Per Diem Tax Deduction

Topic 8332 | Page 2

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Jarod(Red)'s Comment
member avatar

Errol are you running OTR with Swift?

OTR:

Over The Road

OTR driving normally means you'll be hauling freight to various customers throughout your company's hauling region. It often entails being gone from home for two to three weeks at a time.

Errol V.'s Comment
member avatar

Errol are you running OTR with Swift?

Currently I'm doing a shuttle (500+/- miles per day for 5 days a week scheduled can't be all bad!). A friend wants to team up in a few weeks.

OTR:

Over The Road

OTR driving normally means you'll be hauling freight to various customers throughout your company's hauling region. It often entails being gone from home for two to three weeks at a time.

Phox's Comment
member avatar

Whats everyone's opinion on the per diem option? I thought about it but not sure

I myself would rather have a bigger tax return. yeah I read all the stuff about how you're giving the government an interest free loan but big deal it's nice to get a big ol chunk of change come feb. especially since my birthday is in March :D

since i'll be living out of truck full time (maybe stay in a hotel during home time or something just to get some time out of truck) I'll be able to save quite a bit. plan to eat mostly my own preped meals so not much need for per diem. as much as a trucker makes i can afford to go without it I think.

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

Fatsquatch 's Comment
member avatar

Per diem is kind of a give and take proposition. In the short term, per diem will give you a larger weekly paycheck, and a lower annual tax burden. As an example, my current pay rate is .40 cpm , with .10 cpm per diem, meaning that 1/4 of my weekly pay is non-taxable. This puts me in a lower tax bracket, and gives me a larger tax return at the end of the year.

However, less taxable income also means less money being put into social security. That doesn't mean anything to me at this stage of my life, but when I retire (or god forbid, if I ever end up on disability), it will negatively impact my monthly SSI payments.

There are trade-offs to be had, but for myself I like taking the per diem exemption. I like having the extra weekly income, and I'm not relying on social security to provide for my retirement. That may come back to bite me in the ass one day, but I'll burn that bridge when I come to it.

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

Brett Aquila's Comment
member avatar
Great Answer!
I myself would rather have a bigger tax return. yeah I read all the stuff about how you're giving the government an interest free loan but big deal it's nice to get a big ol chunk of change come feb. especially since my birthday is in March :D

I agree 100%. Finance people are schooled to get the maximum returns possible at all times. What they often don't consider is the practical implications.

For instance, there are tons of people out there who wouldn't be able to save a nickel if their life depended on it. Every nickel that comes in goes right back out and they're constantly broke. They could go from making $40,000 per year to $400,000 per year and they'd still manage to save nothing.

For those people, paying the maximum in taxes each week means they have a built in savings account. They simply can't touch that money until they get it back in the spring. And as far as the "interest free loan" you're giving the government? Be serious. First of all, you weren't going to save any money in a savings account anyhow so there would be no interest to be made. But even if you did, you'd be lucky to make $50 per year in interest. When you look at it from a practicality standpoint, being able to save thousands of dollars each year is far more valuable to that person's financial situation than the potential for making $50 in interest.

For anyone that struggles to save money I would recommend considering claiming zero on your taxes so that they take out the maximum. Then you'll get a nice fat check from the Government each spring to do with what you will.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Nick H.'s Comment
member avatar

Can anyone tell me on what IRS form & line# I claim the $63/day deduction? I have read through Pub 463 and Instructions for Form 2106, it talks about it but I don't understand how to put it on the form. This is my first year I am able to claim this and have always done my own taxes so I don't want to go to an accountant for 1 item. Thanks for any help!!

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