[jjohnwinston]

I feel like a complete idiot for asking this. I am about half way through school and beginning to check out various carriers. I hear alot about "per diem." I am ashamed to say I do not know what the heck they are talking about. Some say I should and others say no. It would be easier if I new what they were talking about. While I am on the subject, how much in expenses (meals, shower, etc) can a company driver claim on his or her taxes. Any help you could offer would be greatly appreciated. :?: [/b]

[ssoutlaw]

This ones for you REV, you did so well with all the other ones who asked about this same subject.....lol

[Rev.Vassago]

Thanks for the vote of confidence, ssoutlaw. 8)

Originally Posted by jjohnwinston

I feel like a complete idiot for asking this. I am about half way through school and beginning to check out various carriers. I hear alot about "per diem." I am ashamed to say I do not know what the heck they are talking about. Some say I should and others say no. It would be easier if I new what they were talking about.

Per diem can stand for two different things.

1. You are allowed a deduction on your taxes for meal expenses while on the road. This amount for 2006 was $52 per day for every full day you are on the road, and you can take 75% of that amount. For partial days on the road, you can take 75% of that 75%. This only applies to drivers who spend nights away from home. This is also called a "standard meal allowance".

2. Some companies will pay you something call "per diem pay". Basically, they are taking your per diem deduction, and giving you a set amount of your per-mile wage tax free. While this can seem like a good thing, it can quickly turn south without proper planning. If they pay you too much per diem pay, then you are responsible for all taxes on the balance. If they pay you too little, you still have to take your per diem deduction to get the remainder. That is also money that is not considered wages, and therefore can hurt your social security. A qualified trucking accountant should be able to walk through the per diem pay options that any trucking company offers, to see if they are worth it.

While I am on the subject, how much in expenses (meals, shower, etc) can a company driver claim on his or her taxes. Any help you could offer would be greatly appreciated. :?:

Meals are only deductible under the per diem deduction (otherwise known as the standard meal allowance). You could save every receipt for food that you eat all year, but the standard amount the IRS allows is more than adequate to cover it all.

Showers are fully deductible if you pay for them (you shouldn't have to pay for many if you get the cards that all the major truckstops offer). Any expenses for the truck, such as company-specific uniforms, gloves, any tools, cleaners, oil, coolant are deductible. Hotel rooms, cellular phones, internet access, postage, faxes, truck washes, laundry are all deductible as well. If you do truck washes yourself, you cannot deduct anything for the time that you put into it - only the cleaners.

Just remember - most tax preparers don't deal with the specifics of trucking, and don't know the various things that can be deducted. Trucking is probably the only profession where you can deduct showers, for example. Every other profession other than trucking has a different meal allowance as well. If you are going to have your taxes prepared, shop around for a quality preparer. Keep good records of your expenses. This really holds true if you are preparing your taxes yourself.

[Uturn2001]

"per diem" as used in the most common way is basically an advance on your meal allowance that you can claim at the end of the year.

How it most often works is that a portion of your pay is not taxed. For example if you have a base pay rate of 30 cpm with a 7 cpm per diem 23 cpm is taxed and 7 cpm is not taxed. Your take home pay will be more but there is a downside too.

Where this can hurt a driver is when it comes to workers comp (if you ever have a claim) SSI, loans, and anything else that is based on your taxable earnings. Since you have had a portion of your pay claimed as non taxable your taxable earnings are lower.

My suggestion is this: If the company you are going to work for offers straight pay and per diem pay, take the straight pay. Do not discount companies that only pay per diem for this reason alone however.

At the end of the year, currently, a driver may claim 75% of a standard deduction of $52 per day for every full day (24 hour period) that they are away from their tax home. You do not need to keep reciepts for this but you do need to keep your log books as proof you were away from home for the number of days you claim. You also have the choice of claiming actual expense if you wish and then you must keep reciepts. You can also claim showers on top of this and any business related expenses that are not reimbursed by your company. Be sure to save the reciepts.

As far as showers go, it should be rare that you ever have to pay for one. Most truck stops offer free shower credits if you "buy" 50 or 75 gallons of fuel. These credits are usually good for anywhere from 3-7 days depending on truck stop chain and are good at any of that chains locations.

