Trucking Companies That Pay Per Diem: Tax Savings and More

Working as a truck driver can be a lucrative career, but it often comes with a lot of expenses on the road. Many trucking companies offer per diem to help offset these costs, but not all companies are created equal.

Companies like Swift Transportation and J.B. Hunt offer per diem to their drivers, which can range from $25 to $50 per day. This can add up to a significant amount of money over the course of a year.

Per diem payments are tax-free, which means drivers can keep the entire amount. This can be a huge advantage for truckers who are trying to maximize their earnings.

Some companies, like Schneider National, offer per diem in addition to other benefits, such as meal stipends and expense reimbursement. These perks can make a big difference in a driver's quality of life on the road.

For more insights, see: Semi Trucks on the Road

Per diem pay is essentially an IRS-backed reimbursement paid in advance, pre-paid funds that would typically be included with your paychecks. It's an alternative way to compensate you for daily expenses while on the road.

The term per diem is Latin for "for each day", and it translates to a reimbursement for your daily expenses as a trucker. This includes meal and incidental expenses, lodging expenses, and other costs incurred while delivering the load.

The standard M&IE rate for 2023 is $59, and the standard continental United States lodging rate for 2023 is $98. Most companies use the High-Low method to calculate incidental expenses.

To be eligible for per diem pay, you must have a purpose for travel, which in this case is to deliver goods and services. You must also keep a detailed log showing descriptions of reasonable travel-related expenses.

Pay per diem is a reimbursement plan that covers daily expenses for truck drivers, including meal and incidental expenses. The standard M&IE rate for 2023 is $59, which covers meals and other small expenses.

Lodging expenses are also covered, but the rate varies depending on the location, season, and time frame. The standard continental United States lodging rate for 2023 is $98.

Check this out: Lug Nut Covers for Semi Trucks

To qualify for pay per diem, you must have a purpose for travel, which in this case is to deliver goods and services. You'll also need to keep a detailed log of your travel-related expenses.

If you're offered an allowance beyond what you're entitled to, you'll need to return the remainder. Only OTR drivers are eligible for the pay per diem payment plan, as they spend long hours away from home.

Pay per diem is a pre-paid system where funds are included with your paychecks to cover daily expenses. This system is IRS-backed and can be a convenient option for commercial truck drivers.

The per diem pay is typically a flat-rate per day, with the federal limit currently set at $66. This non-taxable income is one reason why many truckers prefer it over traditional reimbursement methods.

Some trucking companies offer per diem pay on a per-mile basis, but this is not as common. It's essential to ask your employer about their per diem options and how they work.

If you're considering a career as a commercial truck driver, it's crucial to understand how your employer's per diem system works and how it can benefit you.

Per diem pay for truckers has several advantages and tax implications to consider. You'll pay less in taxes with per diem pay, as the allowance is nontaxable and can lead to a bigger tax refund.

With per diem pay, you'll have a lower adjusted gross income, which often entitles you to a lower tax indebtedness. Companies that offer per diem payments often help their drivers manage their tax payments.

Prior to the new tax law, there were three ways per diems could be taken. Here's a quick rundown of the old rules:

The new tax law doesn't affect scenarios #1 and #3, so trucking companies can still pay their drivers a nontaxable per diem and take a business deduction for it.

You'll pay less in taxes with per diem pay, since companies that offer it also offer lower salaries, resulting in a lower adjusted gross income.

This means you're likely to get a bigger tax refund and lower tax indebtedness.

Companies that offer pay per diem often help their drivers manage their tax payments, which can be a big help when filing taxes.

Since you don't need to pay taxes on your per diem allowance, you can keep more of your hard-earned money.

Wage recharacterization is essentially reclassifying wages from taxable to nontaxable based on certain events or factors, and the IRS does not allow it.

Common Carrier A's example illustrates how this happens when per diems are paid by the mile. They pay drivers 40 cents per mile, along with a per diem at 10 cents per mile, for a total of 50 cents per mile.

The IRS considers this an example of a nonaccountable plan, which is when an employer pays employees a fixed rate per mile without keeping track of actual expenses. This was the case when Common Carrier A paid John and Tom $250 each for the day, despite John being away from home for the night.

