Why do so many truckers fall behind on taxes?

The life of a self-employed trucker is defined by hustle, deadlines, and a complex web of regulations. With endless paperwork and the pressure of keeping your rig rolling, it’s understandable how record-keeping and taxes often take a back seat. You intend to catch up, but the “taxman” hasn’t called—until one day, you get the dreaded notice: a wage garnishment sent to your contractor or agency. Now, panic sets in.

We receive calls from people across all vocations, but one of the top groups consistently needing serious tax resolution help is self-employed truckers. They often face massive liabilities—sometimes $250,000 or more—because failing to file allows the debt to compound rapidly. The IRS won’t forget; they will find you. Ignoring the problem only makes it bigger.

The Immediate Crisis: IRS Wage Garnishment

When a garnishment hits your paycheck (W-2 or 1099), it is Priority #1. The immediate goal is to stop the levy to protect your income and keep your business moving.

Priority Step 1: Crisis Intervention

Your first move must be to engage with the IRS to negotiate a temporary hold on the garnishment. This buys the time needed to file your delinquent returns and establish a clear path forward.

Unraveling the Debt: Filing Back Tax Returns

With truckers, it’s common to have multiple years of unfiled returns. This creates major hurdles, particularly proving legitimate business expenses.

Priority Step 2: Filing Back Taxes (The Expense Challenge)

You must file all missing tax returns to enter any resolution program with the IRS. For truckers who haven’t kept pristine records, we often rely on strategies to “impute” expenses—determining a reasonable deduction amount based on industry standards and experience.

• Imputing Per Diem: If you can accurately estimate the approximate number of days you were on the road, you can often calculate a substantial per diem deduction, significantly lowering your final tax liability.

Once all back taxes are filed, you get a clear snapshot of your financial situation, which is essential for determining how the IRS debt will ultimately be repaid.

Your Path to Long-Term Stability

Lifting the garnishment and filing back taxes are just the beginning. True, lasting tax relief requires planning for the future.

Priority Step 3: Mandatory Estimated Quarterly (EQ) Payments

The IRS will not negotiate a debt resolution plan (such as an Offer in Compromise or Installment Agreement) unless you demonstrate you are currently compliant. This means you must start making Estimated Quarterly (EQ) Tax Payments immediately. If you’re not used to paying EQ taxes, you must adapt—compliance is non-negotiable for future negotiations.

Priority Step 4: Structuring for Tax Savings (Stop Paying 15.3% Extra!)

One of the most common mistakes self-employed truckers make is operating as an individual Schedule C Sole Proprietor. This almost never makes sense because:

• Double Taxation: You pay the 15.3% Self-Employment Tax on every dollar of your net income AND the standard income tax rate on all that income.

By setting up an LLC taxed as an S Corporation, you can strategically divide your income into a reasonable salary (subject to payroll tax) and distributions (exempt from Self-Employment Tax). This single step can legally save you thousands of dollars annually.

Priority Step 5: Secure a Workable Resolution

Once the garnishment is lifted, back taxes are filed, and quarterly payments are current, you are in a prime position to negotiate your long-term resolution:

• Installment Agreement (IA): Negotiating an affordable monthly payment plan.
• Offer in Compromise (OIC): Settling the total debt for less than the full amount owed.

You can often “kick the can down the road” strategically for months while getting these components in place, ultimately resulting in a manageable and final resolution.

Don’t let the complexity of the road cost you your income. The sooner you act, the greater your options, and the quicker you can get back to focusing on your livelihood.

Ready to stop the IRS garnishment and get your taxes back on track? Contact Tax Relief Advisers today for a free, confidential consultation.