Tax Questions for Owner-Operators 2022
Q: How much should be kept separately for business taxes?
Ans: 25-30% of your net weekly income should be kept separately for quarterly taxes.
Q: What should I do if I cannot get my taxes done on time?
Ans: The correct procedure would be to file for a 6-month extension; therefore, it will be an extension on file not on pay.
Q: Is there a Tax Refund?
Ans: It is totally dependent upon the individual situation and not likely if you are an owner-operator. If you are eligible for a refund then you must have given the government an interest-free loan.
Q: Will I receive the 1099- NEC form from my tax preparer?
Ans: No, the carrier will send you the 1099-NEC form. Therefore, if you are a corporation, it is most likely that you will not receive a 1099-NEC form so it is recommended to advise your carrier regarding this.
Q: What will happen if I have not paid the quarterly tax estimates?
Ans: There are underpayment penalties and interest for the taxes charged by the IRS. The tax department will calculate the charge and include the penalties and interest on the year-end tax return.
Q: What tax forms would I need to complete for a contract laborer, (for example an employed team driver)?
Ans: In case you have an employee, pass them through the payroll and issue a W-2 by the end of the year. If you have a contractor laborer, then pass them a 1099-NEC.
Q: Is there a separate tax return for owner-operator earnings and company driver earnings?
Ans: No, you do not have to pay a separate tax return but as a sole proprietor, you must file one return, Form 1040. Form 1040 will contain a Schedule C which will be listing business earnings and expenses.
Per Diem Questions:
Q: How much does the per diem tax deduction work?
Ans: When you are working away from home, Per Diem is the tax deduction for meals and incidental expenses for the number of working days. The present rate is 100% of $69 per full day, and ¾ of this amount for partial days. The partial days are the days when you stopped driving and returned home the same day. Full days are any days when there is no need to stop driving due to the hours-of-service rule or you are unable to drive due to on-the-road repairs. Therefore, if you are visiting family or friends for a few days, it does not count as Per diem days. In case you are using a motel/hotel while being on the road, the Per Diem is still deductible but not during home visits.
Q: Can I use my e-log returns for counting Per Diem days?
Ans: Yes, you can if you have a full year of e-log records. It is better to contact your carrier every 3-4 months and ask for a copy of the e-logs. There are many carriers who delete e-logs every six months and do not wait until the end of the year to ask for a copy.
