Trucking Bookkeeping: Owner-Operator Per Diem, IFTA, Form 2290

How do I do bookkeeping for a trucking company or owner-operator?

Trucking books are the bank and card feeds plus four records the bank never shows. Without them the profit figure is unsupported, and the fuel tax and per diem claims have no records behind them.

Gather these first: every settlement statement, fuel and toll records, miles by state, the truck loan statement, the stamped Schedule 1 if you filed Form 2290 (if the carrier registered the truck, ask it who paid the tax) and the log of days away.

Two tests decide which returns apply to your truck:

A truck that meets neither test files neither return. Settlements, fuel, per diem and the truck loan are booked the same way.

A case is not simple when you are leaving a carrier lease to run your own authority, an IFTA quarter or a Form 2290 was missed, a year of settlements was never reconciled, the business is an S corporation, or you have no home base to travel from. Each of these changes the books or the tax result, not just the paperwork: see Different for you? at the end. This page covers federal rules and the IFTA agreement; state income tax, other state road taxes, permits and sales tax on a truck purchase differ by state. For income tax across several states, see business income tax in other states.

How do I record a carrier settlement: gross revenue, chargebacks, fuel advances and escrow?

Book the gross loads as revenue and enter every chargeback (an amount the carrier takes out of your pay) on its own line. The deposit is only the last line of the statement.

If you lease onto a carrier, the federal leasing rule (49 CFR 376.12) requires the written lease to list every item the carrier may charge back and how each is computed, and to give you the documents behind a charge. Payment is due within 15 days after you submit the delivery documents. Gross means your pay before chargebacks: if you are paid a percentage of a load's revenue, the lease must say the carrier gives you the rated freight bill at or before settlement, so you can check your share. Use the lease as the checklist: a deduction it does not list is a question to ask before booking it.

The lease must say what the escrow can be applied to. The carrier must show each addition and deduction on the settlement sheets or in a monthly accounting, pay interest at least quarterly, and return the balance within 45 days after the lease ends. Whether withheld escrow is taxable income in the year it is withheld depends on the lease terms and your accounting method; book it as a balance either way and let the preparer decide the tax timing.

If you are paid as a sole proprietor, the carrier may send a Form 1099-NEC, plus a Form 1099-MISC if it reports truck rent apart from your driving pay (1099 instructions), and their totals can differ from your deposits. Tie both to the settlements. The Schedule C instructions say to attach a statement when the box 1 total is more than the gross receipts reported. Payments to a corporation, including an LLC taxed as an S corporation, are generally not reported on Form 1099-NEC (1099 instructions), so for an S corporation the settlements may be the only record. Revenue booked net of chargebacks also hides the real expenses.

What goes in the books for fuel, lease fees, insurance, tolls, scales, permits and tires?

Book each cost in its own account, by truck, so the same entries support Schedule C, the IFTA return and the Form 2290 file. The lease must state who pays for fuel, fuel taxes, permits, tolls, ferries, detention, base plates and licenses (49 CFR 376.12); book only what you pay.

How do I track fuel and miles by state for IFTA, and when is the return due?

A qualified motor vehicle that runs in two or more IFTA member jurisdictions needs an IFTA license from its base jurisdiction (the member state or province where the truck is registered, where its operations are controlled and where some of its travel occurs) and a return due the last day of the month after each calendar quarter. A qualified motor vehicle has two axles and a gross or registered gross weight over 26,000 pounds, or three or more axles at any weight, or is part of a combination over that weight. The members are the 48 contiguous states and the 10 Canadian provinces; occasional trips can use trip permits instead (IFTA, Inc.).

A due date on a weekend or holiday moves to the next business day, and a return is required even when the truck did not run (Articles of Agreement). Your base jurisdiction's site lists its filing options.

If you are leased to a carrier, check who files. Under a lease of 30 days or more, you and the carrier may agree in writing which of you reports and pays the fuel tax; if the lease is silent, the carrier does. Under a lease of 29 days or less, the truck owner does (Articles of Agreement R530). When the carrier files, you still keep fuel receipts and trip records for it and check its fuel-tax chargebacks against them.

Keep these for each truck and quarter (Procedures Manual):

• Distance: trip dates, origin and destination, route, odometer start and end, total distance, distance in each jurisdiction, and the truck number. Records from a tracking system must be available as a spreadsheet or delimited file; a PDF or image export is not acceptable.
• Fuel: a receipt, invoice or card listing showing the date, seller name and address, quantity, fuel type, price, the truck fueled and the purchaser. Without it there is no tax-paid credit for that purchase.
• Summary: a monthly summary of distance and fuel for each truck, in total and by jurisdiction. It may be needed for an audit, and the base jurisdiction can demand it.

