Per Diem question.

Thanks for sharing that. I didn't know there were different rates for different areas. Seems the entire low-budget plains area is 46, while the big cities are around 70.

 

No prob, but FYI I turned out to be partially wrong. Apparently truckers get a flat $59.

 

Couple of other things to consider. If you are a person who does not itemize on your tax return, you get a fairly good "standard deduction". If you itemize, you basically get no tax relief on your deductions for anything up to your standard deduction. You only get an additional tax deduction for deductions "over and above" the standard deduction.

An example: If you are married filing jointly, your standard deduction is $12,600. So when you itemize, you literally gain NOTHING from the first $12,600 in deductions. If you get 200 days per diem, you can "deduct" those for roughly the same amount, but your tax bill STAYS THE SAME!!!!!!!!! You just use per diem instead of the standard deduction. What's the benefit?

So if you get your per diem from your employer, you reduce your income (lowering both FICA AND income tax), and still get the full standard deduction.

This is the same reason I run all my expenses through the LLC, and the LLC pays me per diem. I reduce my income, and then still have my full standard deduction. Same thing for my pickup. Rather than deducting the mileage expense personally, the LLC runs the pickup, and I claim the business miles through the LLC (but not, of course the personal miles). For a typical O/O, this strategy can be an $8,000 swing in net income per year.

My taxable income is lower, but I have more spendable income. I can't borrow as much money, but if you have more money, you don't have to borrow to begin with!

 

That's incorrect. There are two different Per Diems: one for ordinary people, and one for transportation workers subject to HOS. We get the better deal of the two, by far. Just make sure you deduct a partial day for those days you are leaving or returning. But if you come home at 12:30 AM, you do get that partial day.....

 

As a company driver, your per diem deduction on your federal income taxes is;

Total days out X $59 X.8 = $47.20
Partial days out x $59 x .75 x .8 = $35.40
minus company paid per diem... the 9 cents per mile. 9x600=$54.00, 9x500=$45.00
equals what you can deduct, or what you owe.

 

I think I might be cheating myself, I've always counted partial days as half days. What do they consider a partial day?

 

that's right, I'm gonna take away ALL your Social Insecurity, and buy a houseboat, a Bentley, and have a harem of 72 virgins.....

Or, a row boat, a 1977 VW Beetle and a former prostitute named Tammy.

 

A partial day is anything that does not include 00:01 to 24:00.
There are two ways to figure partial days.

You can use the 75% rule for every partial day, simple and easy.
Or you can use the actual percentage of the day you were out. example if you leave at 01:00 you could take 23/24 of the per diem. But you must use this method for every partial day.

 

I disagree! I used to climb cell phone towers and anytime I was more than 2 hrs from our shop it was considered out of town. My per diem was $100 a day.

 

That's a company rate, not an IRS tax rate.