Pros & Cons: Schedule C vs S-Corp for Self-Employed Truckers is from "Making The IRS Work In Your Favor" presented by Mark W. Sullivan, EA at the CMC LIVE hosted by Kevin Rutherford and Let's Truck.
IRS Orders Immediate Stop To New Employee Retention Credit Claims (IRS Newswire, 9/14/23)
IRS Issues 2024 Trucker Per Diem Rates (9/25/23)
Pros & Cons: Schedule C vs S-Corp for Self-Employed Truckers general rule of thumb:
It is important to note that entity classifications like Limited Liability Company (LLC) and Limited Liability Partnership (LLP) are a function of state law and not federal. For federal purposes the entity type is a tax election.
What qualifies as "reasonable wages" has been a matter of debate for more than 100 years. However, in trucking a safe-haven would be to pay yourself a wage equal to that which an employee truck driver would be paid for doing the same job. Hint: Paying yourself $20,000 of wages as an OTR driver clocking 110,000 miles annually and $80,000 of draw would likely be classified as unreasonable.
The procedures for compensating yourself for your efforts in carrying on a trade or business will depend on the type of business structure you elect. Below are topics that frequently arise when new business owners ask the Internal Revenue Service questions about paying themselves.
An officer of a corporation is generally an employee. However, an officer who performs no services or only minor services and who neither receives nor is entitled to receive any pay is not considered an employee. Refer to "Who Are Employees?" in Publication 15-A, Employer's Supplemental Tax Guide.
Partners are not employees and should not be issued a Form W-2, Wage and Tax Statement, in lieu of Form 1065, Schedule K-1, for distributions or guaranteed payments from the partnership. Refer to Tax Information for Partnerships page for more information.
Any distribution to shareholders from earnings and profits is generally a dividend. However, a distribution is not a taxable dividend if it is a return of capital to the shareholder. Most distributions are in money, but they may also be in stock or other property. For information on shareholder reporting of dividends and other distributions, refer to Publication 550, Investment Income and Expenses.
You cannot designate a worker, including yourself, as an employee or independent contractor solely by the issuance of Form W-2, Wage and Tax Statement or Form 1099-NEC, Nonemployee Compensation. It does not matter whether the person works full time or part time. You use Form 1099-NEC to report payments to others who are not your employees. You use Form W-2 to report wages, car allowance, and other compensation for employees.
You will be liable for social security and Medicare taxes and withheld income tax if you do not deduct and withhold them because you treat an employee as a nonemployee, including yourself if you are a corporate officer, and you may be liable for a trust fund recovery penalty. Refer to Publication 15, Circular E, Employer's Tax Guide for details about the trust fund recovery penalty or Independent Contractor (Self-Employed) or Employee? for more information on employee classification.
A loan by a corporation to a corporate officer should include the characteristics of a loan made at arm's length. That is, there should be a contract with a stated interest rate, a specified length of time for repayment, and a consequence for failure to repay the loan. Collateral would also be an indication of a loan. A below-market loan is a loan which provides for no interest or interest at a rate below the federal rate that applies. If a corporation issues you, as a shareholder or an employee, a below-market loan, then depending on the substance of the transaction the lender's payment to the borrower is treated as a gift, dividend, contribution to capital, payment of wages, or other payment.
See "Below-market interest rate loans" under Employees' Pay / Kinds of Pay / Loans or Advances in Publication 535, Business Expenses for more information.
Because an officer of a corporation is generally an employee with wages subject to withholding, corporate officers may question what is considered reasonable compensation for the efforts they contribute to conducting their trade or business. Wages paid to you as an officer of a corporation should generally be commensurate with your duties. Refer to "Employee's Pay, Tests for Deducting Pay" in Publication 535, Business Expenses for more information. Public libraries may have reference sources that provide averages of compensation paid for various types of services. The Internal Revenue Service may determine that adjustments must be made to the income and expenses of tax returns for both the corporation and an individual shareholder if the officer is underpaid for services provided.
Per Diem Plus Small Fleets requires users to complete the account setup HERE before using the app.
Per Diem Plus Fleets is also available on the Truckstop Marketplace, Samsara App Marketplace and Platform Science Marketplace
Per Diem Plus is a proprietary mobile software application that was designed by truckers and built by tax pros. It is the only IRS-compliant mobile app for iOS and Android that automatically tracks each qualifying day of travel in the USA & Canada and replaces ELD backups (logbooks) to substantiate away-from-home travel.
Mark is tax counsel for Per Diem Plus. With nearly two decades of experience advising trucking companies on per diem issues, Mark was responsible for defining the Per Diem Plus software logic rules that automatically calculates trucker per diem in accordance with IRS regulations. He also previously served as the consulting per diem tax expert for Omnitracs.
In addition to his time working with Per Diem Plus, Mark works in private practice as an Enrolled Agent at Mark Sullivan Consulting, PLLC specializing in federal tax controversy representation and consulting. He also served as the consulting and expert witness for the Federal Defenders Office and private defense counsel in financial crimes cases in multiple federal district courts. Contact Mark W. Sullivan, EA
Disclaimer: This article includes general tax information, and therefore may not be relied upon as legal authority. This means that the information cannot be used to support a legal argument in a court case. Please consult with a licensed tax professional.
