Owner-Operators enjoy the freedom of owning their own business, but with that comes the challenge of taking care of their taxes. Owner-operators are considered self-employed by the IRS, which means the burden is on them to pay their taxes every year. The good news here is that there are a lot of tax credits you can receive as a self-employed business owner. These credits are only available if you record every single expense while out on the road.
The first thing to note is that there is a difference between a tax credit and a deduction. A tax credit will bring down the amount that you owe each year, while a deduction lowers the amount of income that can be taxed. Owner-operators have the luxury of being able to apply both credits and deductions to their income to lower the amount they owe each year. So, what kind of tax credits can they get?
Typical truck expenses like fuel, vehicle acquisition, and other general costs of doing business. But the main question you should ask yourself is whether a tax credit or a deduction is better for you. Really, it depends on how much income you have as an owner-operator. If you have a high taxable income, then you’re better off writing tax deductions. If you don’t owe a lot, then a tax credit might be better suited for you.
Here’s a list of deductions you can make to your tax bill as an owner-operator:
- Office Supplies
- Protective Clothing
- Hotel Expenses
- Laundry Costs
- Cleaning Supplies
- Cell Phone
- CB Radio
- First Aid Supplies
- Cooking Utensils
There are more deductions you can list that aren’t on here, so it’s important to sit down with a reputable tax expert. You also need to remember to record and save every single transaction. You never know what can be used as a credit or deduction. In fact, you might even find that most of what you purchase can be deducted from what you owe. This is a great way to really offset their regular business expenses. Every dollar counts, so take tax time seriously and consult an expert.