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1099 for Truck Drivers
Since they are considered contractors, 1099 workers do not have taxes deducted from their salary. The entire gross sum would be paid to a 1099 contractor. The employer of the 1099 employee is not obligated to submit taxes. The individual 1099 worker is entirely responsible for the tax remittance or payment.
Independent Contractor vs. Employee
It is important to understand whether you are classified as an employee or an independent contractor. Independent contractors receive a 1099 form and are responsible for paying their own taxes, while employees receive a W-2 form and have taxes withheld by their employer.
As an independent contractor, you are considered self-employed and must pay both the employer and employee portions of Social Security and Medicare taxes (totaling 15.3%) on your net earnings. You can do this by filing Schedule SE with your tax return.
Quarterly Estimated Tax Payments
Truck drivers working as independent contractors are generally required to make quarterly estimated tax payments to the IRS, which include both income tax and self-employment tax. To avoid penalties, ensure you pay the appropriate amounts on time by using Form 1040-ES.
Truck drivers can deduct business-related expenses to lower their taxable income. Common deductions include:
- Vehicle expenses (e.g., fuel, maintenance, insurance, registration fees, leasing or interest on a vehicle loan, and depreciation if you own the truck)
- Per diem allowance for meals and incidentals while on the road (subject to limitations)
- Lodging expenses
- Tolls and parking fees
- Office supplies and equipment
- Communication expenses (e.g., mobile phone, internet)
- Licensing and regulatory fees
- Uniforms and protective gear
- Professional association dues
Maintain accurate and detailed records of your income and expenses to support your tax deductions. This includes keeping receipts, invoices, and mileage logs.
Consider the potential benefits of forming a Limited Liability Company (LLC) or other business structure to separate personal and business finances and potentially reduce liability exposure.
Given the complexity of tax regulations, truck drivers may benefit from consulting with a tax professional who is familiar with the specific tax laws and deductions applicable to the trucking industry.
1099-MISC vs. 1099-NEC: Truck drivers operating as independent contractors will receive either a 1099-MISC or 1099-NEC form, depending on the type of compensation received. As of the 2020 tax year, non-employee compensation is reported on the 1099-NEC form. Other types of income (e.g., rental income, royalties, or prizes) are reported on the 1099-MISC form.
Please note that tax laws and regulations are subject to change. Always consult with a tax professional for the most up-to-date and accurate information for your specific situation.
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