Taxes: OTR. What's Deductable, Whats Not, And What Receipts Should I Keep?

So if I DO get a portion of my pay as per diem , can I also take the standard household deduction?

So if I DO get a portion of my pay as per diem , can I also take the standard household deduction?

Not 100% sure on this - I believe you have to itemize to take the per diem deduction. But - between per diem and other non-reimbursed expenses, you might be better off itemizing (versus the standard deduction) anyways - as your deductible expenses will certainly exceed the standard deduction.

"Standard Deduction" is for people that don't itemize - it's a gimme, whether or not you actually have deductions that you can prove.

OTOH - the per diem pay, even though it shows up on W-2 as non-taxable-income (as in, you don't pay taxes on it, but neither does YOUR EMPLOYER), it is STILL INCOME, until you deduct it in your 1040.

So, for example - if you have a wife and a kid - you would have $12.4K as a "standard deduction". If you itemize (even if it's only the standard per diem), then your itemized deductions will exceed the standard deduction, and you will have less TAXABLE INCOME, then using the standard deduction.

Keep in mind (also - important to remember) that if your employer PAYS PER DIEM - there are no TAXES WITHHELD on this income. So you would want to do a Schedule A, in order to not risk getting UNDER-WITHHELD and end up OWING THE IRS when you file.

As long as you keep your receipts, etc. - you should be able to almost 1/2 your "taxable income" legally.

Just a rough numbers here, but:

Say you made 35K driving. You were out 300 days, that's roughly $14K deductible as "per diem", add in another $2K in "misc expenses", that's $16K.

So - by itemizing JUST THAT, you've lessened your taxable income by another $10K over the "standard $6.2K deduction" (single, 2014 numbers), or $4K over the married/filing jointly standard deduction.

Add in mortgage interest, property taxes, state/local taxes and all the other goodies - and you can further reduce your taxable income.

A lot depends on your married/kids status - and other expenses.

Disclaimer: I AM NOT A TAX PROFESSIONAL. The information is what I've gathered from (pretty extensive) personal research.

A "regular 1040", is not that much more complicated to prepare, than a 1040EZ. Why give the grubbermint another dime more than is absolutely necessary?

Rick

Something else to think about per diem... because the company is paying less taxes (and you are too), less is being paid into your social security fund which means less money for retirement.

Personally I just don't see the value in per diem.

From a (purported) tax guy on another trucking forum... -----

It REDUCES your GROSS PAY, as well as your tax liability. By reducing your gross wages, it reduces your Social Security payments, so if you retire or become disabled, your pay will be less. By reducing your gross wages, it reduces the maximum amount you could claim in unemployment benefits if you are laid off. By reducing your gross wages, it will reduces the amount you could borrow from a bank to purchase a home or other durable item By reducing your gross wages, it reduces the amount of money that could be awarded to your family in case you are killed. By reducing your gross wages, it reduces the money your employer has to pay on your behalf to Social Security, lowers the amount of money he has to pay for Unemployment compensation, Workers Comp and State Disability Insurance on your behalf.

There are no "real" benefits for the employee to accept the EMPLOYER sponsored "Per Diem" program and those programs only benefits the EMPLOYER.

Other things you can deduct: Cell phone; I usually deduct 1/2 the monthly bill, because I can show at least that much usage is work related Internet; I also usually deduct 1/2, because my primary use is work related as well. I use a different internet service when I am home. Pet food/supplies; although I haven't used this deduction in a few years Cleaning supplies (for truck interior); you should have receipts Laundry supplies (and the cost of doing your laundry on the road) Extra Health-care costs if you have to use "non-network" health-care services.

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Food for thought...

Rick

Cost for Passport is deductible.