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  1. #21
    Honorary Supporter Roadmedic's Avatar
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    Quote Originally Posted by jerry_c View Post
    OK, so if we can take this one or two steps further, I'd sure appreciate it.

    Suppose a trucker forms an LLC (or a corp).

    Step 1. The LLC pays him $59 per day (or whatever the maximum per diem is at the time) for every day he's away from his tax home. From the LLC's point of view, this would be a 100% write off. From the trucker's point of view, this is an expense reimbursement, and the 80% rule would not apply.

    Step 2. Since the trucker would have nothing to deduct for meals expenses, if he had no significant other personal deductions, he could then take the standard deduction instead of itemizing and filing Schedule A.

    Am I correct on this?

    Further disclaimer (as if it's not obvious): I don't do tax returns — I'm a strategist, not a number cruncher.

    Some people consider the terms "bean counter," or even "number cruncher," to be put downs. Whenever I use such terms, I used them as terms of great reverence. I don't have that kind of mind, and really admire and appreciate people like you who do.
    The payment by the LLC would be deductible but limited due to the nature of the meals and entertainment rules. This means it would be subject to the same restriction as the driver on the subject of 80% deductible. Not a problem, but doable without looking further into it.

    Second proposition is out.

    The trucker received a monetary contribution toward these expenses. Therefore in order to deduct them, it has to be declared as income.

    In order for the LLC to have the ability to do this it would be best to have a plan in writing. Such a plan then negates the ability of the driver due to the fact there is no money spent by the driver for the deduction as allowed.

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  3. #22
    Road Train Member CommDriver's Avatar
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    Just as I reminder, to anyone planning to get a home loan anytime soon, all of your unreimbursed expenses are deducted from your gross income to come up with "how much you make" in order to qualify for a loan. This even includes your charitable giving. It can severely cut your buying power if you deduct a lot and/or make a lot of charitable contributions.

  4. #23
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    Sorry, wrong thread...

  5. #24
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    Quote Originally Posted by CondoCruiser View Post
    Truckers are being ripped off. The only thing you save is the taxes on $52 which is around $7 a day. Can you eat on that??

    Go to any traveling government job and they actually get a tax free check for $52 for each day on the road. Another unfair rule that exempts us from the rest of the work force.
    You're mixing apples and bowling balls. That $7 figure you throw in to support your claim that truckers are getting ripped off, implies you're expecting Uncle Sam to actually pay for your meals rather than exempt you from having to pay tax on the income you used to buy those meals. We all know that's not going to happen anytime soon, either for us or for any government employees (well, maybe for some - the President probably doesn't have to spend his own money for meals - but not many).

    In actuality the $52 meal deduction (or whatever - $59) is equivalent to receiving a tax free per diem check for the same amount, with the one minor exception that a per diem check gets you the tax benefit right away instead of having to wait until tax time. That's not a very big difference. There are a lot of other per diem factors that really screw the driver over, that you didn't touch.

  6. #25
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    Quote Originally Posted by jerry_c View Post
    OK, so if we can take this one or two steps further, I'd sure appreciate it.

    Suppose a trucker forms an LLC (or a corp).

    Step 1. The LLC pays him $59 per day (or whatever the maximum per diem is at the time) for every day he's away from his tax home. From the LLC's point of view, this would be a 100% write off. From the trucker's point of view, this is an expense reimbursement, and the 80% rule would not apply.

    Step 2. Since the trucker would have nothing to deduct for meals expenses, if he had no significant other personal deductions, he could then take the standard deduction instead of itemizing and filing Schedule A.

    Am I correct on this?

    Further disclaimer (as if it's not obvious): I don't do tax returns — I'm a strategist, not a number cruncher.

    Some people consider the terms "bean counter," or even "number cruncher," to be put downs. Whenever I use such terms, I used them as terms of great reverence. I don't have that kind of mind, and really admire and appreciate people like you who do.
    Even though the standard deduction and the standard meal deduction are mutually exclusive in general, there's one specific case where the two overlap. It rarely gets mentioned in trucker tax discussions about per diem, so I'll mention it here:

    Drivers who receive per diem pay who do not have enough other deductions for it to make sense for them to itemize, get to receive BOTH the benefit of the standard meal deduction (in the form of per diem pay) AND the standard deduction. This little-mentioned fact amounts to roughly $1000/year in tax savings for drivers who receive per diem pay, give or take a few hundred dollars.

    It's important to keep in mind that this only applies to a small percentage of drivers (10% at best), and the numerous drawbacks to per diem unfortunately outweigh this thousand-dollar bonus. For nearly 100% of drivers, the per diem method is worse than deducting at the end of the year.

  7. #26
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    Quote Originally Posted by jerry_c View Post
    OK, so if we can take this one or two steps further, I'd sure appreciate it.

    Suppose a trucker forms an LLC (or a corp).

    Step 1. The LLC pays him $59 per day (or whatever the maximum per diem is at the time) for every day he's away from his tax home. From the LLC's point of view, this would be a 100% write off. From the trucker's point of view, this is an expense reimbursement, and the 80% rule would not apply.

    Step 2. Since the trucker would have nothing to deduct for meals expenses, if he had no significant other personal deductions, he could then take the standard deduction instead of itemizing and filing Schedule A.

    Am I correct on this?

    Further disclaimer (as if it's not obvious): I don't do tax returns — I'm a strategist, not a number cruncher.

    Some people consider the terms "bean counter," or even "number cruncher," to be put downs. Whenever I use such terms, I used them as terms of great reverence. I don't have that kind of mind, and really admire and appreciate people like you who do.


    On step#1
    If the driver forms an LLC or corp. and pays per diem to himself the plan will not meet the IRS requirements for ‘Plans’ that allow the employee to use the allowance ($59/day) as proof for the amount of the expenses.(That is because the employee is more than 10% owner of the employer.)

    And as Roadmedic said the LLC can deduct 80% not 100%


    On step#2
    If the driver has some other income (from driving or otherwise – say wife’s salary) He will have no problem deducting the standard or the itemized deduction – whichever serves him best.


    Toni, CPA

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