Generally 'Per Diem' As A Paid Benefit. ?

After company drivers lost the ability to claim any itemized business expenses on the taxes two years ago

Why cant you claim out of pocket purchases for work use??

If one claims the standard deduction, you cannot claim it as any itemized costs unless you want to lose money. The standard deduction of $6000 is more than the per diem will add up to.

Gotcha! I wouldn’t be claiming all that much anyways. Basically the tool box for the truck, work clothes, gloves, boots Etc... Just all the little stuff I used to claim as an employee before owning a business

If one claims the standard deduction, you cannot claim it as any itemized costs unless you want to lose money. The standard deduction of $6000 is more than the per diem will add up to.

Wish we could SEARCH the forum(I thought we used to have a search function).

I did a whole big writeup a few years ago - with a sample itemized deduction. If you were out 300 days a year - with the 80% of the $66 a day rate for deduction - your per diem deduction (under the old tax code) would be $15,840 - which is a whole lot MORE than the old $6,300 standard deduction - BUT (there's always a but) - you would have to BACK OUT the portion of per diem you were PAID IN ADVANCE by the company. Which means you were better off NOT TAKING per diem, and ITEMIZING. Rough numbers - 43 weeks out X 3,000 miles a week X $.10 per diem per mile - is $12,500 you would have to BACK OUT OF the $15.8K that was the deduction for per diem.

BUT - IF YOU DID NOT TAKE PER DIEM PAY AS A COMPANY DRIVER UNDER THE OLD TAX CODE - you could ALMOST TRIPLE your deductions (versus the $6,300 standard - keeping mind mind that's for single taxpayers), with the rest of your expenses, other taxes and mortgage interest, etc. that fall under the current $12K "standard deduction".

But keep in mind - you could itemize ALL THE OTHER EXPENSES. Now - as a company driver - you cannot.

Now - a lease op or O/O, that's getting paid to their own corp, and taking W-2 wages (and K1 income) would do things a little differently. But if you were a straight 1099/Sole Proprietor (or ran your operations though a Sub-S or LLC, and took your wages as straight 1099) - you are still eligible (under the new tax code) to itemize.

I get the feeling the new admin is going to repeal the new tax code - but how much they GIVE BACK (like the ability to start itemizing per diem and expenses) is a whole nother story. With all the spending they plan on doing - they going to have to rape the taxpayer (and not just the "demon rich " - BECAUSE THEY ARE THE DEMON RICH - which is why the "demon rich" always seem to make out better than the "average working stiff"). But this is all conjecture. If they get the 2 GA seats - it's FULL STEAM AHEAD to a lot of stuff that we're NOT GOING TO LIKE.

I'm having a "Biden Is Not My President" gung sale right not - and getting rid of some "extra guns" (is there such a thing?), while prices are at a premium and guns/ammo are difficult to find (yeah, good luck finding ammo at a reasonable price).

But I digress...

Rick

Now i see tax code has indeed changed since my traveling sales days: " If you have unreimbursed business expenses as an employee (what used to be known as “Employee Business Expenses” [EBE]), then those expenses are generally no longer deductible for the 2019 tax year on your federal tax return. In fact, they were not deductible in 2018, and will not be deductible through 2025. These expenses used to be summarized on Form 2106 Unreimbursed Employee Business Expenses and deducted on Schedule A Itemized Deductions to the extent that they and similar expenses exceeded 2% of the taxpayer’s adjusted gross income. Yes, it doesn’t seem fair that your employer can deduct the amounts they reimburse to you as a business expense, but you as an employee cannot deduct those same expenses. However, as we all know, the concepts of “fair” and “taxes” do not always go hand in hand.

If your EBE are reimbursed, that reimbursement may or may not be taxable to you. If you submit receipts to your employer, and they reimburse you the amount of the receipts, then that is known as an accountable plan and the reimbursements are not taxable income to you. However, if your employer grosses up your pay to provide income to help you cover your EBE, then that gross-up amount is taxable income to you. However, even though this gross-up is taxable income and intended as a general reimbursement, you may still not deduct the business expenses that are being covered through the gross-up."

Oh, and you can search this forum. within the url at top of your browser type search words or phrase https://www.truckingtruth.com/ the word or words must be typed prior to the web address

Oh, and you can search this forum. within the url at top of your browser type search words or phrase https://www.truckingtruth.com/ the word or words must be typed prior to the web address

We used to have an internal search function - but thanks anyways. 40 year in IT - think I know how google works. We used to be able to search internally for particular threads by particular posters. But if care to take the time to look to look up a couple of the extensive write-ups I did in the past, with reference to Per Diem Pay, please feel free to reference them here.

Tax Regs for Transportation Industry Works are slightly different than "corporate folk" (EBE) that spend time on the road, as a Transportation Workers job IS THE ROAD. And there were many expenses (CB Radios, Cell Phone Expenses and the like - that were non-reimbursed) that could be itemized, along with Per Diem deduction. Don't recall whether there was a specific form - but there was a table/worksheet specific to transportation workers that was used to calculate the deduction that included the "reimbursed in advance", versus the "allowable daily amount (or 80% of it).

The debate of "who benefits most" from Per Diem pay, is unrelated to the "unfairness of taxation" (taxation is unfair and sucks in ANY FORM) - though in the short run - even for drivers and folks in the sub-$150K income range - without a whole lot of business-related expenses, including un-reimbursed ones - the new code at least tried to "simplify things". The more complicated the tax code is, the less likely the "average taxpayer" will understand it enough to take full advantage of "legal avoidance" to the maximum extent allowed - without paying for "professional help" that tends to cost almost as much as they can put back in their pocket. I think the average single payer would have to really work hard to find in excess of the current standard $12K deduction.

As a business owner, I pay a pretty decent amount to my tax professional (and even at a "friends & family discounted rate" - still comes to $2K a year), but the $$ he keeps in my pocket is well worth the expense.

OTOH - the fact remains - especially under the current tax code, that the COMPANY benefits more by leveraging Per Diem pay, than the driver does.

And I'm not here to argue it. But to get back to the ORIGINAL QUESTION on the discussion (your original question) - the "tax advantage" is to the company - and the driver was (and is) better off NOT taking it (though that's my opinion, based on the way it used to work, and the way it works now). Under the old code, you could "re-capture" MORE of the Per Diem. But people operated under the delusion that it was TAX FREE MONEY - when in fact - is was simply money that was NOT WITHHELD ON - it was still taxable income, UNLESS DEDUCTED (even as a reimbursed business expense - because you had to CLAIM THE EXPENSE to benefit from the reimbursement). Under the old code - the driver actually BENEFITED MORE at tax time by NOT taking Per Diem pay - because you didn't have to "back out" that which you already got (that does show up on a W-2) and risk not overcoming the "standard deduction threshold", whereas - you almost always did if you were able to claim the entire 80% of the daily rate in itemization (along with the other allowable deductions).

We've gotten kind of circular here in the discussion - so I'm done...

Rick

We used to have an internal search function - but thanks anyways. 40 year in IT - think I know how google works

we still do. Its the blank white box below "TRUCKING TRUTH"

We used to have an internal search function - but thanks anyways. 40 year in IT - think I know how google works

we still do. Its the blank white box below "TRUCKING TRUTH"

Totally missed it. Used to say SEARCH in the box. WTF Brett?

Anyways - thanks for the heads up Rob...

Rick