Originally Posted by mathematrucker

Somehow the tax home issue strikes me as being of little or no consequence in this discussion. I doubt I'd even need to show the IRS my driver logs in an audit since I use my credit card for just about every purchase I make on the road. They'd probably be willing to put two and two together and believe me when I tell them that as an OTR driver, I didn't have that Egg McMuffin from Akron FedEx'd to Nevada.

Originally Posted by Roadmedic

If there is no tax home, a driver is not entitled to take per diem or food costs when traveling away from home. It is in the rules.

Originally Posted by Roadmedic

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Tax Home



To determine whether you are traveling away from home, you must first determine the location of your tax home.
Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located.

If you have more than one regular place of business, your tax home is your main place of business. See [LINK POSTED BY MEMBER] Only Members Can View This Truck Forum Link. later.
If you do not have a regular or a main place of business because of the nature of your work, then your tax home may be the place where you regularly live. See [LINK POSTED BY MEMBER] Only Members Can View This Truck Forum Link. , later.

If you do not have a regular or main place of business or post of duty and there is no place where you regularly live, you are considered an itinerant (a transient) and your tax home is wherever you work. As an itinerant, you cannot claim a travel expense deduction because you are never considered to be traveling away from home.

Originally Posted by mathematrucker

Correct.



Like so many things when it comes to taxes, tax home is pretty loosely defined, as the above shows. It seems doubtful the IRS would try to pin the category "itinerant worker" on any OTR driver who worked for just one trucking company the whole year. Especially if the IRS's mailing address on file for that driver had been the same for several years. I'd definitely still be deducting if I never bought my condo and just had my postal mailbox all these years.

Originally Posted by LooneyTune

Ah if only it was the good old days(like just a few years back...) when we just simply claimed it at the end of the year and got back a nice sized refund on our taxes. Again I think per diem should be optional and should be CLEARLY explained how it works before any driver signs up for it.

Originally Posted by TLeaHeart

Such negative attitude towards per diem pay. Gross 31K, paid taxes on 20K, saved you $2750 in taxes that went straight in your pocket. SS is a rip off, and will soon be bankrupt and gone. If they only reduce your mileage pay by 1 cent per mile, you come out ahead.

As far as qualifying for a loan, if you can't afford it on $20K you should not be purchasing it, plain and simple as that is your actual income.

Originally Posted by mathematrucker

Just read all the posts in this thread. One of our company's FAQ sheets on per diem begins with the following Q & A that I'm having some trouble comprehending:

"Q: Why does the company reduce my pay on the per diem plan?
A: IRS code disallows 20% of any deductions for expenses on meals and entertainment. Per diem is included in this category. Therefore, in order for the company to pay a per diem of $.14 a mile, it will not be able to deduct $.025 per mile. This reduction per mile helps offset this cost."

I fully understand the first sentence because starting in 2008 the percentage of the $52/day that drivers get to deduct became 80%. The second sentence sounds natural, but on the other hand suddenly there's some "category" being referred to that sounds a little ambiguous to me.

The third sentence sends my brain into a tailspin. Who's doing the deducting here, the driver or the company?

In the fourth and final sentence it looks to me like "not being able to deduct $.02 per mile" suddenly becomes a "cost" that, when what appears to be 100% of it is taken out of driver pay, still hasn't been offset, just "helped" to be offset.

I see that there is an issue with only 80% of the $.14 reimbursement being nontaxable, while at the same time none of that reimbursement goes into gross (taxable) wages. Theoretically something needs to be done to account for the disparity so the IRS receives the income tax on the $.025 per mile that tax is due on. And it somehow wouldn't make sense for the company to just reduce the per diem to $.115 instead of $.14 in the first place and shift the remaining $.025 into gross wages, I guess because the per diem is supposed to be per diem, not some after-tax rendition of per diem.

To summarize, the only shortfall I can see here is the income tax on $.025 per mile that has to come from somewhere. But how much does that amount to? Are we not talking about something like 15% of $.025 per mile? That equals $.00375 per mile, or about 1/3 of a cent per mile, not 2.5 cents per mile.

Can someone please explain? Is the company just spouting gibberish to fool drivers in that answer they give, or is there some real substance behind it?

Originally Posted by mathematrucker

Correct.



Like so many things when it comes to taxes, tax home is pretty loosely defined, as the above shows. It seems doubtful the IRS would try to pin the category "itinerant worker" on any OTR driver who worked for just one trucking company the whole year. Especially if the IRS's mailing address on file for that driver had been the same for several years. I'd definitely still be deducting if I never bought my condo and just had my postal mailbox all these years.

Originally Posted by Roadmedic

I have dealt with many IRS audits over the years on the various business returns and personals I prepare.

As the economy worsens, like it did in the late 70's and early 80's the IRS looks for any additional income it can.

They have nailed workers for this in the past. Whether they will in the future is just a guess.

I am required as an enrolled agent to give the proper advice.

Originally Posted by LooneyTune

Ok so if you medic seriously explain this to me... I was told the maximum any company can pay a driver in per diem pay is 10 cents a mile. Yet I see some companies offering 11, 12, and even 14. So what happens to those drivers? Are they forced to pay back the amount over 10 cents if they were say, audited?