition for yourself or your children to a qualified educational institution, take the tuition tax credit -- a dollar-for-dollar savings off your tax bill, up to $2,500. Paying the full tuition by Dec. 31 will allow you to credit the entire amount on your taxes.
This only works for students seeking an undergraduate degree and enrolled at least half-time. There is a four-year limit on this credit.
Use the calendar to your advantage. Keep a trucking-specific tax calendar at your home or in your truck. You can find one on the ATBS website containing important tax deadlines throughout the year and frequently missed tax deductions.
Before Dec. 31, buy whatever big-ticket business equipment you know you need: new tires, a laptop, in-cab heater or auxiliary cooling device. Even if you buy it on credit, you get the tax benefit quickly while postponing the cost.
Deductions must be business-related. Here are a few examples:
- If you wash your truck at home, you can claim the cost of detergent for washing the truck.
- You can deduct a flyswatter for your truck, flashlight batteries, cleaning supplies and a bunk comforter.
- You can deduct a meal expense if you buy dinner for a driver you are trying to recruit for your company.
- You can deduct coveralls, but not blue jeans. You can deduct steel-toed shoes, but not tennis shoes.
Notably, at once, the Tax Cuts and Jobs Act tax law has made the standard deduction universal for most tax filers, as ATBS has seen upward of 90% of owner-operators use the standard deduction.
Ways to guard against IRS-audit risk
The IRS usually has three years from the date of filing to challenge deductions or income stated on your return by requesting an audit, so you should keep your records for at least three years. The statute of limitations can be up to six years for returns where there is evidence of an understatement of income of 25%. If the return is found to be fraudulent with the intent to evade tax, or if no return is filed, an action can be brought against you at any time.
The fact that the IRS is auditing your return does not mean that you or your CPA made a mistake. The IRS periodically randomly selects some returns to determine compliance with its tax rules. If you receive a notice you are being audited, the first thing you should do is contact the person who prepared your return.
However, only a Certified Public Accountant or Enrolled Agent can represent you in an audit.
The IRS says 4% of tax returns filed by the self-employed with at least $100,000 in revenue get special attention.
Claiming substantial expenses not common to a single-truck owner-operator — such as utilities, advertising or inventory — might draw an audit. The reality of the owner-operator world is that a single engine rebuild can spike expenses for the year; income also can be volatile, especially for independents. If circumstances such as those put you among the one in 25 who meet face to face with the IRS, make sure you’ve got the documentation.
There are some audit-triggering issues, however, that are fairly common for owner-operators.
- No fixed residence. Make sure you have an established residence where you collect mail, even if it’s a relative’s house you rarely visit. Without a home to be away from, you don’t qualify for the daily per diem writeoff for meals.
- Questionable home office. The IRS rules for home offices are so strict that they exclude most owner-operators. Deductible home offices must be used exclusively for the business and nothing else, not even at nights and on weekends. That goes for any equipment in the office, including the computer and the TV set. More of a hurdle to truckers is that the deductible home office must be the operation’s primary place of business and must be used regularly. In most instances, the home-office deduction is legitimate only when a driver has a spouse or partner who stays at home and regularly does the load booking, dispatching, handling of multiple trucks or other business functions. You’ll also need your business services provider to help you with the paperwork, as the required IRS Form 8829 gets confusing.
- Mingled accounts. No law requires separate business and personal checking accounts or credit cards, but the law of common sense says otherwise. If you’ve mingled church and state, good luck proving to the taxman that a grocery receipt was for meals in the truck.
The ATBS Tax Resolution team specializes in helping owner-operators who get behind on their taxes or otherwise need representation before the IRS. Consultations with the team are free.
You ultimately are responsible for your tax return. Some tax preparers are aggressive in claiming deductions; be aware of what’s being submitted on your behalf, and make sure you’re comfortable with it.
