Company driver taxes: what being on a W-2 changes

If a carrier pays you on a W-2, the law treats you as that carrier's employee. That single fact decides which set of expense rules you read, and it is why advice written for owner-operators can send a company driver badly wrong.

What the rules say

Being an employee sets the rules you read

The IRS treats worker status as a question of fact determined under common-law rules, and it publishes guidance distinguishing an independent contractor from an employee.

Publication 463 states that unreimbursed employee travel expenses are no longer allowed as a miscellaneous itemized deduction subject to the 2-percent floor for tax years beginning after 2017, and it names Armed Forces reservists, qualified performing artists and fee-basis state or local government officials as the categories that may still deduct such expenses as an adjustment to total income.

Section 70110 of Public Law 119-21 amended 26 U.S.C. § 67(g) by striking its expiration date and redesignating it as subsection (h), so the disallowance of miscellaneous itemized deductions continues for taxable years beginning after December 31, 2025 rather than lapsing.

26 U.S.C. § 62(c) provides that an arrangement is in no event treated as a reimbursement or other expense allowance arrangement if it does not require the employee to substantiate the covered expenses to the person providing the reimbursement, or if it lets the employee retain any amount in excess of the substantiated expenses.

Unreimbursed job expenses under current law

The most important thing for a company driver to know is what the law currently does with job expenses an employee pays out of pocket and is not paid back for.

Where a carrier does pay you back for costs under a plan that requires you to account for them, that reimbursement is handled under its own rules, and it is not the same thing as claiming a deduction yourself.

A tax home does not reopen a rule the law has closed

26 U.S.C. § 162(a)(2) allows a deduction for traveling expenses only while away from home in the pursuit of a trade or business, so the existence of a tax home is a precondition rather than a consequence of the work performed.

Publication 463 describes the tax home as the regular or main place of business, and where there is no regular or main place of business it looks to whether there is a regular place of abode, treating a taxpayer with neither as an itinerant whose tax home is wherever work is performed.

Travel and meal rules only start to apply when someone is away from a tax home. Having a tax home does not create a deduction on its own, and it does not switch on a rule that the law closes for your situation.

A per-diem rate existing is not the same as you claiming it

The rules below are the ones that come into play only where a driver is away from a tax home. Whether that is true is its own question, and it is answered on the tax-home page rather than assumed here.

Publication 463 states that in general only a stated percentage of business-related meal expenses may be deducted unless an exception applies; the percentage itself is carried in a dated rate schedule.

Publication 463 states that a higher percentage applies to meal expenses while traveling away from the tax home if the meals take place during or incident to any period subject to the Department of Transportation's hours-of-service limits, and it lists interstate truck operators under Department of Transportation regulations among the individuals subject to those limits; the percentage itself is carried in a dated rate schedule.

Rev. Proc. 2019-48 provides an allowance method under which a stated amount is treated as substantiated in lieu of actual expense records, so the method governs proof of an amount and is not itself an entitlement to any amount.

A daily figure published for the transportation industry is a substantiation figure. It says how an amount may be proved. It does not say that a particular driver gets to subtract it, and for an employee that second question is governed by the employee rules above.

What to keep either way

26 U.S.C. § 6001 requires taxpayers to keep records as prescribed, and 26 U.S.C. § 274(d) denies deductions for traveling expenses unless the taxpayer substantiates them by adequate records or sufficient evidence.

26 C.F.R. § 1.274-5 sets out the substantiation requirements for travel expenses, including the elements that must be established for each expenditure.

Where this comes from

Every rule stated on this page comes from the law, the regulations, or IRS guidance, and each one is linked so it can be read directly.

Still being read

These are questions on this page we have not finished reading the authority for. We list them rather than fill the space with a guess.

Where to go next

How we research this

Nothing here works out an amount for one person. It explains which rules apply so a driver knows what they are looking at, and what to bring to whoever prepares the return.

This page is educational. It is not tax advice, and it is not a determination about any one driver's return. A tax professional who can see the whole situation is the right person to apply these rules to it.