Ok, per diem - as I understand it...

$59 a day for each full day you are out, 75% of that for each partial day. If you leave and return on the same day it doesn't count, you must be out overnight. If you leave one day and are back the next it is 2 partials. I believe, however, that once you figure out your total for all the days you were out you are only allowed to deduct 80% of that total.

Edit: Yup, it's 80% that you can deduct. See this.Not sure why they do that, why not just lower the deductible amount and let you take the full amount? I'll never understand the gooberment...

 

Wow, for 300 days it's over $14,000. That's a good chunk of money.

 

If you are going to truely understand per diem ... you need to understand what it actually is and what it is not. Per diem is NOT income, per diem is NOT a reimbursement and it nothing that anyone is SUPPOSED to pay you.

Per diem is simply an IRS construct. The IRS allows certain expenses incurred when traveling to be deducted when conducting business. These deductions can be taken by the business itself, if they expend them as in reimbursing the employing for the expenses. Or the employee can can deduct the expenses themselves if they are not reimbused for the expenses.

Per diem is simply a permissable rate allowed by the IRS, in lieu of providing detailed documentation of incurred expenses. How the IRS allows the use of per diem rates varies from industry to industry and from region to region.

Now how does it apply to trucking? As an HOS employee the IRS allows 80% of $59 per day that you are away from home. You can either take this deduction yourself or your employer may elect to reimburse you or allow part of your income as tax free at the per diem rate.

As far as should you or should you not take per deim? I can't tell you that and nobody here can. It all depends on your own tax situation and where you are at in your career cycle.

 

I have an online business that is 100% automated so it still makes money on its own and I created a program that automatically categorizes all of my income and expenses so I easily itemize. In my case I think per diem works out well since I still claim business taxes and my company trucker income.

 

First part is correct, the current per diem rate is $59/day, the per diem deduction is 80% of that.

Partial days can be claimed at 75% but the requirement is that a (ten hour) break must be taken and required by HOS rules to complete the run. If you left at 10pm and got home at 10am the next day, and 11hrs or less driving, most likely you did not satisfy that requirement. If you only drove 1/2 hour each way to a customer where you were then able to log ten off duty hours waiting for a trailer to be loaded, it would still not be eligible since a ten hour break was not required to complete the run. If you drove 5.5 hours to pick up a trailer and its 5.75 hours to get back, the ten hour break is required and now you are entitled to per diem. It's a small detail, but if you've ever been audited you'd know it can be important. I haven't been home but a few days this year, my deduction is $16,626 so it most certainly is worth it.

 

Okay, let me run my understanding of per diem by you all and please enlighten me if I don't have my head wrapped around the concept. As a prospective driver I'm trying to determine if per diem might work for me.

First off, it doesn't matter to me if per diem reduces income for purposes of a loan or worker's comp or Social Security, etc. So we can take that out of consideration. And I don't care if it turns out to be a good deal for the carrier. I'm primarily concerned with taxes.

To illustrate, let's use an example. I'll just pull numbers out of my hat. Let's say Company X offers per diem of $0.04 cpm and I take per diem. As a company driver, I run 100,000 miles for company X during the tax year (Jan. 1 to Dec 31). That means $4000 in non-taxable income for the year.

Now, as a driver, for my particular region of the country or whatever the IRS says for my situation let's say I can deduct 80% of $59.00/day for each full day I'm out, for meals and lodging (right? it's only for meals and lodging?). Let's say I'm out 300 full days. So 80% of $59.00 = $47.20 times 300 full days equals $14,160.

To simplify the example, I'm not considering those partial days where I can deduct 75% of $59.00, but in real life I know they would come into play.

Have I got this right so far? Since Company X paid $4000 in per diem for the tax year I can still deduct $10,160 ($14,160 - $4000 = $10,160) for meals and lodging?

Now what about other normal deductions a company driver should be able to take, e.g., stuff that would be considered necessary in order to perform the job, like Road Atlas, certain tools, supplies, etc. These are separate from per diem, right?...and can be tax-deductible separate from per diem?

Thanks in advance.

 

Yes, though you would have to itemize to claim the difference & therefore lose the standard deduction. However 4cpm is a really low estimate. Ideally you would want to be paid 14,160 in per diem -- that way you pay less in FICA & can claim the additional ~6000 standard deduction.

Correct. But you may very well find that it is better to take the standard deduction instead.

Example: 12cpm per diem, 100,000 miles/year, 300 days out, & 1,500 in misc supplies/expenses.

You could itemize: 2,140 unclaimed perdiem + 1500 expenses = 3,140 deduction (on top of the 12,000 you were paid tax-free)

or take standard $6,100 deduction instead (on top of the 12,000 you were paid tax free)

 

Thanks double yellow - I think I got it now. So in my case per diem may only be worth it if all the other miscellaneous expenses (including unpaid per diem) add up to more than the standard deduction.

Appreciate it, sir.

 

I was told you could still claim the tax meal deduction. You have to add the tax meal deduction per day then subtract your total amount of per deim and what ever is left over is still claimable. Atleast that's what a tax person told me.