The freedom of self-employment can prove quite liberating. However, this freedom doesn’t extend to the various taxes you must pay on the self-employment income you earn as a truck driver. However, because you aren’t subject to tax withholding, you do have more control over your periodic tax payments during the year, which you may reduce by claiming business deductions for your truck-driving expenses.
Income Taxes
Whether you earn your income hauling merchandise across the country in an 18-wheeler or operate a moving business, you must pay federal income tax on your net earnings if you’re a self-employed truck driver; if you reside in a state that imposes an income tax, you must pay that tax as well. Although you’re subject to the same tax rates that employees pay, you’re not subject to tax withholding, which means you receive your gross earnings when you collect payment from each customer. However, this doesn’t mean you can wait until April 15 when you file your tax return the following year to pay your taxes. Instead, the IRS requires that you make up to four estimated tax payments during the tax year.
Self-Employment Tax Obligations
The federal government imposes self-employment taxes on truck drivers who operate their own business. The sole purpose of these taxes is to fund the Social Security and Medicare programs. One disadvantage to paying these taxes as a self-employed truck driver is that you pay twice as much as taxpayers who earn their income from employment. This is because employers are responsible for paying the other half of these taxes for their employees. However, the IRS does allow you to claim a deduction for 50 percent of the self-employment tax payments you make as an adjustment to income.