Taxes what can be claimed

My understanding to Per Diem is that Company drivers cannot claim per diem on their tax returns. Independent contractors can claim per diem. The way most fleet pay their company drivers is to pay the allowable per diem to the driver, which is non taxable. Example, lets say your company driver wage (W2) is $200 for a day. The trucking company will show that your salary is $150 which is subject to all taxes, and $50 is per diem reimburstment which is not taxable. So, instead of being taxed on $200, you will now be taxe on $150. The actual per diem allowance will be different since i simplified the numbers above. In the example above, the trucking company saves a little in tax too because they will be paying employment taxes on $150 instead of on $200. Yet, the overall gross income is the same $200

 

Because the $63 is allowance with receipts, 80% without.

 

I honestly haven't seen a difference. If your tax would have been $2400, once you claim 40 days on the road, your tax liability is wiped out and you get a refund of whatever you've paid in, assuming enough was withheld from paychecks to cover it.

Unless you have per diem directly done through your check and need to claim more through receipts, that's the only reason I could see to do it that way. I've never gotten back more than I paid in. It doesn't work that way AFAIK.

 

Correctomundo. For example, a $0.40 mileage rate on per diem might be paid as $0.28 taxable, $0.12 non-taxable.

This results in a larger paycheck, but ultimately nullifies the per diem daily deduction, leaving you owing money at tax time. Plus the company gets over on you because they don't have to pay as much into social security and such, leaving you holding the bag yet again.

 

Schedule C is Self Employed, is it not? I've always been a company driver.

 

Laundry, (I might have done laundry once at a truckstop, but I claim I did it a lot more)
Bed sheets, (I even deducted the sheets I bought for home). Ssshhh!
Cleaning supplies
USB chargers and cables
Printers
Flashlights

 

I think he meant Schedule A which is what I do every year as a company OTR driver but if lease operator or "contractor driver", they would likely do Schedule C

 

I have been playing with the numbers with Turbo Tax in the past as a company employee. What i find out is that all of your claims of personal items used in your work such as work boots, cell phones, etc.. doesnt reduce your tax bill unless you itemize all your expense. The government already give you a lot in deduction in the Standard Deduction. If you decide to itemize, you better make sure to have proper documentation and know what is allowable deductions.A W2 employee have very limitted deductions so being a W2 employee and itemizing tax returns will usually trigger a red flag in the IRS system which will result in an audit.

If you want to save in Taxes, dont be a company driver with a W2. Also, dont be fooled in being a company driver as a 1099 contractor because your self-employment tax will cost a lot. Do what I did and be an Owner Operator.

 

I've been itemizing as an OTR driver employee for a very many years and never been audited. And granted, I'll do many more days out than most so it benefits me more. There's hundreds of thousands of employee drivers who itemize well beyond the standard deduction. It's there for your benefit, use it.

Given the "low pay" for extended periods away from home OTR drivers put up with, this helps to take some of the sting out of it [and carriers seem to know this and "pay accordingly"]

With the meal allowance and several dozen hotels every year and other stuff, I'm always FAR beyond the standard deduction when itemizing on Schedule A