Although the Internal Revenue Service (IRS) reportedly fell behind in many of its collection duties due to the pandemic, the federal government awaits truck driver checks with open arms. Filings resumed on Jan. 24, and the deadline has been set for April 18, 2022.
Truckers still have the option of requesting an extension until October, 2022, if they need time to gather documents, meet with a tax professional, or accumulate the money to write a check based on 2021 earnings. The tax code did not undergo drastic changes, but truck drivers may benefit from knowing the following.
1: What are the New Tax Brackets?
The tax bracket percentages have not changed since the Tax Cuts and Jobs Act of 2017 was signed into law. There are seven brackets for 2021 earnings: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent. But each year, the taxable income levels are shifting, albeit modestly in many cases. For example, single filers in the 10 percent bracket could earn up to $9,875, with the limit on married couples set at $19,750 for 2020 earnings. This year’s 10-percenters are $9,950 and $19,900, respectively.
According to the IRS, the top tax rate remains 37 percent for individual single taxpayers with incomes greater than $523,600 ($628,300 for married couples filing jointly). The other rates include the following.
- 35 percent for incomes over $209,425 ($418,850 for married couples filing jointly).
- 32 percent for incomes over $164,925 ($329,850 for married couples filing jointly).
- 24 percent for incomes over $86,375 ($172,750 for married couples filing jointly).
- 22 percent for incomes over $40,525 ($81,050 for married couples filing jointly).
- 12 percent for incomes over $9,950 ($19,900 for married couples filing jointly).
With truckers typically earning between $30,660 and $69,480, according to the Bureau of Labor Statistics, filers can anticipate falling into the 12 or 22 percent bracket.
2: Truck Driver Health Care Plans May Lower Taxes
Truckers who prefer to work for themselves and negotiate freight rates often need to pay out-of-pocket health insurance. The federal government will go a little easier in terms of health care deductions this tax season. Depending on how truckers structure their business and health care, the following deductions may be available.
For truckers who possess self-only coverage in a Medical Savings Account, the plan must have an annual deductible of not less than $2,400 and no more than $3,600, an increase of $50 from the tax year 2020.
- The maximum out-of-pocket expense amount for self-coverage is $4,800, a $50 increase from 2020.
- The annual deductible for family coverage ranges from a floor of $4,800 to a limit of 7,150.
- For family coverage, the out-of-pocket expense limit is $8,750 for the tax year 2021, an increase of $100 from the tax year 2020.
Although the increases are nominal from 2020 to 2021, every penny counts in these challenging inflationary times.
3: Common Truck Driver Deductions
Drivers who received a W-2 are largely prohibited from taking job-related tax deductions, with some exceptions. These are deductions many CDL holders will likely enjoy.
- Union Dues and Trucking Association Fees
- Tools of the Trade & Equipment
- Trucking Business Insurance
- Licensing Costs
- Industry-Related Subscriptions
- Cell Phone Plans
- Class 8 Costs and Depreciation
- Travel-Related Necessities for Travel
- Internet & Device Expenses
If you are unsure about truck industry deductions and income, it’s essential to speak with a tax professional. Truckers are also tasked with mainlining detailed accounting records regarding income and expenses.
Sources: turbotax.com, irs.gov, irs.gov, bls.gov, bls.gov, indeed,com
The IRS needs to give the write offs back to the company drivers or they will keep having a driver shortage. Drivers can’t afford to feed themselves on the truck and feed there family at home and not be able to write it off
Let it hit the wall and crash. Only when faced with insurmountable disruption will they see the errors to their ways and make change. I for one cannot wait for it to happen.
Thomas, there’s not a driver shortage. With 400k of of people getting CDLs annually, roughly just over 3.2M drivers in the US, the whole pool turns over every 8 years. It’s really a retention problem as most new CDL holders don’t remain in the pool.
However, let’s go with your belief. The more then that decide to leave for the reason you mention, drivers will see wages higher for those that remain due to the supply demand equation. As an O/O been very beneficial as rates for reefer freight have more than doubled from July 2020 to July last year and are holding steady.
Plain and simple, everyone that gives us a hard-time out here, needs to cut it OUT!! That goes for the government and its limitless rules & regulations.(Definitely the IRS)
Businesses having truck restrictions for parking including some Walmart stores.(We need food & stuff like everyone) Let’s not forget other drivers.(Can we bring back a little courtesy and consideration to the roadways..?) The list goes on…
Just give us a break, and let us continue to deliver everything American wants and needs. Jay