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Car-truck crash fatalities continue to increase 10/14/2019 Friday Short Haul - Amazon's fleet of day cabs, legislator's disclosure, WTA petition 10/11/2019 ATA chief takes on truck-accident lawyers 10/9/2019 Lonely on the road? Get a furry friend 10/7/2019 Friday Short Haul - Lab-grown meat, fraudulent freight brokering, FMCSA HOS committee, FMCSA Clearinghouse 10/4/2019 UPS takes giant leap in its drone delivery program 10/2/2019 Female drivers are safer bet for trucking companies 9/30/2019 Friday Short Haul - Embark gets financing, FMCSA announces safety grants, Covenant exits Mexico routes, and trucking statistics 9/27/2019 Emissions standards battle heats up between the EPA and California 9/25/2019 Smog checks in the future for California truck drivers 9/23/2019 Friday Short Haul - Volvo Dynamic Steering, Meals for 18 Wheels, speeding crackdown, OOIDA opposes legislation 9/20/2019 Telematics could be insurance-premium-saving boon for fleets 9/18/2019 54 percent of survey respondents still not impressed with telematics technology 9/16/2019 Friday Short Haul - Walmart video, it's churn, not shortage, California's independent contractor bill, hemp drivers plea 9/13/2019 TCA honors three Highway Angels 9/11/2019 Now they're talking about "smart" trailers 9/9/2019 Friday Short Haul - Detention-time comments, truck orders decline, diesel fuel shortage 9/6/2019 Berkeley study says reducing independent truckers can alleviate climate change 9/4/2019 Clearing up concerns about the drug and alcohol clearinghouse 9/2/2019 Friday Short Haul - Hurricane Dorian, Speed limiter bill, Thank a Driver campaign 8/30/2019 Georgia jury awards $280 million for truck-driver-caused multi-fatality 8/28/2019 Friday Short Haul - New eCascadias, Top cities for truck driver jobs, Push against driverless trucks 8/23/2019 Decision on California drivers' employee/contractor status coming down to the wire 8/21/2019 UPS jumps on autonomous bandwagon with TuSimple investment 8/19/2019 FMCSA publishes proposed HOS rule changes 8/16/2019 Fleets, drivers coming to like automated manual transmissions 8/14/2019 CVSA asks for new truck crash study 8/12/2019 Friday Short Haul - HOS revisions delayed, AEB mandate proposed, Koch sued for sex discrimination 8/9/2019 Kodiak Robotics takes lead in autonomous truck industry race 8/7/2019 New York City combats rash of cyclist/truck clashes 8/5/2019 Friday Short Haul - CRST wins lawsuit, OOIDA opposes insurance hike, UPSNav 8/2/2019 Mechanics shortage equals driver shortage in intensity 7/31/2019 DOT announces almost 1$ billion in grants to fix infrastructure 7/29/2019 Friday Short Haul - DOL on sleeper pay, UPS drone delivery, Geowiz ELDs 7/26/2019 FMCSA takes a look at assault, harassment of female and minority drivers 7/24/2019 It's hot out there, what's a trucker to do? Can't idle. 7/22/2019 Friday Short Haul - Utah truck rollovers, aging truckers, lifetime CDL bans 7/19/2019 Truck-mounted LED billboards coming under fire 7/17/2019 Trucker 'drones on' with unique approach to teaching driving skills 7/15/2019 Friday Short Haul - Rhode Island tolls, human smuggling, contractor vs employee status 7/12/2019 ELD mandate deadline looming, many still not compliant 7/10/2019 New "boot" device being deployed to threaten Walmart overnighters 7/8/2019 Friday Short Haul - Prime Inc vs Amazon, mother fights HOS changes, truck drivers appreciation week 7/5/2019 Proper way to fly the American flag on your truck this Fourth of July 7/3/2019 Roundabouts are becoming popular; but are they best for trucks? 7/1/2019 Friday Short Haul - Skills test proposal, driver shortage, hemp sentencing, driverless trucks 6/28/2019 Experts warn of active wildland fire season 6/26/2019 More states signing on to enlist truckers against human trafficking 6/24/2019 Friday Short Haul - Shippers of Choice, insurance rates, wheel spikes, WIT award 6/21/2019 Freight numbers not holding up to 2018's highs 6/19/2019 Truck safety group urges purges of drug abuse drivers 6/17/2019 Friday Short Haul - Self-driving certificate, truck platooning, trade war stacking up cargo 6/14/2019 HOS waiver coming soon for fireworks haulers 6/12/2019 FMCSA takes a further look at detention time 6/10/2019 Friday Short Haul - Autonomous delivery, HOS rules changes, CDL retest 6/7/2019 Roadcheck 2019 in effect this week 6/5/2019 Hemp arrest prompts USDA memo 6/3/2019 Friday Short Haul - Waymo big rigs, Move over sting, Under-21 comments 5/31/2019 Severe weather prompts renewed emergency declaration 5/29/2019 Memorial Day holiday is prime time for cargo thefts 5/25/2019 Friday Short Haul - Hauling hemp, road rage fatality, new rules for autonomous vehicles 5/24/2019 Autonomous trucks on USPS test run 5/22/2019 Future era of cab-less trucks will be the end of HOS rules 5/20/2019 Friday Short Haul - FMCSA under-21 comments, Tesla autonomous car crash, 24,000 drivers sign contract with YRC 5/17/2019 Under-21 interstate drivers getting serious look by FMCSA 5/15/2019 