can some one please explain per diem pay??

I know what he was getting at.

However, as a transportation worker, he should use the option I posted. It is simpler.

I have done returns for those that tried it based on locations.

I love the fee charged.

 

Hmm. Interesting. Canada is very overpriced, wonder if i can pull that one off?

They'd probably F me over in the currency covnersion though.

 

I agree with what has been said...in that, use the standard rate of $59 rather than trying to determine the rate for every locale in which you laid your head each night. I guess it wouldn't be so difficult if you determined this number each day throughout the year but to do it after the fact would be quite labor intensive and I am not sure it would produce a number that would be beneficial enough to make it worth the effort.

The total allowable per diem equation is as follows:

Number of days away from home (per the rules) times $59/day times 80% = total allowable per diem deduction for the year.

If your company, as a portion of your pay, pays you a portion of or all of the per diem for the days you are out, you would need to reduce the total allowable per diem amount by the amount paid by the company. If they pay you $59/day, then there would be none left for you to deduct. The portion of your pay that comes in the form of Per Diem is not subject to tax UNLESS they pay you more than the allowable amount for the area.

This result is reported on Form 2106 along with any other Unreimbursed Employee Business Expenses. The result of Form 2106 then flows to your Schedule A.

If the total of your Schedule A, Itemized Deductions, does not exceed the standard deduction amount based on your filing status, then the per diem calculation is moot and not used.

Let me know if you have other questions. I am a CPA out here taking a "brain break" after 15 years behind the desk.

 

Thanks for all the great info on this thread. My husband works for a company now that does not pay per diem. We have a pretty good understanding of how it works and were able to take a nice write off on our itemized deductions. He is now considering going with a company that "pays" (just convenient wording) a flat per diem per day equal to the daily federal max. My question is this - when we itemized of course deduction was subject to the 80% limit - if the company takes out the max daily per diem amount do we in fact "gain" 20%? Since this topic can be so confusing, I'll use an example to clarify my question:

No company per diem, we take deduction on Sched A

$50,000 total wages
300 days out x $59 x 80% = $14160 deduction
$35840 taxable wages

Company per diem $59 per day x 300 days
$50000 - 17700 = 32300 taxable wages
What about the 20% disallowed if we itemize?
Is this assumption correct, or am I missing something? Just seems like the IRS would have a way to limit this to keep it in line with limits imposed on those who take the deduction when they itemize.

BTW, I know there are many other things to take into consideration regarding per diem like the potential effect on Soc Sec, disability, unemployment and the like, and I realize these are big issues to consider. I am just wondering about this one area - seems like a discrepancy - any info will be appreciated. Thanks!

 

Do you know that the company will pay the full $59/day? Are there companies who do that? Confirm the amount.

If so, what you would do is calculate your per diem as though the company did not pay per diem and reduce this total by the amount to which you are entitled based on his number of days away from home.

If there is per diem left over to be deducted...then you are entitled to that deduction. Usually, if the amount paid by the company is greater, then you would have to pick up into income the overage.

Let me confirm that. The $59/day is the per diem amount for continental US. The 20% reduction is the IRS deduction amount. I'll confirm the difference and let you know.

Nole.

 

Thank you - yes, I am sure about the $59 per day - confirmed it with the payroll dept. So what happens to the 20%? Does it become taxable income when we file? thanks for the advice!

 

If the employer paid more than the $59/day, then there would be an issue with an income element.

Your issue will be that since the per diem is not taxable when received (nor at anytime in the future as long as you receive no more than $59/day) you will get no deduction for the $59/day x 80% because you will have received 100% of the per diem amount for every day he was away from home.

For example, if your husband spent $59/day on meals and incidentals and the company paid him $59/day, then he really hasn't spent any of his own money for meals and incidentals...agree? At the end of his day, the company paid for all of his expenses.