A nonaccountable plan can lead to wage recharacterization, as seen when Common Carrier A allocated $50 as a nontaxable per diem to John. This is because they paid drivers 50 cents per mile whether they were away from home or not, recharacterizing John's wages.

On the other hand, Common Carrier A followed an accountable plan when they correctly allocated $200 (40 cents per mile) as taxable and $50 (10 cents per mile) as nontaxable for John. This is when an employer pays employees a fixed rate per mile and only adds a per diem if they are away from home for the night.

Per diems can no longer be claimed as an unreimbursed business expense. This change was made to help pay for the law's tax cuts.

Prior to the new tax law, individuals could claim per diems as an unreimbursed business expense on Schedule A, subject to the 2 percent adjusted gross income limitation. This option is no longer available.

The 2 percent miscellaneous itemized deductions, where a driver could claim per diems as an unreimbursed business expense, has been eliminated. As a result, scenario #2 has become obsolete.

Discover more: How to Start a Transportation Business with One Truck

In the past, drivers could claim a per diem of $63 per day as an unreimbursed business expense. This option is no longer available due to the elimination of the 2 percent miscellaneous itemized deductions.

For your reference, here are the three ways per diems could be taken prior to the new tax law:

As you can see from the list above, only scenarios #1 and #3 remain unaffected by the new tax law.

Per diem pay for truckers has several disadvantages. One major drawback is that despite the tax deductible advantages, the reimbursements from per diem pay may not fully cover the actual expenses of drivers.

The tax deductible advantage of per diem pay is a significant benefit, but it's essential to consider the potential drawbacks as well.

Per diem pay may not fully reimburse drivers for their expenses, leaving them with out-of-pocket costs.

Per diem pay is a type of compensation that trucking companies offer to their drivers, and it's a Latin phrase meaning "by day." Essentially, it's a way for companies to reimburse drivers for daily expenses while on the road.

The federal limit for trucker per diem pay is $66 per day, and it's mostly non-taxable income, which is why many commercial truck drivers prefer it.

To calculate per diem rates, the IRS takes into account the cost of living in different areas, and starting in 2024, the per diem rate for truckers in the Continental U.S. is $80 per full day of travel.

You can use a per diem calculator to estimate your daily entitlement for meals, lodging, and clothing, and it's a good idea to consult with a local tax expert to get the latest information.

Per diem pay can be provided in two ways: a standard meal allowance, where the company gives you money for daily meals and incidentals, or an annual tax deduction, where you wait until tax season to get refunds on the aggregate amount you spent while on the road.

Here's a breakdown of the two payment methods:

If a company offers per diem pay, you'll typically receive pre-paid funds with your paychecks, and you'll need to keep a detailed log showing descriptions of reasonable travel-related expenses.

As an OTR driver, you're eligible for the per diem payment plan, and you'll need to meet certain criteria, such as having a purpose for travel and keeping a log of your expenses.

In 2023, the standard M&IE rate is $59, and the standard continental United States lodging rate is $98.

Working for a trucking company that pays per diem can have a significant impact on your annual income. Companies that offer per diem pay usually offer wages lower than the market average.

This is because they are giving you an additional allowance for food, lodging, and other expenses. As a result, you'll end up earning less than your counterparts for the same workload and at the same experience level.

To comply with regulations, trucking companies that pay per diem must adhere to the Federal Motor Carrier Safety Administration's (FMCSA) guidelines, which dictate how drivers can claim and report their expenses.

The FMCSA requires trucking companies to maintain accurate records of drivers' expenses, including receipts and invoices for meals, lodging, and other incidentals.

Drivers must keep a daily log to track their expenses and submit it to the company for reimbursement.

Companies must also provide drivers with a per diem rate chart to help them understand what expenses are eligible for reimbursement.

TSA regulations require trucking companies to verify the identity of drivers and ensure they are not transporting hazardous materials without proper training and certification.

Some trucking companies may have their own internal policies and procedures for per diem reimbursement, so it's essential for drivers to review their company's guidelines carefully.

Readers also liked: Trucking Industry News Canada