23 Sep What does per diem mean for truck drivers?
The most recent per diem regulations were passed in 2017 and immediately took effect for the next year’s tax season. Although that was four years ago, there is still a lot of confusion about the changes in per diem for truckers.
Since there is a lot of information and misinformation out there, we decided to make it clear for our readers once and for all.
What is Per Diem for Truck Drivers?
Per diem for truckers is a non-taxable reimbursement for meals and other incidental expenses transportation workers can have while they’re on the job. To be paid per diem means that your check is split into two parts – your regular pay (which is taxable income) and your per diem pay.
Hence, per diem is not taxed or counted as part of truckers’ gross income. However, like every other non-taxable expense, it has its limitations set by the IRS. For instance, receiving per diem pay means that a trucker can’t take the ‘standard meal deduction’ when he files for his yearly income taxes. Also, most truck drivers take home almost the same amount in the end after taxes, whether they received per diem pay or not.
What Does Per Diem Mean For Truck Drivers?
Receiving per diem pay means that a truck driver can promptly recoup some of the expenses he incurred for meals in every paycheck, instead of deducting it at tax time and being reimbursed.
The IRS allows for a ‘standard meal and incidental expense’ deduction for those working in the industry since the goal is to eliminate the need for truck drivers to itemize every single expense when filing their taxes.
If a truck driver fails to get per diem pay, he can do one of two things at tax time. He can either save all receipts for meals and incidental expenses and deduct %80 of those at tax time, or he can take the IRS ‘standard deduction,’ which is currently $59 per day.
Why Do Trucking Companies Use Per Diem?
Trucking companies benefit from paying per diem because they are technically paying lower wages. The lower the wages, the smaller the share of payroll taxes that they owe to the government. Some companies require truckers to take per diem, and others encourage it. As a trucker, it’s essential that you do your homework and decide what is best for you. Keep in mind that, in most cases, truckers take home the same amount of money with or without per diem pay.
Benefits of Per Diem
While the main benefit of receiving per diem pay is undoubtedly getting the payment right away for your daily expenses, per diem also reduces the amount of the trucker’s gross income, which may increase eligibility for public assistance or student loans.
We hope we made this as short and concise as possible. If you are unsure about the particulars or implications of per diem pay for truck drivers, we invite you to contact the Golden Tax Relief team.