Book fuel at full cost by truck. The IFTA payment is fuel tax, so it belongs with fuel cost, and a refund reduces it. Keep the records for four years after the return was due or filed, whichever is later.

If the base jurisdiction finds the records inadequate, it reduces the reported fuel economy to 4.00 miles per gallon or by 20%, which raises the tax. A late, missing or underpaid return can draw a penalty of $50 or 10% of the unpaid tax, whichever is greater, plus interest, and the license can be suspended or revoked. The base jurisdiction's own law can add other penalties. The Agreement's penalty can be waived for reasonable cause. IFTA covers motor fuel use tax only; your base jurisdiction tells you what else applies.

If you missed a quarter: rebuild miles by state and gallons from fuel card statements, receipts and trip records, then file the late return with your base jurisdiction. If the records are gone, an audit can bring the 4.00 miles-per-gallon assessment above.

Can I deduct per diem as an owner-operator, and what changes if I run an S corporation?

A self-employed driver may be able to deduct meals for days away from home at a flat daily rate: $80 in the continental United States and $86 outside it. For a driver under the federal hours-of-service rules (the Department of Transportation's limits on driving time), 80% of that amount is deductible. An S corporation owner generally cannot deduct it on a personal return; the deduction runs through the company's reimbursement plan. The IRS republishes the rate each fall in its annual special per diem notice; read the current one before setting the rate.

Self-employed owner-operator

A sole proprietor, and a single-member LLC taxed as one, deducts per diem on Schedule C.

• Who qualifies: work that directly involves moving goods by truck and regularly requires travel away from home, with stops on one trip in places that have different federal meal rates (Revenue Procedure 2019-48).
• Away from home: your duties must take you away from your tax home for substantially longer than an ordinary day's work, and you must need sleep or rest. A driver who returns the same day with only a short break to eat is not away (Publication 463).
• Tax home: your regular or main place of business, wherever your family lives. A driver based at a terminal can have the terminal's area as the tax home, and then meals and lodging there are not travel. If the work has no regular or main place, your home can be the tax home. Three factors decide: you do part of your business in its area and lodge there, you have living expenses there that you duplicate by being away, and you have not abandoned the area (family lives there, or you often stay there). Meeting all three makes it your tax home, meeting two depends on the facts, and meeting one makes you an itinerant, who cannot deduct travel (Publication 463). Whether a driver who lives in the truck has a tax home depends on these facts.
• Amount: the daily rate for each day away, with the first and last day of a trip at three-fourths of the rate. The rate covers meals and incidentals only; a hotel stay is deducted at actual cost. Use the transportation rate for the whole calendar year, and do not also deduct actual meals for the same days.
• Share: 80% for interstate truck operators under Department of Transportation hours-of-service rules (section 274(n)(3); Schedule C instructions). A driver who is not under those rules should confirm which share applies. Most other business meals are limited to 50%: see the business meals guide.
• Proof: a log with the time, place and business purpose of each day. The rate replaces meal receipts, not the log. It goes on the deductible meals line of Schedule C.

Owner of an S corporation

An S corporation officer who performs more than minor services is an employee, and pay for those services is wages (IRS). An employee generally cannot deduct unreimbursed travel on a personal return, because no miscellaneous itemized deduction is allowed for tax years after 2017 (section 67(h); Publication 463). So the deduction runs through the company, limited by the same rule: 80% for hours-of-service drivers.

• Accountable plan: the company reimburses travel meals under a plan with a business connection, records of each trip, and return of any excess. A plan that fails one of these makes the payments taxable wages (Publication 463). The company must then withhold and pay payroll tax, and an officer who controls payroll and willfully fails to pay it over can owe it personally (section 6672). The tests and the time limit on that penalty are in S corporation reimbursements.
• Not a pay substitute: an arrangement that repays expenses by reducing the owner's wages is treated as a nonaccountable plan (Publication 463), and wages must still be reasonable: see S corporation owner salary.

A reimbursement that meets the accountable-plan tests is booked as a company travel cost supported by the day log, not as a distribution. One that does not is wages.

What is Form 2290, who files, and when is it due?

