26 Jun What Is Per Diem Pay for Truck Drivers
Each industry is different, and each has its rules when it comes to taxes. However, the trucking industry is arguably the most distinct and yet the one for which there are not enough resources online that can provide easy answers.
We at Golden Tax Relief always aim to help the trucking industry and especially the drivers who require the most help.
With that in mind, we wanted to give you an adequate and easy-to-understand explanation of what per diem pay for truck drivers is.
The Definition and Benefits
The per diem pay for truck drivers is a reimbursement method designed by the IRS. Its purpose is to cover the meals and other incidental expenses truckers have to make while they are on the road.
The main benefit of per diem pay is that it allows truckers to take home more income as fewer taxes are withheld.
When you’re paid per diem, it essentially means that your paycheck is split into two distinct parts:
- The regular pay, i.e., the taxable income
- Per diem pay, i.e., the nontaxable salary
However, it would be wrong to say that per diem pay is the same as nontaxable income. In reality, it’s reimbursement for the meals and other expenses you made on the road, which are nontaxable.
It does sound like untaxed wages, but when you consider income tax, with per diem pay, you receive reduced gross compensation, which subsequently reduces the tax you have to pay.
When getting paid per diem, you cannot take the standard meal deduction when you file your taxes, but that doesn’t mean that you get less money. In reality, getting paid per diem is the same as getting regular pay, as you take the same amount of money home in the end.
The difference is that you get to immediately recoup most of the expenses in the paycheck instead of deducting them when you pay taxes.
What Is the Point of Per Diem Pay?
After reading all of this, you’re probably wondering about the point of per diem pay for truckers?
Well, the idea is that it eliminates the need for itemizing expenses when you file taxes. Without per diem pay, you would have to save all receipts for meals and other costs and then deduct 80% of these when you file taxes. It essentially makes things much easier for drivers.
It’s usually the companies that employ truckers who benefit the most from per diem pay, and many will require their drivers to take them. That’s all because they get to pay fewer taxes to the government with per diem payments. As for the drivers, the amount of money they get usually remains the same, whether they have per diem pay or not.
If your company is not making you take per diem pay, it’s up to you to decide whether or not you need it.
If per diem pay is still unclear to you, or you need some more answers when it comes to taxes in your industry, feel free to contact us at Golden Tax Relief whenever you want.