Trucker Buddy program matches drivers with a classroom; everyone wins 5/13/2019 Friday Short Haul - Driver awarded $80 million, ODFL driver wins, loading dock black hole 5/10/2019 Storm breaks out from Rockies, slams into Midwest, South 5/8/2019 Capacity issues have shippers looking at private fleets 5/6/2019 Friday Short Haul - HOS rules, dark skies, Falcon drivers 5/3/2019 'Bug' permits now required for four eastern states 5/1/2019 Simulator use is catching on for schools, carriers 4/29/2019 Friday Short Haul - Thinking electric, Penske opens charging station, border crossing crisis, railroads taking trucking business 4/26/2019 ELDs might not be the panacea that was hoped for 4/24/2019 Truck drivers may soon see "phantoms" driving yard trucks 4/22/2019 Friday Short Haul - Nikola big rigs, WIT welcomes Peterbilt, Oregon crashes, Border crossings 4/19/2019 Carriers claim financial benefit of putting up drivers in hotels 4/17/2019 Uber's IPO application reveals interesting data about its freight brokerage business 4/15/2019 Friday Short Haul - CDL examiner arrested, tolls proposed for trucks, marijuana use on the rise 4/12/2019 Smart Load Board will get carriers the loads they need 4/10/2019 Huge lines and long wait times greet carriers at Mexico border 4/8/2019 Friday Short Haul - Marijuana, ATA campaign, personal conveyance rules 4/5/2019 Over-the-air downloads revolutionize parameter updates 4/3/2019 Don't get scammed by skimmers 4/1/2019 Friday Short Haul -- New Cascadias honored, motorist survey, U.S, Xpress awarded, rest stop parking 3/29/2019 Legislators address underride collisions, propose more underguards for trucks, trailers 3/27/2019 Motorists soon may encounter a different kind of truck convoy 3/25/2019 Friday Short Haul -- Women in Trucking, irate motorist, FMCSA eases HOS, Safe-Cap 3/22/2019 Recent survey shows cost of roadside repairs is rising 3/20/2019 FMCSA announces drug and alcohol clearinghouse website 3/18/2019 Friday Short Haul - Swift settlement, driver shortage myth, TCA Best Fleet award 3/15/2019 The hidden danger of looking but not seeing 3/13/2019 Accident scammers target trucks for financial payout 3/11/2019 3/9/2019 3/9/2019 Friday Short Haul - Snow on the roof, bypassing toll road, Waze under fire 3/8/2019 Retailers blame driver shortage for price increases 3/6/2019 Drivers' smartphones may be clue to road roughness 3/4/2019 Friday Short Haul -- Freight rates, HOS changes, tonnage reports 3/1/2019 New tax changes hit drivers hard 2/27/2019 FMCSA to implement under-21 interstate driver program for former military 2/25/2019 Friday Short Haul -- Connecticut tolls proposed, hydrogen fuel-cell trucks, cell phone use 2/22/2019 Congress committee looks at state of America's highways 2/20/2019 Number of cargo thefts is down; but dollar value about the same 2/18/2019 Friday Short Haul -- Crossing the border, CA sues FMCSA, Lobbying against larger trucks 2/15/2019 Detention - A problem still in search of a solution 2/13/2019 February Highway Angels honorees named 2/11/2019 Friday Short Haul -- C.R. England announces pay raises, eCommerce impact on trucking, TCA announces best fleets 2/8/2019 Is a guaranteed minimum pay the solution to the driver shortage? 2/6/2019 Long CDL testing wait times cost economy billions of dollars; not helping driver shortage 2/4/2019 Friday Short Haul -- Walmart hiring, Uber Freight App, Speed-limiter Law, America's Road Team 2/1/2019 Cranking -- The Good, The Bad, and the Ugly 1/30/2019 California survives challenge to its low-carbon fuel standards 1/28/2019 Friday Short Haul - Highway robbery ... autonomous trucks ... new trailers 1/25/2019 LithiumHub enters jump-starter market with Jumpbooster JP30 1/23/2019 2019 Looks Good For The Transportation Industry 1/21/2019 Raymond Burt named TMC Trainer of the Month for February 2018 3/28/2018 TMC Transportation Announces Recipient of Prestigious Wheel Master Award 3/7/2018 TMC Transportation Named The Home Depot’s Flatbed Carrier of the Year For Fourth Straight Year 2/28/2018 Pay Raises & New Peterbilts for PAM Drivers 2/26/2018 New DOT Drug Testing Rules Effective Jan 1, 2018 1/11/2018 Amtrak Derailment: Trucks Haul 270,000 Pound Locomotive Engine During Cleanup 12/21/2017 Pepsi Places Largest Order Yet For Tesla Electric Trucks 12/12/2017 Kavin Hallett named Trainer of the Month for October 2017 12/8/2017 Over 100,000 Truck Drivers Likely Have Undiagnosed Sleep Apnea And More Testing Is On The Way 8/10/2017 Drivers Share Their Best Tips, Tricks, And Secrets For Life On The Road 7/18/2017 Drivers Are Losing Money By Taking The Wrong Approach 7/13/2017 Truckers and Guns: What Is and Is Not Legal 7/6/2017 Preparing To Go Solo For The First Time? Experienced Drivers Share Their Best Advice 6/29/2017 The Truck Stop Survival Guide: Advice From Experienced Drivers 6/15/2017 The Worst Cities For Traffic In The U.S. For 2017 6/8/2017 We Ask Drivers How They Would Make The Logbook Rules Better 5/30/2017 Self Driving Trucks Are Not Coming Anytime Soon 5/25/2017 11/30/-0001