Form 2290 is the annual federal heavy highway vehicle use tax return. The person in whose name a truck is registered, or required to be registered, at its first use in the Form 2290 year (July 1 to June 30) files it when the truck's taxable gross weight is 55,000 pounds or more. It is due the last day of the month after the month the truck is first used on a public highway (Form 2290 instructions).

• Tax: from $100 to $550 a year by weight, prorated by month when first use is after July (Form 2290; section 4481). Taxable gross weight is the truck's unloaded weight, plus the trailers customarily used with it, plus the heaviest load customarily carried, and no less than the highest weight declared in a state registration that declares one.
• Due date: tied to first use, not to the registration renewal date (trucking tax center). A truck first used in July is filed by August 31; each later month moves the date one month on, and a weekend or holiday moves it to the next business day.
• Filing: an EIN is required; a Social Security number is not accepted. E-filing is required at 25 vehicles or more. A single-owner LLC that is a disregarded entity files under the LLC's own EIN.
• Leased trucks: if the truck is registered to both the owner and another person, including under a lease, the owner is liable. If the truck is registered only in the carrier's name, the person in whose name it is registered files; check whether the lease moves the cost to you by a chargeback.
• Proof: the stamped Schedule 1 is the proof of payment states ask for when registering the truck (Publication 510). Keep it.
• Low use and changes: a truck expected to run 5,000 miles or less in the period can be reported as suspended. If it goes over that limit, or its taxable gross weight rises into a higher category, file an amended Form 2290 by the last day of the month after the month of the change. Credits exist for a truck sold, destroyed or stolen; a buyer who registers a used truck follows the used-vehicle rules in the instructions.

A late return adds 5% of the unpaid tax for each month or part of a month, up to 25%, and late payment adds 0.5% a month; the payment penalty reduces the filing penalty for any month both apply (section 6651). Interest runs on unpaid tax. If you missed Form 2290: file it for the month the truck was first used and pay the tax. If the IRS assesses a penalty and you believe you had reasonable cause, send it a letter explaining why; do not attach the explanation to the return. Keep each truck's records, with the VIN and dates, for 3 years after the tax was due or paid, whichever is later. Book the tax with licenses.

How do I record the truck: loan payments, interest, principal and depreciation?

Split every loan payment. The interest is an expense, the principal reduces the loan balance, and the truck's cost is recovered through depreciation, not through the payments.

1. At purchase: record the truck as an asset at its cost and the loan as a liability. State and local sales tax on a business purchase is part of the truck's cost, not a tax expense (Schedule C instructions). A new truck, trailer or tractor above the weight limits in section 4051 also carries a federal retail excise tax of 12% of the price, charged by the seller on its first retail sale (Publication 510). It is in the price you pay, so it is part of the cost.
2. Each payment: the lender's statement shows the interest. Book that part as interest expense and the rest against the loan. Which interest is deductible, and the limits, are in recording a business loan.
3. Each year: book depreciation from the date the truck is placed in service. The method and any first-year write-off are in writing off equipment in the first year.

If the truck is also used personally, only the business share of the costs is deductible. Whether to buy it personally or through a company changes who owns the asset and the loan: see buying a vehicle through your business.

Do I need a separate business account, and which records do I keep for the year-end?

The IRS tells a new business to open a business checking account and keep it separate from the personal one (Publication 583). For a trucker it also lets every settlement deposit and fuel charge be traced to a statement or receipt. Whether any rule requires one, and what mixing money does for an LLC, is in the business bank account guide.

Before closing the year, tie these out:

• Each settlement to its deposit, and the escrow and advance balances to the carrier's statements.
• The total of every Form 1099 you received (1099-NEC, and 1099-MISC if the carrier reported truck rent separately) to the revenue booked.
• Fuel card statements to receipts, by truck, and miles and gallons across the four IFTA returns to the books.
• Days away to the per diem claimed.
• Loan interest to the lender's year-end figure, and the Form 2290 payment and Schedule 1 to the tax booked.

For software, see bookkeeping apps for Schedule C; to decide between doing the books and hiring help, see doing your own books or hiring a bookkeeper.

What changes when I leave a carrier lease and run my own authority?

Running your own authority moves the costs and filings the carrier handled onto you, and replaces one settlement with a stream of customer invoices.

