For owner-operators, the time is coming to file and pay taxes. The IRS made a statement that all owner-operators have until August 21, 2020, to submit their Form 2290, Heavy Highway Vehicle Use Tax Return. Also, by August 31, 2020, owner-operators must pay any tax that is due on the vehicles that were operated during the month of July.
When determining tax, the tax is assessed of the vehicle weight. In some situations, this determination applies to highway motor vehicles that have a taxable gross weight of 55,000 pounds or more. Many trucks and buses will be subject to this tax.
The IRS also states that individuals will receive a watermarked Schedule 1 from an e-file provider in your e-mail after the Form 2290 has been accepted.
If you are unsure if you are required to pay taxes, you can log onto the IRS website and use the online tool to determine if you are required to pay taxes. Also, for those who do need to pay taxes, the IRS encourages you to do so by paying online.
Owner-Operator Tax Deductions
There are many things an owner-operator can deduct from their tax responsibility payments. Being an owner-operator means you run your own business, and you have business expenses that can be deducted, just like any other company.
Below is a list that can be deducted from your tax responsibility:
- Access Fees: this can include your internet bills, cellphone bills, satellite bills, Qualcomm, and Sirius/XM radio.
- Administrative Fees: including ATM fees and check fees
- Association Dues: OOIDA, Teamsters, etc.
- ComData/ComCheck Fees: computer software and credit card fees
- Cleaning Supplies
- Interest Fees: business loans and credit card interest fees
- Office Supplies
- Medical Exams: DOT physical, drug tests, etc.
- Postage Fees: this can be where you mailed invoices, Bills of Landing, etc.
- Real Estate Costs: mortgage interest, mortgage prepayment fees, penalties from early withdrawals, points on principal residence financing, and real estate taxes.
- Safety Gear: including steel-toe shoes, work gloves, cargo straps
- Trucking and Business Subscriptions: Load board fees and trucking industry magazines
- Uniforms: dry cleaning costs or protective clothing
Many owner-operators are not aware of the different things they can deduct from their taxes. However, do no be that person that tries to claim too many deductions because the IRS can audit you.
While there seems to be a never-ending list of deductions for owner-operators, there are some things that cannot be deducted.
Non-deductible items include:
- Any expenses that your employer reimbursed you.
- Clothing that is for everyday wear and not related to your job.
- Tolls, gas, parking for commute
- Home phone bills
- Personal load interest
- Personal vacation and expenses
IRS Payment Options
When paying your taxes, there are two different ways to pay electronically.
These payment options include:
- Electronic funds that are withdrawn. You authorize a direct debit from your account during the e-file process.
- Electronic Federal Tax Payment System. This option can take up to 5 – 7 business days for new accounts.
There are two ways to pay the tax electronically:
- Electronic funds withdrawal; authorize a direct debit as part of the e-file process.
- Electronic Federal Tax Payment System; allow five to seven business days for new accounts.
There is another option on how you can pay your taxes. This is to pay by mail. You must send the completed Form 2290 along with a check or money order with the Form 2290-V, Payment Voucher to the following address:
Internal Revenue Service
P.O. Box 932500
Louisville, KY 40293-2500
Typically, those who e-file will have their IRS-stamped Schedule 1 sent within minutes of filing and paying the Heavy Highway Vehicle Use Tax online.
Once you receive the confirmation, you can print out the Schedule 1. You can give the Schedule 1 to your state department of motor vehicles for their record without even stepping foot into an IRS office.