corsia logo

2020 tax season for truckers and carriers: What to know

2020 tax season for truckers and carriers: What to know

The new tax season has begun. This year, you have until April 15th to submit your 2019 income tax return and pay any amount owed. Factors such as your filing status, taxable income, potential tax exemptions, among others, determine how much tax you will pay.

Tax filing:Major changes

The 2017 Tax Cuts and Jobs Act (TCJA) brought changes especially concerning the taxable income, per-diem deductions, as well as vehicle and equipment depreciation methods. These changes affected both individuals and businesses. The TCJA has also caused controversy in the logistics and trucking industry. This is where we will zoom in: truckers and carriers. How were they affected?

Changes in per-diems for salaried truck drivers

According to the 2017 Tax Cuts and Jobs Act, employee truck drivers cannot be able to list any per-diem expenses and consider them tax-deductible. Per-diems derive from traveling long miles and spending nights away from home.

Before the Act, the employee drivers would itemize expenses such as meals, accommodations, and other incidental expenses that would typically qualify for the 2% itemized deduction.

Under the TCJA, the 2% itemized deductions have been suspended through 2025. However, the deduction hasn’t gone away completely. A number of states refused to enact this part of the law and allows you to claim these expenses on your state tax return. For more information, consult your state’s tax authority.

Also, to compensate for the loss of deduction employee drivers can negotiate a reimbursement plan with their employers.

Carriers and the per-diem rule

There are two major subcategories of carriers: the typical carrier companies that have a fleet of drivers working for them, and the independent contractors that act as sole proprietors. In both cases, there have not been many changes.

The carrier companies can choose to pay their drivers a per-diem in the form of a fixed amount or based on the miles they drive. For example, they can pay their inter-state drivers 60 cents per mile, where 50 cents would be the regular pay, and the 10 cents would correspond to the per-diem expenses. These per- diems will not be considered as part of the driver’s taxable income, and, on the other hand, the company can consider most part of them as a tax-deductible expense.

In the second case, independent contractors can consider these extra expenses as part of their business activity and directly deduct them from their business income. This per-diem deductible amount can go up to $63 per day.

Possibility for lower tax liabilities

When President Trump signed the Tax Cuts and Jobs Act in 2017, the major idea behind it was to lower tax rates for businesses, especially type C corporations. However, most companies in the auto logistics sector operate as sole proprietorships, S corporations, or Limited Liability Companies (LLCs). Hence, they do not profit directly from the major tax cuts.

Nevertheless, in order to compensate for this, they qualify for a 20% deduction from their business income. This automatically reduces their tax liability.

Lower individual income tax rates

As for private employees, the income tax rates have slightly decreased for each tax bracket. So, before 2017, the tax rates were 10%, 15%, 25%, 28%, 33%, 35%, and 39.6% respectively. Now they are: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

tax season for truckers and carriers

 

You can find more information regarding your tax rates based on your income and other adjustments on the official IRS site.

Accelerated depreciation

This is good news for all carriers. If before they could depreciate their vehicles at a standard rate each year, now they can apply a bonus depreciation upfront. It means that carriers can accelerate their depreciation expenses up to 100% for their vehicles and equipment. The new depreciation rule has been expanded to used property as well.

As higher depreciation expenses lower the taxable revenues, this change makes it very attractive for companies to invest in new trucks, for example. However, they need to keep in mind that if they depreciate 100% of their purchased truck this year, they will not be able to do it again on the same truck next year.

Also, beginning in 2023, the 100% right-off will begin to phase down 20% per year until it halts at the end of 2026. So, the carriers need careful financial planning to distribute these depreciation expenses over the years.

Another thing to keep in mind is that not all states’ tax authorities conform with the new bonus depreciation rule.

Filing your taxes

After reading about the changes brought by the new tax act, you may feel intimidated. Tax filing season has officially begun, so where to start?

Below are a few tips:

  • If your annual income is $69,000 or below, the IRS offers you a free filing form.
  • If your annual income goes above, then you will need to pay for the tax filing software. Your investment will range between $50 and $100 (possibly more), depending on the software complexity.
  • If your income is significantly higher, comes from various sources, and you also have several dependants, then you may want to hire a CPA or consult an expert to help you file your taxes, as they can be highly complex.

Impact of the 2017 Tax Cuts and Jobs Act

The Act can be considered very generous regarding collecting less tax overall. Nevertheless, it has raised controversy regarding their distribution. No doubt, type C corporations benefit the most, followed by S corporations, LLCs, and sole proprietorships.

The traditional employees, who file their W2 tax forms annually, don’t benefit as much. Employed truckers are faced with limited options to obtain their per-diems since they cannot file their overnight-job-related expenses as tax-deductible anymore.

As the tax implications further unfold, we will keep you posted on any changes or relevant events. After all, the logistics industry, in which we operate, does not develop in a vacuum. Hence, Corsia Logistics is always interested in any events that may impact our staff and customers.