• Registration: a for-hire motor carrier whose transportation is subject to federal jurisdiction may provide it only if registered with the federal government (49 U.S.C. 13901), and registration requires a filed bond, insurance policy or other security (49 U.S.C. 13906). On your own authority, the registration and its security are yours to pay and book.
• Insurance: for-hire carriers of nonhazardous property in vehicles of 10,001 pounds or more in interstate commerce must carry at least $750,000 of public liability coverage (49 CFR 387.9). On your own authority the policy and its premium are yours.
• Costs the lease assigned: the lease had to say who paid fuel, fuel taxes, permits, tolls and plates. Reread it, then book each in your own name from the first load.
• IFTA and Form 2290: open an IFTA account with your base jurisdiction. File Form 2290 under your own EIN if the truck is registered to you, and apply for the EIN before the first load: the IRS says a new one takes about four weeks to be set up in its systems (trucking tax center).
• Unified Carrier Registration: a yearly interstate fee, set by the number of vehicles a carrier owns or operates, paid to its base state (49 U.S.C. 14504a). A truck under a long-term lease counts as the carrier's, so the fee was the carrier's; now it is yours. Book it with licenses.
• Revenue: invoices to brokers and shippers replace settlements. The 15-day payment rule covers pay from a carrier to a lessor, so your customers' terms are in their contracts. Track what each customer owes. If a factoring company advances part of an invoice, book its fee as its own expense and any reserve it holds as an amount owed to you; whether the advance is a sale or a loan depends on the factoring contract.
• Escrow: book the release when it arrives; the carrier's 45-day deadline is above.

Example

These examples are illustrative; all figures are in US dollars.

Settlements with chargebacks and escrow

A leased owner-operator earns $180,000 of load pay in a year, before chargebacks. The carrier charges back $14,000 for insurance and fees and holds $3,000 in escrow. The deposits total $163,000. The books show revenue of $180,000, expenses of $14,000 in their own accounts, and an asset of $3,000 for the escrow.

Per diem for a self-employed driver and for an S corporation

A self-employed interstate driver, under hours-of-service rules and with a tax home to travel away from, is away 200 days in a year, all within the continental United States: 180 full days and 20 departure or return days. The full days are 180 × $80 = $14,400. The partial days are 20 × $60 (three-fourths of the rate) = $1,200. The total is $15,600, and 80% of it, $12,480, is deductible.

If the same driver owns an S corporation, the company reimburses $15,600 under an accountable plan, using the same three-fourths rule for partial days, and deducts $12,480. The owner generally has no personal deduction.

Form 2290 for a heavy truck

A truck with an 80,000-pound taxable gross weight, registered in the owner's name, is first used on a public highway on July 2. Form 2290 is due August 31, the tax is $550, and the stamped Schedule 1 is the proof of payment states generally require at registration. If it were first used in November, the due date would be December 31 and the tax would cover only the remaining months of the period.

Different for you?

• You are leaving a carrier lease to run your own authority: registration, insurance, fuel tax and Form 2290 each carry their own deadline and penalty, per diem needs a day log from the first trip, and the entity you choose decides how you are paid and what you track from the first load. See bookkeeping help before the first load.
• An IFTA quarter or a Form 2290 was missed: penalties and interest build, and the IFTA license can be suspended or revoked. Catching up starts with the fuel and mileage records: see catching up on overdue books and bookkeeping help with the missed filings.
• A year of settlements was never reconciled: the settlement, fuel and escrow records have to agree before a return is prepared. See catching up on overdue books and bookkeeping help to reconcile the year.
• The carrier takes a truck payment from every settlement: the contract decides whether it is rent or a purchase, and the asset, the interest and the depreciation differ. See bookkeeping help with the truck payment.
• You run or are considering an S corporation: pay, per diem and the accountable plan must work together. See S corporation owner salary, S corporation reimbursements and bookkeeping help for an S corporation.
• You have no home base, or you live in the truck: whether travel is deductible turns on your tax home, which needs a professional's judgment. See bookkeeping help.
• Your spouse or a partner drives with you or co-owns the truck: who owns the business can change whether it files as one Schedule C or as a partnership. See spouse and family LLCs.
• You pay another driver: employee or contractor changes payroll, tax forms and the books. See contractors who may be employees.
• You haul into Canada: IFTA covers fuel use tax in the provinces too, but it does not settle income tax or sales tax on either side of the border. See cross-border tax help.
• You are buying or replacing the truck: see buying a vehicle through your business.
• Your trip sheets, fuel receipts or odometer records are lost: the base jurisdiction can assess tax on inadequate records. See rebuilding a mileage log for the same approach applied to a car.