When you get on the road ask for a driver reward card from all of the truck stop chains your company fuels at. Your shower credits will be loaded on to these cards and some of them also offer store credit that can be used to purchase item at that truck stop chain.

[TruckinRanger]

In short simple terms I would not take a companies per diem rate. I would just add up all the days I've been away from home multiply by 52 and then by .75. This is your per diem. It is easier to track and file for taxes this way. Otherwise as the Rev say it can get quite sour and head south.

[merrick4]

Originally Posted by Rev.Vassago

If they pay you too much per diem pay, then you are responsible for all taxes on the balance. If they pay you too little, you still have to take your per diem deduction to get the remainder. .

Could you please explain this part? Where I work that pay me at an abusive rate of 28 cents per mile of which 9 cents is per diem. I was told that I don't have a choice in this. I still deducted my other expenses like gloves, cooler, cb etc. but I would have like to have been able to take more of the per diem deduction.

[jjohnwinston]

I really appreciate the input from all of you. This was of tremendous help. As a "Newbie" I very concerned about the degree to which various carriers would seek to take advantage of my ignorance. As a retired Peace Officer I generally know when I am getting jerked around. On the other hand, this is a brand new experience for me. So, I am very grateful to this website and those who post for giving me a heads up with wise counsel. Stay safe and I am sure we will running (not literally) into each other on the road.

Where I work that pay me at an abusive rate of 28 cents per mile of which 9 cents is per diem.



holy crap that's bad wages.. The race to the bottom is in site. Wait to the Mexican trucks arrive next month.

[Rev.Vassago]

Originally Posted by merrick4

Could you please explain this part? Where I work that pay me at an abusive rate of 28 cents per mile of which 9 cents is per diem. I was told that I don't have a choice in this. I still deducted my other expenses like gloves, cooler, cb etc. but I would have like to have been able to take more of the per diem deduction.

When you file your taxes, you are still responsible for calculating out your standard meal deduction of 75% of $52 per day. The amount that the company provides as a per diem is SUPPOSED to equal that amount. If they paid you too much, then that is considered taxable income. If they paid you too little, then you still have some of your deduction to take (but probably not much).

So, in your example, if you drove 100,000 paid miles last year, and had $0.09 per mile as per diem, then you had $9000 of your income paid as per diem.

Now, on your taxes, you caclulate out how many full days you were out on the road (partial days don't qualify for the full 75% of $52 per day). Let's say you were out 300 full days last year. 300X52X.75= $11,700 standard meal deduction.

Now, the $9000 that the company paid you is considered untaxed income. The $11,700 standard meal deduction will offset all of it, plus an additional $2700.

You are still going to have to take the standard meal deduction on your taxes, even if you are paid per diem pay. In fact, you'll have a few extra steps involved because you have to include that additional untaxed income on your taxes.

Why do companies do this? Because it's a huge writeoff for them. When a company pays you wages, they must pay taxes on your wages, above and beyond the taxes they charge you for. By taking that per diem amount of your income, and not considering it wages (but rather a writeoff), that is a large amount of income that they don't have to pay wage taxes on. Plus, a lot of these companies who give the option of per diem pay will dock the driver 2-4 cents per mile for the privilege of giving the company a tax break.

[merrick4]

Thanks a lot Rev. Acutally this one response has cleared up a lot of things I didn't understand about this whole per diem thing.

I did my taxes this year just recently but it really wouldn't have mattered cause I just started OTR November and only went solo in December. But i'll be keeping track of all this for next tax season. I'll need to as I expect a heavy tax bill next year due to an investment I made.

I actually don't mind the per diem too much. I'm not charged a fee which I wouldn't be paying anyway; I'd flat out refuse. I know it does mess with the wages and it affects social security and all that, but I figure that if I have to rely on Social Security when I'm older that I took a serious wrong turn in life. And as for banks and all that, a great credit score fixes a lot of that. Although for instance if you did a no ratio or a no doc mortgage than you would have to pay a slightly higher interest rate.

Again thanks for the response, I really appreciate it.