New tax changes hit drivers hard

Dave Wickenhauser on Wed, February 27, 2019

Last Updated: Tue, April 16, 2019

Anybody want to take a wild guess at what occupation is featured in just about every news story these days about taxpayers getting less refund from their tax return now that we are well into tax preparation season?

If you guessed truck drivers, particularly what are called W-2 drivers, you'd be right on the money … no pun intended.

Company (W-2) drivers

That's because fleet drivers, like a lot of other company workers who have un-reimbursed expenses, and whose income is reported on a W-2, can no longer deduct their daily expenses of meals, cell-phones or other common expenses used in doing their jobs that were deductible until this year's new tax laws went into effect.

That decrease in withholding refunds for drivers because of taking away the deduction, along with that of others similarly affected, has resulted in the average refund being down in early February by 8.7 percent from 2018.

The situation is different, however, for owner-operators, many of whom will enjoy a greater refund, and the carrier companies themselves who, as Class C corporations, benefit from a huge tax break.

FleetOwner asked Equinox Business Solutions to explain how the new tax laws affect the different types of drivers.

Equinox Business Solutions reported that tax liability for company drivers across the board has gone up between $600 and $1,000 this year. This is because drivers are no longer able to deduct on Form 2106 the costs of their phones, meals, gloves and other incidentals; which used to mean an average $15,000 deduction for a long-haul driver who is on the road most of the year.

The new increase in the personal exemption to $12,000 does not cover that loss for many drivers.

Team drivers, like married couples, who file jointly are hit even harder.

