How Does Per Diem Work for Truck Drivers?

how does per diem for truck drivers work?

Per diem for truck drivers is one of the key benefits that trucking companies offer to lure in serious drivers. Truckers should know and understand truck driver per diem law and how it impacts them.

What is Per Diem for Truck Drivers?

The IRS offers a reimbursement program plan for truck drivers. As a driver, you’re away from home often and will have to incur incidental expenses and meal costs. You’ll receive more take-home pay.

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Compensation may be broken down by the employer, and Schneider does this by allowing for:

  1. Taxable linehaul rate
  2. Non-taxable per diem rate

Breaking down compensation makes tax season easier for drivers. Since a portion of your wages is non-taxable, you’ll have a higher weekly paycheck.

You’re entitled to per diem in the following cases:

  • Overnight stays
  • Motel expenses

Deductions of expenses will include expenses that are necessary for your job yet not reimbursed by your employer. You may be able to deduct:

  • Cell phone
  • Uniform
  • Maps
  • Gloves
  • Other items

You can also deduct any expenses that you incur when cleaning your vehicle. Window cleaner and paper towels are just two of the items that may be deducted come tax season.

Per diem rates are outlined by the IRS and listed for you to read on Tax Slayer.

Per Diem for Travel Expenses

Owner-operators and self-employed drivers can deduct certain items as “travel expenses.” The rates are:

  • 80% of $66, or $52.8 per day in the continental United States
  • 80% of $71, or $56.8 in Canada or outside of the continental United States

You will have to meet a few requirements to be able to benefit from the per diem rate:

  • You’ll be sleeping away from home during the course of your work
  • You’ll have to be away from your “tax home” for longer than a normal workday

Employee drivers cannot benefit from these per diem rates.

Instead, employee drivers are eligible to deduct the expenses necessary to fulfill their job as listed previously. All drivers are able to deduct:

  • Licensing fees
  • Association fees

You’ll be able to deduct your continuing education, association and licensing fees from your taxes.

Incidental expenses are capped at $5 per day for any travel.

In 2017, tax reforms were put in place that change the way truckers are able to deduct certain expenses. If you’re planning to reenter the trucking industry, you will want to consider the advice of a tax professional to discuss whether per diem is a good choice for you.

Per Diem Trucking Advantages and the Impact on Taxes

truck driver per diem rates
Tax preparation form US 1040 and tax tables with pen and calculator, generic (no year specified)

Per diem rates for truck drivers can be very advantageous. Truckers benefit from:

  • Increase in weekly take-home pay
  • Less taxes withheld
  • Reimbursement for meals and incidentals

Drivers will have their paycheck split into two main parts, in most cases:

  • Taxable income
  • Non-taxable income

Based on the different incomes that you will receive, taxes can become very complicated. You will want to work with a tax professional to help you reduce your gross income for driving, but it is also important to understand that you’re not technically receiving untaxed income. It’s a non-taxable reimbursement that you’re receiving, so it is complicated come tax season.

You will also not be able to receive your standard meal deduction that most truckers include during their yearly income taxes.

Oftentimes, truckers will make around the same amount that they make after taxes whether or not they get per diem pay.

It’s very important for you to keep your logs in order. A driver logbook will allow you to determine which days you’re eligible for per diem pay based on the amount of time you spent on the road.

In most cases, you will receive slightly lower cent per mile rates, but a portion of this will be untaxed in your paychecks so it equals out at the end of the day. Trucking companies will be able to save some money by offering per diem, and others will recommend that you take it but not force you to take a per diem rate. It’s important for you to fully understand what a per diem rate may mean for you as a driver if you’re taking a lower rate per mile.

When you do take the per diem for truck drivers, you will have some disadvantages that are minor but should be considered. These disadvantages include:

  • You will be paying less into your Social Security, workers compensation and unemployment benefits. Paying less will have a small impact on your benefits in the future, but this equals about a $120.00 per year difference.
  • You will not be able to receive the 401(k) matching for your per diem portion of your pay. This means that you will have less in retirement savings, depending on the trucking company that you work with.

As an owner-operator, you should be using a tax professional if you claim per diem as a driver. You will benefit from slightly less taxable income, but you’ll also be able to enjoy a slightly higher paycheck and other benefits.

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