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What Is Per Diem Pay For Truck Drivers?

by Patrick Netzel

Important Facts About Per Diem Pay For Truck Drivers:

  • Getting paid per diem usually means that your paycheck will be split into 2 parts: your regular pay which is taxable income and your per diem pay.
  • Per diem pay for transportation workers is not technically 'untaxed income'. It's a non-taxable reimbursement for meals and other incidental expenses. This distinction can be important and we'll explain why in a minute.
  • For income tax purposes, getting paid per diem will reduce a driver's gross income, thus reducing the amount of taxes they owe to the IRS.
  • Receiving per diem pay means that a truck driver cannot take the "standard meal deduction" when filing their yearly income taxes.
  • Most drivers will take home almost exactly the same amount in the end after taxes whether they get per diem pay or not.
  • See Also: Per Diem Truck Driver Pay

What Does Per Diem Pay Mean For Truck Drivers?

Getting per diem pay means that a driver can immediately recoup some of the expenses they incurred for meals in each paycheck instead of deducting them at tax time and being reimbursed.

  • Translated literally, per diem is Latin for "per day". An allowance or payment made for each day.
  • The IRS Publication 463 - Travel, Entertainment, Gift, and Car Expenses allows for a "standard meal and incidental expense" deduction for those in the industry. Its aim is to eliminate the need for drivers to itemize their expenses when filing their taxes.
  • If a driver did not receive per diem pay they would do one of two things at tax time. You either save all receipts for meals and incidental expenses and deduct 80% of those at tax time. Or you would take the IRS "standard deduction" which is currently $59/day.
  • A driver's logbook can be used to verify you are elgible for per diem pay by demonstrating the amount of time you spent on the road during the year.
  • The drivers paycheck is split into 2 parts: regular cents-per-mile earnings (taxed), and seperate per diem reimbursement (untaxed).
  • Most commonly, companies who use per diem pay will pay drivers a slightly lower cents per mile (CPM) rate, but a certain percentage of that pay will be included in the drivers paycheck untaxed.
  • If you are unsure about the details or implications of per diem pay, please consult with a tax professional or an accountant. They will be well-versed and up-to-date on the ever-evolving laws and regulations.

What Are The Pros And Cons Of Getting Per Diem Pay?

Because everyone's situation is a bit different, it is up to the driver to decide the best way to handle per diem pay, assuming they are even offered a choice. As per diem pay has gained popularity with trucking companies, many require their drivers to accept it as a condition of employment.

  • Per diem pay will reduce the amount of gross income that a driver reports. This could negatively affect certain things that are dependent up a certain level of income, such as loans, credit, and mortgages.
  • In the long run, per diem pay could decrease retirement benefits, such as Social Security benefits and Medicare. It will also impact an individuals Unemployment Insurance benefits, should they be needed.
  • At the same time, lower gross income could positively affect someone's eligibility for public assistance, student grants and loans, or lower insurance rates.
  • Truck drivers who receive per diem pay are not eligible to take the standard deduction, as it is technically a reimbursement and does not count as income, anyways.
  • If a drivers per diem pay is more than what the IRS currently allows for the standard meal and expense deduction, the driver will be responsible for paying taxes on the overage.

Why Do Trucking Companies Pay Their Drivers "Per Diem"?

  • The company benefits because they are technically paying lower wages. The lower their wages, the smaller their share of payroll taxes owed to the government.
  • Many companies will require drivers to take per diem, others will simply encourage it. It's important for the driver to do their homework and decide what is best for themselves.
  • In most cases, drivers will take home around the same amount of money whether they get per diem pay or not.

IRS Qualifications For Truck Drivers To Be Eligible For Per Diem Deductions.

The IRS has established specific criteria for transportation workers to claim the standard meal and incidental expense deduction on their taxes:

You must be employed in the transportation industry, and your job must keep you away from home on a regular basis. Long enough for you to sleep away from home.

Your job must directly involve moving goods or people by truck, train, bus, ship, airplane or barge.

Logbook:

A written or electronic record of a driver's duty status which must be maintained at all times. The driver records the amount of time spent driving, on-duty not driving, in the sleeper berth, or off duty. The enforcement of the Hours Of Service Rules (HOS) are based upon the entries put in a driver's logbook.

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

Per Diem:

Getting paid per diem means getting a portion of your salary paid to you without taxes taken out. It's technically classified as a meal and expense reimbursement.

Truck drivers and others who travel for a living get large tax deductions for meal expenses. The Government set up per diem pay as a way to reimburse some of the taxes you pay with each paycheck instead of making you wait until tax filing season.

Getting per diem pay means a driver will get a larger paycheck each week but a smaller tax return at tax time.

We have a ton of information on our wiki page on per diem pay

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
by Brett Aquila

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