Will we lose per diem

Any company drivers out there who has filed their W2 for 2018? Were you able to claim M&IE on your 1040? Thanks!

 

Nope. I used Turbo Tax, like I do every year, and it told me I could list employee expenses if I wanted to, but they might only be useful in a state tax return (Texas doesn't have state income taxes, so I didn't enter them). In years past, the software always took my information and put it on the proper forms. Under the new tax law though, only employers (and owner ops) can deduct employee expenses if they reimburse the employee.

 

Thank you sir for the quick reply. Good luck to us OTR boys/gals

 

No sir, not this year.

 

No good. If you’re working with a company that provides per diem. I would ask them to withhold $50-$100 weekly for federal taxes so you’re not in too deep. It’s better that you gave too much and get them back rather than ending up owing Uncle Sam $2500 in taxes.

 

Why?

A quick explanation, the new tax law no longer allows non-reimbursed employee business expenses. For most employees, it wasn't a big deal. The doubling of the standard deduction more than made up for it for 99.999% of the occupations. The only one where there was a big loss was over the road drivers. Still, if your company pays you the meal allowance, it is not taxable. You just can't take it as a deduction on your taxes anymore. Your withholding is based on your taxable income. The meal allowance isn't taxable, so you won't owe taxes on it.

 

I am a company driver for Highway Transport. They have a per diem program that reduces my taxable income every week. They take $66 per day and multiply it by number of days out. $462 for every 7 days out. They deduct this amount from my gross before taxing it so I pay less taxes out of my check. Then they add the $462 back in.

Is this going to bite me in the ### next year at tax time? According to the per diem plan info they sent me, it shouldn't.

Anyone else on this plan?

 

No your fine. Companies are allowed to do per diem.
I’m on the same plan. No worries here.

 

Negatives on the plan: lower AGI, so lower Social Security contribution, lower work comp insurance level, less ability to borrow money.

Positives on the plan: you get more money in your hands, so you can invest, save, and don't need SS or borrow money.

You should consider increasing your disability insurance to make up for decreased work comp coverage.

 

From my understanding talking to my tax preparer, 1099/owner operators/business owners can deduct per diem based on similar factors of 2017 tax laws. However, W-2 employees, company employees, can not directly deduct the per diem from their taxes anymore. But you can be reimbursed for those expenses incurred if you meet certain conditions. First, are they necessary for your work that requires you to travel from your tax home area (to complicated to explain especially when it comes to HOS). Second, are you a "reimbursed" employee or "un-reimbursed" employee. If you're a company driver and the company, when they file their taxes, they claim per diem to reduce their tax debt, you are a reimbursed employee, and the employer must pay you the amount equal to the amount they deduct from their taxes up to $66/day (80% in some cases). But you have to provide the employer with documentation of daily expenses to be reimbursed. If they don't take the deduction, then you can't get re-imbursed as a company driver. But as an owner/operator, 1099, independent contractor, you still have the per diem deduction but it only applies to actual meal cost. It no longer include lodging, laundry, etc...