One deduction that I see truckers miss a lot is ATM fees. ALWAYS get your receipt, and save it. You can deduct all those fees they tack onto the ATM at the end of the year.

A good reason to use a debit or credit card for all purchases on the road is that it created a good record of your expenses along with the dates. Some cards give you a summary at the end of the year for tax purposes. You can also use a spreadsheet or get some trucking specific software to help track all of your road expenses. You can put your expenses into the system weekly or daily and everything will be well organized. I put all of my receipts in an envelope after each run. That way it keeps everything together should I get audited. And I would not suggest you deduct anything that you are not legally entitled. You are only asking for trouble. The IRS has decided to scrutinize those in this industry more carefully according to one lady I spoke with about a year ago at the IRS office. You might want to go by and speak with them. Some of them can be quite helpful.

Per diem pay absolutely does reduce the amount that you can deduct. The money is tax-free precisely because it is considered a reimbursement of expenses, rather than income, under the tax code. Reimbursed expenses are not deductible by the employee. (Good luck submitting those scale tickets that your employer already claimed, BTW.)

Essentially, you figure the deductions as if you never received per diem pay and then reduce that amount by any per diem pay that you received.


We generally deal in either actual expenses (for incidentals) or a daily rate (80% of $52 for meals), rather than the "standard mileage rate" in this example, but the same process is followed.

Who said it didn't?

You yourself may have understood that, after taking the deductions "the same way you would," you then have to adjust downward for per diem pay. Your reply however, especially when directed to someone who is clearly clueless about the whole process, seemed to indicate that he could have his cake and eat it too.

Since the per diem pay shows up on ones' W2 on line 1 as wages, tips, or other compensation, it's kind of hard for them to "have their cake and eat it too." The income tax withheld on line 2 will be less for someone receiving a portion of their pay as per diem pay in relation to what appears on line 1 than someone who is not receiving per diem pay.

Per diem pay is a reimbursement of expenses, not income. Not wages, tips, or other compensation, not taxable income, not anything. It reduces the amount that you can take as a deduction because it has already been effectively deducted (by never having been "earned" in the first place.) It doesn't appear on your W-2 at all unless the reimbursement was excessive, in which case only the excess goes on Line 1. Most plans give the employee an amount less than the allowable deductions would have been, so there is no excess to report. If you take the deductions "the same way you would if you weren't receiving the per diem," then you will be double dipping. In essence, you're trying to deduct expenses for which you have been reimbursed. That's illegal.

The years go by and you still have this one wrong. You're on the right track in referring to Publication 463, at least.

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If you have $17,000 in deductions and you get $10,000 in per diem pay, then you can deduct $7,000.

If you have $10,000 in deductions and you get $10,000 in per diem pay, then you can't deduct anything.

If you have $10,000 in deductions and you get $12,000 in per diem pay, then you have to repay the excess $2,000 to your employer. If you don't repay the excess $2,000, your employer has to report it on Line 1 as income and you can't deduct anything. (Your employer probably has no realistic way of knowing what your deductions would be, so you had better make sure you find at least enough in deductions to justify your per diem pay. The IRS has been scrutinizing these types of plans pretty closely in recent years and these types of excess reimbursements are a target.)

I'm not getting into another month-long debate on the subject, so I'll just suggest to the original poster that he not take anything on this message board as anything more than chatter on a message board. "Some guy on the internet told me I could" would make a lousy defense in the case of an audit.

You're quoting the wrong one. The one you have the yellow box around is for employers who require the excess to be returned. Since most employers pay $52 per day in per diem, which is higher than the federally allowed amount of 80% of $52 per day, the excess would be reported in box 1, and the amount up to the federal rate would be reported in box 12. The last scenario on that table is the one that applies.

Your employer knows exactly what your deduction is. It's 80% of $52, or $41.60 per day. Since they are over paying by $11.40 per day, that $11.40 should be appearing in box 1, and the $41.60 should be in box 12. What deductions you have above and beyond the meal expense allowance have no bearing on your employer at all (unless they also reimbursed you for them).

That's the whole reason employers offer (and many times require) per diem. It allows them to "borrow" and overdeduct your meal allowance. They write off $52, but you can only write off $41.60. That's extra money they don't have to pay employment taxes on. They shift the burden of the taxes to the employee. In many cases, the employee thinks (and are being sold) they are getting this tax free money. In reality, they are getting untaxed wages that they will eventually have to pay taxes on. The employer is the only one who wins.

Why the IRS does the 80% of $52 garbage is beyond me. If the deduction is $41.60, then say the deduction is $41.60.

"Up to the federal rate" is not a complicated phrase...
Tables 3&4 of Publication 1542 have a boatload of different rates for different localities, anywhere from $39 to $64. We don't tend to use those, but we could. Or, under high/low (Tables 1&2), the rates would be $45 and $58. We don't tend to use those either, but we could. We tend to use the middle option, the standard meal allowance, which also can have a great number of variables, since it uses the same Tables 3&4.
(Note once again - "The federal M&IE rate," not 80% of the federal M&IE rate.) If we prefer not to use the tables for this method, we can (as in, have the option to) take out most variables by using a single standardized rate. This is what most of us tend to do and this is where the $52 figure shows up.
"Standard meal allowance of $52 a day," in plain English. No mention of 80% of $52 a day. Why? Because the 50% rule only applies to expenses being deducted. You can't deduct any expenses that have already been reimbursed (aka "have your cake and eat it too"), and per diem pay is a method of reimbursement.

If they give me 10 cents a mile in per diem pay, then I can drive 520 miles a day before exceeding the federal rate. Maybe I drive 600 miles a day Monday-Friday and take weekends off at home. Then I've been overpaid by $8 a day and I'm required to repay the difference. Nothing goes on my W-2 if I repay the money, but $8 per day goes in Box 1 and $52 per day goes in Box 12, code L if I fail to repay it...
Maybe they pay me $52 a day but I spend most of my nights in high cost areas where the federal rate is more than $52. Then none of my per diem pay has to be reported anywhere on my W-2 and I can still deduct the difference. This is the very straightforward part of the publication that you apparently refuse to acknowledge...
Maybe they pay me $26 a day but I only spend half my days away from home. At the end of the year, it looks like I had my allowable $52 per day. Technically though, I should be taxed on the full $26 for days that I wasn't on the road. I would also have a deduction for the excess $15.60 ($52 x 80% = $41.60 allowed, then reduced by the $26 that I already got) in expenses for days that I was on the road.
Companies get into trouble when they routinely overpay people and have no mechanism in place to track or recover the overpayments. Since only an amount up to the federal rate can be considered as substantiated by the per diem method, you would have to provide actual receipts to justify higher amounts. When they have no receipts to justify the overpayments and no consistent method for recovering overpayments, the plan is nonaccountable and every dollar, not just the excess, is 100% taxable as income.

Life would be so much simpler if we went to a flat tax with no deductions. Perhaps a 5% tax would be good.:thumbsup: