Everything About Per Diem for Truck Drivers
Working in the transportation industry can be challenging, with drivers often misinformed when it comes to compensation. New per diem regulations for truck drivers are the perfect example. While this form of reimbursement was adjusted in 2017, there is still a lack of clarity surrounding the definition, implications, and expectations of per diem payments for truck drivers.
Let’s take a detailed look at per diem rules to help you make every dollar count.
What Does Per Diem Mean?
When you break it down, the new per diem rules are really quite simple. As a form of compensation, per diem is the money given to truck drivers to reimburse what they spend on overnight accommodation, meals, and other expenses on the road. Despite its lofty Latin title, per diem simply means “per day” — because it describes a set amount of money reimbursed for a 24-hour period.
How does Per Diem for Truck Drivers Work?
From a practical perspective, per diem changes the way you are paid, as your paycheck is split into two parts. The first part represents your regular taxable take-home pay, and the second part reimburses you for certain expenses on the road. However, while per diem pay is designed to compensate you for expenses, the amount of money you receive is related to the number of miles you have driven.
Per diem pay is not technically a form of income. Instead, it is a non-taxable form of reimbursement. You still have to pay for your own meals and accommodation, with your company paying you back. Per diem money is not considered as taxable income, which has a number of implications for truck drivers.
Truck Drivers Per Diem Tax Implications
IRS Publication 463, Travel, Gift, and Car Expenses allows for a “standard meal and incidental expense” deduction for people working in the transportation industry. The updated per diem regulations come from the 2017 Tax Cuts and Jobs Act, which changed the rules for company drivers compared to owner-operators. Per diem pay reduces your gross income, which means you are likely to owe less money in taxes or get a bigger tax refund.
Whether you own a truck or drive for the company, per diem will impact your taxation obligations.
Per Diem for Self Employed Truck Drivers
The new per diem rules are a huge benefit for owner-operators, as you can claim per diem expenses at the higher standard deduction rate. Truck driver per diem tax deduction is more complex for owner-operators, however, as you need to itemize all your costs daily and fill in your forms correctly when tax time comes around.
Per Diem for Company Drivers
Things have changed substantially for employees, with company drivers no longer having to itemize their own deductions. While you still get paid for your expenses on the road, you will receive a set amount as a standard deduction. This sum doubled under the Tax Cuts and Jobs Act, with some trucking companies also increasing their cents per mile (CPM) per diem rate.
How Much Per Diem Pay Should I Expect?
The amount of per diem money you can expect to receive depends on your company. As an owner-operator, you can claim per diem expenses in your taxes at the end of the year for a bigger refund. Things are different for company drivers, who face the following two possibilities:
- If your company reimburses your expenses, then you are getting per diem benefits. This reduces the amount of gross income that you report, and you can no longer claim the standard deduction.
- If your company does not reimburse your expenses, you can no longer claim expenses as lost income. Instead, you can claim the new higher standard deduction.
There are some eligibility criteria for per diem deductions, however, so check with your company first. You must be employed in the transportation industry, and your job must keep you away from home on a regular basis. Additionally, how long you’ve been with the company and the number of miles you’ve driven can come into play. While not all transportation companies have a per diem plan, the new rules can benefit both drivers and owner-operators.
Logity Dispatch provides dispatching services for owner-operators and truck fleets across the United States. We are proud to support the transportation industry and always prioritize the hardworking people who drive the country forward. If you would like to learn more about our services or company, please contact our team.