Tax Deductions for Bus Drivers
Driving people around from place to place is a great job, especially when you drive a bus. If you're a bus driver, you may incur expenses throughout the year which can be deducted at tax time, and help put a little extra cash in your pocket.
If you are employed by a company or business, you can expect to receive a Form W-2, Wage and Tax Statement. On your W-2, if Box 13, Statutory Employee is checked, then you'll be considered self-employed, and you'll need to report your income on a Schedule C, Profit and Loss from Business. Commissioned drivers are often considered statutory employees.
If you are self-employed, you won't receive a Form W-2, but your clients may supply a Form 1099-MISC. Any tips you receive are required to be reported as taxable income. Any net earnings greater than $400 are subject to self-employment taxes, and you may need to make estimated tax payments to cover the amount reported on your Schedule C.
Work expenses that can be deducted include:
- Vehicle expenses such as parking fees and tolls, as well as maintenance including fuel, oil, and repairs and other expenses (You cannot use the standard mileage rate when the bus is used for hire)
- Liability insurance fees
- Union dues
- Subscriptions to trade publications
- Uniform costs, as long as they are required for wear and not suitable to wear everyday
- State or local government licenses and regulatory fees
- Flat rate occupational taxes and excise taxes
- Leasing and rental costs for equipment rented
- Travel expenses, with limitations, including meals and lodging
Self-employed bus drivers deduct expenses on a Schedule C, whereas employees use a Schedule A, Itemized deductions.
Travel Expenses
Bus drivers may deduct travel expenses if they drive farther than a normal business day for more time than they normally work during a day. You aren't required to be gone the entire day, though the break you take has to be long enough for you to get the required amount of rest in order to drive again. Quick lunches or naps don't count as an expense, so most local bus drivers don't qualify to deduct travel expenses. Long distance drivers should keep a log book with records including receipts, dates of travel, time and place of each expense.
Whether or not you're eligible to deduct travel expenses, you must first determine your tax home. Your tax home is:
- The place, including the entire surrounding area in which you do your regular business, regardless of where you live.
- If you have more than one regular place of business, your tax home is the place where you do the most business.
- In some cases, your tax home may be the place where you live regularly, if the nature of your job doesn't account for a regular or main area of business.
- If you are considered a transient, being that you have no place of regular business or housing, your tax home is wherever you work.
For bus drivers, the tax home is usually the place where they start and end a trip, including centralized locations like bus depots, regardless of where the driver actually lives.
Meal Allowance
Driving long distance for an extended period of time may qualify you for a meal allowance. You can use the standard meal allowance of $46 per day, instead of deducting each individual expense. In some metro areas, the meal allowance increases to $59 per day.
Meal expenses are generally subject to only 50% deductions, unless the meals take place during the Department of Transportation's "hours of service", in which up to 80% of the expenses are able to be deducted.
