Per Diem Pay For Truck Drivers?

Errol,

I hope you don't think that I was incensed, or was responding in an attempt to inflame.

I still think that you, Rick, and I are in agreement on all the important issues regarding Per Diem pay.

Anything that I offered than may have been in contradiction to you or Rick was offered in the spirit of Solidarity and truth.

Also be aware that I have made a good living in the past by being wrong, so I am quite likely to be wrong again. And again...

Anything that I offered than may have been in contradiction to you or Rick was offered in the spirit of Solidarity and truth.

There is that grey area about per diem. You can use it straight as it is, or combine it with itemized expenses. Freedom of Choice!

Also be aware that I have made a good living in the past by being wrong, so I am quite likely to be wrong again. And again...

May you be WRONG many, many times. And you're (winning) opponents can be smug!

Found it...

IRS Pub. 463 allows (but does not require) transportation workers to use the special standard meal allowance of $59 per day within the continental United States, or $65 per day for travel outside the continental United States from Jan 1, 2015 to Sep 30, 2015, and $63/$68 from Oct 1, 2015 to Dec 31, 2015.

I haven't seen the rates for 2016 yet. Perhaps they have not yet been published?

From the publication:

Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year.

That means that you just have to count your days OTR and multiply by the standard special rate to calculate your expenses for M&I.

Much of what I described in my rather lengthy reply is outlined in detail in this same publication. A close reading of the document did not reveal any other exceptions for transportation workers (other than one for air transportation workers), so I believe that all the other deductions that I mentioned are valid.

If there are any other special provisions for non-reimbursable expenses for transportation workers please let me know.

I've found this exchange helpful and educational, even though I thought that I was the smug one...

To put it simple, if you are good with keeping up with all your receipts for your taxes then it's no need, but if not then I would get it.

New-School,

My main point is that you don't need to keep up with your receipts - other than to toss them into a shoe box or envelop.

What you do need is to keep a calendar, ledger, or journal, and use it to record the amount and category of every expense.

Many members of this forum have advised us to keep a ledger or journal for keeping track of things like directions and phone numbers for shippers,receivers, and fuel stops. So adding a few pages for recording expenses and making entries as they occur should not be much of an encumbrance.

There is nothing extraordinary about me, and I was able to manage this as a traveling construction worker... If I can do it, anyone can.

Another important thing to keep is YOUR LOGS.

Download them from your carrier and keep them. I have a number of "cloud accounts" (iCloud, GoogleDrive & Microsoft OneDrive) that I keep duplicates of "very important papers" (tax returns, divorce papers, etc.).

Grab your logs and throw them in a cloud account. In the event you are ever audited - you'll need these to prove "days out".

Rick

I am going to disagree with Rick about Social Security. Anyone who is depending on it to get them from retirement to death, is going to be in for a bad reality check one day. It would be best to make as much bring home now as and put it into a Roth IRA. Just my opinion.

As I said - might be delusional thinking to "count on it" for the youngsters here. For us 55+ types, it'll probably still be there in a decade.

Also - the "daily rate" is up to $63 per day as of 10/1/15. Keep in mind also - that you deduct 80% of that rate, not the whole $63.

So - for example - out 300 days X $63 per day = $18,900.00 X .8 = $15,120. This would be the DEDUCTION from your gross income (and the per diem untaxed income IS PART OF YOUR GROSS). Being that this deduction is LARGER than the "standard deduction" (single being $6,300, married/jointly being $12,500), you are going to have to ITEMIZE deductions anyways - which allows you to take all the other deductions pointed to in an article I linked to earlier.

You can GREATLY REDUCE your tax liability by itemizing - but YOU HAVE TO DOCUMENT. This includes getting COPIES OF YOUR LOGS from your company - to PROVE DAYS OUT, as well as keeping receipts for all other allowable deductions. GET COPIES OF YOUR LOGS ON A REGULAR BASIS - and STORE THEM (cloud accounts like google drive, drop box, onedrive, etc. are good places - keep them in MORE THAN ONE PLACE). Companies usually purge their ELog records every 6 months - get copies of your logs at the end of every month.

This is especially important for states that you have to file PERSONAL INCOME TAX RETURNS for - as they seem to be even stricter than the IRS.

If you get AUDITED and you don't have the documentation to PROVE YOUR DEDUCTION - it will be DISALLOWED and you will have to pay the difference plus interest and penalties.

I haven't heard of companies putting the daily per diem on your card on a DAILY BASIS - it is still paid on your regular paycheck, along with your non-per diem pay.

Also haven't heard that they take a penny for processing - but - keep in mind, per diem is not "doing a favor for the driver", as the driver can still take the deduction and get the tax refund based on what is withheld.

But - figure 1,000 drivers, out 300 days, times $63 per day - with the company NOT HAVING TO CONTRIBUTE the 7.5% "matching funds", saves the company $1.4 MILLION in taxes they don't have to contribute to. Granted - the company writes that off as an expense - but - that puts another 1.4 Mil back in the company's pocket. WHO IS DOING WHO THE FAVOR HERE?

The difference in "net income" on a weekly check is pretty negligible.

Y'all do what you want - all I can do is provide the data. My financial situation is a little different from those where an extra $40-$60 a week on a paycheck can make a big difference. If I ever get out there (depending on how I heal from a recent surgery), I have a decent amount of $$'s in savings, so I would prefer a slightly smaller paycheck and larger refund - than an extra couple of Jacksons a week.

YMMV...

Rick

We probably need an update on this now... I know it uncomfortable to talk about now, but the whole "per diem" conversation needs to start over since the $63 per day has left the building...

I'm trying to find accurate information about this, but it always devolves into a political argument.

What changed, how does it work now, and how does it affect drivers?

Seems like a straight forward question, but its REALLY hard to get a straight answer anywhere!

We probably need an update on this now... I know it uncomfortable to talk about now, but the whole "per diem" conversation needs to start over since the $63 per day has left the building...

I'm trying to find accurate information about this, but it always devolves into a political argument.

What changed, how does it work now, and how does it affect drivers?

Seems like a straight forward question, but its REALLY hard to get a straight answer anywhere!

The new (as of 2018) story is really pretty simple.

Owner Operators still have the option to take the per diem deduction as in the past.

Employee-drivers may no longer take the per diem deduction. However, the standard deduction has been increased significantly, so many taxpayers will pay less than before even if they formerly took the per diem deduction. This will vary by income, marital status, other deductions, etc.

Companies may offer or mandate pier diem pay, potentially resulting in a similar taxation level compared to drivers who formerly claimed a per diem deduction.

In my view, the big winners from the 2018 change are drivers who receive a portion of their pay from their company as per diem pay, and who don't have enough deductions to make itemizing worthwhile given the new standard deduction. I fall in this category, so the change will really help me.