"If you have a team, like a husband-wife team, filing jointly, that is causing a real big impact on them, especially for families that have more than two children. Because of the exemptions that are going away, they’re no longer able to claim those exemptions, and that’s causing a big increase in their taxable income as well," said Colton Lawrence, owner and president of Equinox Business Solutions.

“You've got this group of company drivers that, between being impacted on the per diem and then perhaps not being able to take the same level of deductions for the number of children that they have, and they’re getting hammered. We’ve seen taxable income go up by as much as $20,000, $25,000 for large families between that and the per diem."

A workaround

There is a workaround for company drivers, but it requires the cooperation of the carriers they drive for. The workaround is where the trucking company classifies as per-diem pay a percentage of what they pay their per-mile drivers for the miles that they drive.

Drivers do still get the same pay per mile, but it is split out between taxable income and non-taxable per-diem pay, resulting in an overall lower taxable income for the year.

"A driver's overall pay remains the same but their taxable income goes down, and so in essence, they’re able to take advantage of the per diem deduction just simply by the way the motor carrier is paying them," Lawrence explained.

Some of the larger carriers are already implementing such strategies.

For example, Schneider, one of the top 5 largest trucking companies, has detailed information on its website explaining how its per-diem pay program works.

Their program combines a standard mileage rate with a non-taxable per-diem reimbursement which results in larger weekly paycheck for drivers.

Schneider computes the pay difference for a sample driver who logs 2,250 miles a week, and gets paid $.49 per mile. If that driver is in the per-diem program his or her pay would split to $.30 per mile taxable, and $.17 per mile non-taxable.

The end result at the end of the year between the two pay methods is considerable:

Weekly take-home pay, minus all the taxes and deductions, would be $697.59 for the standard mileage pay. But that would increase to a weekly take-home pay of $809.59 for drivers in the per-diem pay program. That's because less withholding is taken out due to the non-taxable portion.

According to Schneider, that would result in almost $6,000 more annual take-home pay for per-diem company drivers. They claim that 90 percent of their drivers could benefit from this program. There is a downside to accepting part of their paychecks as non-taxable per-diem pay in lieu of taking it all as standard mileage pay.

Schneider explained that making part of their driver mileage pay non-taxable will have a slight effect on their personal time-off pay – less than $50 per year per week of vacation time.

Also, the non-taxable portion will slightly reduce the social security, unemployment and workers’ compensation benefits that accrue. For example, it would be about $10 per month less social security for every year the driver is in the per-diem program.

And the per-diem portion of a driver's pay is not part of what is matched by the company for 401(k). Schneider says, however, that drivers can fund a higher amount from the extra take-home pay that they receive.

Owner-operators

Owner-operators actually might come out ahead because of the tax changes concerning per-diem expenses.

"Beginning Oct. 1, 2018, their per diem increased from $63 a day to $66 a day in the US." It's about five dollars higher for trips to Mexico and Canada. "That change alone, over the course of a full year, will reduce their tax liability by about $200 to $300," Equinox's Lawrence said.

Another benefit for owner-operators in addition to the per-diem increase is that they also get to take an additional 20 percent deduction on top of what they normally compute for their fuel, per diem, maintenance and repairs, etc.

Trucking companies benefit

The big windfall in the new tax plan goes to trucking companies because the corporate tax rate has dropped from 35 percent to 21 percent. There is no run-out time for the change, either. The new rate is permanent.

A word of advice

Besides workers like truck drivers who are seeing smaller refunds because they can no longer deduct un-reimbursed expenses, there is another group of people who are seeing smaller refunds this year. According to an article at Yahoo Finance, this is an easy fix.

Most taxpayers, according to the article, didn't realize that the tax change resulted in their withholding rate being adjusted. There was less withholding taken out to reflect the lower tax rates. However, they still experience a decrease in refund due to other changes in tax law, like reducing or eliminating certain deductions … as truck drivers experienced.

It is recommended that everyone take a look at the W-4 they have registered with their companies and make adjustments if their refund fell short of expectations this year.

Sources: Fleet Owner, Schneider, Yahoo Finance

Tagged Under:

Advice For New Truck Drivers Food & Eating On The Road Owner Operator Per Diem Pay Truck Driver Salary Truck Drivers Tax Questions

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