What are your thoughts on the tax changes? Have you begun filing your 2019 income tax yet? Feel free to share with us your insights on the topic.

Thank you!

Share our experience:
Are you ready to ship a car?
Recent posts
car shipping quote

Truckers Can Fight Sex Trafficking

If You See Something, Say Something! This is the slogan of the nonprofit group Truckers Against Trafficking, the organization’s main goal is to have more

Shipping a Rivian

Shipping a Rivian

Shipping an electric vehicle like Rivian requires several considerations. Here we will share some key aspects to keep in mind when you need to ship

Read more

Corsia Logistics team works hard every day to ensure reliable expedited car shipping service. Our customer reviews prove that.

5-Star Rated Car Shipping Company

5/5
5/5
5/5

they trusted us

and here's what they say

Simon Moore
Great company
Read More
Looking for a logistics company, to ship my car, from California to Illinois,my first search, then Corsia showed up, skeptical. Call and a very friendly secretary: Elena. She guided me through, I scheduled and as she explained, all when smooth as scheduled Very happy I did the right choice. I'll recommend this great Company to anyone that is thinking to relocate a vehicle. Thanks Corsia logistics for your honesty and professionalism!
Elizabeth Woodward
High five's all around!
Read More
Corsia was highly recommended by a friend in the automobile industry. We needed to transport a cargo van from Seattle to Florida. We contacted Corsia who quickly arranged transport within just a few days. Communication was outstanding! Just a few email confirmations and we were all set. Mike was great and arrived right on time and delivered to Florida on schedule. Tip-avoid the hornets nest of auto brokers on line and just contact Corsia for a truly great experience!
Carrol Tiffany
Amazing
Read More
Corsia has been amazing. Their prices are really competitive but more importantly their customer service has been 5-Star. Elena followed up with me every step of the way, making sure there was no miscommunication between me & the driver. We are using them to ship a 2nd vehicle & would not hesitate to use them again!
Tony Boyd
Definitely recommend
Read More
I have recently used Corsia for long time family car with sentimental value that was moved I have recently used Corsia for shipment of my vehicle from Oregon to Arizona by recommendation from other family member who also used Corsia in the past. I am very pleased on the service and the communication throughout shipment. Ken was my direct contact and kept me informed along the move The car was picked up and delivered as communicated. I did use a enclosed mover and the driver was also clean cut professional and treated car as his own. I would definitely recommend Corsia again with the experience I have had. Thank you. T
JW
Top notch
Read More
Top notch Transport - Porsche 997 Top notch! As easy and efficient as one could possibly imagine. Great customer service.. thank you Luke. Great prices. Check. Timely communications. Check. Clean transport trailer. Check. Supremely careful driver. Check. Timely arrival. Check. Don't mess around elsewhere, just call Corsica and feel confident your transports needs are going to be exceeded. My Porsche 911 rode like a Queen in her enclosed chariot. I've never needed a transport company before, and I surely will use them every time. Do yourself a favor, seriously. Call now.
Geet Mp Haryana
Reliable, efficient
Read More
Corsia rep (Elena) was very proactive. Helped ship a car from CA to GA. She checked in with me via email quote and several phone calls to find me the best possible quote for the fastest available service. After several communications, Corsia was able to schedule a vehicle pickup the next day. The driver communicated well, and the vehicle arrived in final destination faster than we expected in perfect condition. I highly recommend using Corsia's reliable, efficient service.
Cay Liptak
Clean, efficient, wonderful
Read More
Thanks, Corsia! Pickup was so clean, efficient, and wonderful -- my only recommendation is to make sure you schedule it during the day so you can fully review the car in the daylight. Drop off was equally wonderful, and the whole trip went down without a hitch (pun intended!). Seriously, Corsia delivered my Jeep from CT to California with no issues or bumps in the road!
Csaba Kovesdy
Truly positive experience
Read More
Corsia Memphis to LA, mid-size SUV. I looked at 4 different companies amd Corsia was the most responsive of them. While being responsive, they were not unduly aggressive: when I indicated that I need to wait a month before making a decision they stopped contacting me and only came back with a reminder when I really needed it. Once I decided to engage Corsia they found me a transport within two days and the car was delivered (from Memphis to LA) in another two days. I had a truly positive experience.
Kelly Torres
Highly recommend
Read More
Working with Corsia Logistics was a great experience. Working with Corsia Logistics was wonderful. They were able to find a driver right away to transport our car. They were in constant communication as to when the car was getting picked up and dropped off. The driver also communicated with me as to when he would arrive. I would highly recommend Corsia Logistics.
Amy Nelson
Excellent Organization
Read More
Corsia was an excellent company to work with while I transferred my car across the US. A friend of mine suggested I use them as they had been very organized and trustworthy with her own car. I researched a few different place but decided to go with Corsia and I'm so glad I did! Any questions I had throughout the process they answered quickly and clearly. I would definitely use them again in the future and recommend them for others to use.
Previous
Next