In this scenario, he has no expense to deduct because the company has paid 100% of his expenses. It's really no different than the company giving him a company expense card with a $59/day limit each day.

To receive the money tax free and then deduct the $59/day x 80% x # of days out, he would be "double-dipping". Does that make sense?

The way the form works is that you report 100% of the deduction amount and then reduce that by the amount that the company "reimbursed" the employee. If the ONLY expenses were Meals and Incidentals...then the two numbers would net to zero and there would be no deduction.

Look at Form 2016, there are only 10 line items (on the 2009 form) and you will see what I am referring to.

Hope this helps.

 

I am not a trucker but I am a CPA. There are two kinds of perdiem plans - accountable and non-accountable. If your employer gives you money and you give them back an report "accounting" of what the funds were used for, it is an "accountable" plan and it is not reported on your W-2 (and your employer does not have to withhold taxes).

If your employer gives you money and you don't give them back any kind of "accounting" for what the funds were used for, then it is a non-accountable plan and the employer has to withhold taxes and report it on your W-2.

If you receive non-accountable funds (for perdiem) on your W-2, then you will need to offset them with an "accounting" to the IRS on your Schedule A (or Schedule C if you are a statutory employee).

If you are not a statutory employee, you would only be able to deduct these expenses if they exceed 2% of adjustable gross income (as indicated by previous posters) but I think that many truckers would be able to meet the definition of a statutory employee and be able to deduct all expenses on a Schedule C.

See http://www.irs.gov/businesses/small/article/0,,id=179118,00.html for a definition of Statutory Employee.

If you meet the definition of statutory employee, you should ask your employer to check the statutory employee box on your W-2, if they have not done so already.

Regarding the 20% difference between perdiem (and the allowable perdiem) - the IRS has deemed that 20% of perdiem is "personal" (i.e. you would have to eat and go to work even if you were at home). Even if your employer pays for your meal (and other incidentals), the IRS requires you to pay income tax on 20% of it (because it is considered to be a personal expense.

This is also true of other business people - except it is a higher percent for non-truckers. For example, when I take someone out for coffee - or lunch, I can only deduct 50% of my expense (not 80%) because 50% of that expense is considered "personal".

I hope this clears things up a bit...please let me know if you have additional questions. If I don't know the answer, I am happy to research it for you.

 

cmchiker,

I respect your opinion and I agree with most of what you say, HOWEVER, monies received in accordance with Federal Per Diem Rates falls under the "Accountable" plan rules. The log books serve as the verification and "account" to the company your whereabouts, etc. verifying to them and to the service, in the event that the service ever reviews the return.

Otherwise, the company would be required to report the per diem payments in Box 1 of the W-2.

I, too, am a CPA and have dealt with per diem arrangements for many years.

What I believe you are referring to is the following scenario:

Company A sends Employee A on a business trip. Co A believes that the trip will cost $1000 and thus, hands the employee $1000. If the company requires the employee to ACCOUNT back to them for the expenses, it is an accountable plan. The employee is usually required to repay any unspent funds or submit for further reimbursement in accordance with the expense report, receipts, etc. If the excess is not required to be re-paid, then the excess is taxable and the other amounts go unreported by the employee on his return.

If the company wants no accounting and doesn't care what it costs, then the funds are taxable to the employee when received and the only way the employee can offset that income is to report the expenses on 2106 (then on Sch A).

Per diem payments, in accordance, with Federal rates falls under the ACCOUNTABLE plan rules.

Per diem paid by trucking companies, as long as it doesn't exceed the $59/day as set by the Feds, is not reportable on the employee's 1040 with the exception of what I stated above...the amount received throughout the year only serves to reduce the deduction to which the employee is entitled and shown on Form 2106.

 

I'm having a huge problem with the IRS on this issue. Currently being audited for 2007 agent is stating that since I did not opt into Company OPTIONAL Per Diem program I was not able to take the daily Per Diem on my taxes. Any help greatly appreciated