Copyright 2020-2023 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®
Yes. As a self-employed trucker you cannot do your job via a ZOOM meeting, thus you are eligible for a refundable tax credit under the Families First Act (FFCRA). You may fund the "sick leave" or "family leave" tax credit by using a portion of the 2020 estimated tax payments that were supposed to be paid quarterly. The refundable credit will be claimed on your Form 1040, U.S. Individual Income Tax Return, for the 2020 tax year.
An eligible self-employed individual is defined as an individual who,
Eligible self-employed individuals are allowed an income tax credit to offset their federal self-employment tax for any taxable year equal to their “qualified sick leave equivalent amount” or “qualified family leave equivalent amount.”
The tax credit is calculated by multiplying the number of days you could not work (maximum of 10 days) between April 1 and December 31, 2020 by either:
Average daily self-employment income is an amount equal to the net earnings from self-employment for the taxable year divided by 260. A taxpayer’s net earnings from self-employment are based on the gross income that he or she derives from the taxpayer’s trade or business minus ordinary and necessary trade or business expenses.
Which type of "leave" you qualify for depends on the reason(s) you were unable to work. Those that were prohibited from working can claim up to $511/day but those who were home to care for a family member can only claim up to $200/day.
For an eligible self-employed individual who is unable to work or telework because the individual:
the qualified sick leave equivalent amount is equal to the number of days during the taxable year that the individual cannot perform services in the applicable trade or business for one of the three above reasons, multiplied by the lesser of $511 or 100 percent of the “average daily self-employment income” of the individual for the taxable year.
Example: John was unable to drive due to state-mandated quarantine orders and the absence of loads for 8 days. He had $75,000 or an average of $288/day of self-employment income in 2020.
John can claim the lesser amount of $2,304 as refundable credit under FFCRA on his Form 1040, U.S. Individual Income Tax Return.
For an eligible self-employed individual who is unable to work or telework because the individual:
the qualified family leave equivalent amount is equal to the number of days during the taxable year that the individual cannot perform services in the applicable trade or business for one of the three above reasons, multiplied by the lesser of $200 or 67 percent of the “average daily self-employment income” of the individual for the taxable year.
Example: Mary was unable to drive for 10 days because she was home caring for her husband who had been exposed to COVID. She had $65,000 or an average of $250/day of self-employment income in 2020.
Mary can claim the lesser amount of $1,680 as refundable credit under FFCRA on his Form 1040, U.S. Individual Income Tax Return.
The refundable credits are claimed on the self-employed individual’s Form 1040, U.S. Individual Income Tax Return, tax return for the 2020 tax year. The Families First Act refundable tax credit is not surprisingly complicated, please consult with your tax advisor.
Substantiate the days you were unable to work using either of the following methods:
The Per Diem Plus® - Owner Operators is the only IRS-compliant mobile application that provides automatic trucker per diem and travel-related expense tracking for drivers, motor carriers and owner operators. Per Diem Plus was designed, developed and is managed in the USA.
Mark is tax counsel for Per Diem Plus. With nearly two decades of experience advising trucking companies on per diem issues, Mark was responsible for defining the Per Diem Plus software logic rules that automatically calculates trucker per diem in accordance with IRS regulations. He also previously served as the consulting per diem tax expert for Omnitracs.
In addition to his time working with Per Diem Plus, Mark works in private practice as an Enrolled Agent at Mark Sullivan Consulting, PLLC specializing in federal tax controversy representation and consulting. He also served as the consulting and expert witness for the Federal Defenders Office and private defense counsel in financial crimes cases in multiple federal district courts. Contact Mark W. Sullivan, EA
Copyright 2020-2022 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®
Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.
The 10% ownership - related party rule and per diem creates much confusion. Under the related party rule an Owner-Operator can claim substantiated per diem even if they are the sole owner of the trucking company. However, the related-party restriction imposed by the IRS is frequently misunderstood by both drivers and tax practitioners alike. Based on the foregoing it does not apply to the trucking industry.
Section 4.01 Per diem allowance:
Section 4.04 applies to:
Section 6.07 applies to:
Available as a $7.99 monthly subscription on Google Play and App Store.
The Per Diem Plus® - Owner Operators is the only IRS-compliant mobile application that provides automatic trucker per diem and travel-related expense tracking for drivers, motor carriers and owner operators. Per Diem Plus was designed, developed and is managed in the USA.
Mark is tax counsel for Per Diem Plus. With nearly two decades of experience advising trucking companies on per diem issues, Mark was responsible for defining the Per Diem Plus software logic rules that automatically calculates trucker per diem in accordance with IRS regulations. He also previously served as the consulting per diem tax expert for Omnitracs.
In addition to his time working with Per Diem Plus, Mark works in private practice as an Enrolled Agent at Mark Sullivan Consulting, PLLC specializing in federal tax controversy representation and consulting. He also served as the consulting and expert witness for the Federal Defenders Office and private defense counsel in financial crimes cases in multiple federal district courts. Contact Mark W. Sullivan, EA
Copyright 2020-2022 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®
Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.
No per diem tax analysis would be complete without addressing the state income tax considerations on driver per diem. In our last blog post, No Driver Per Diem Yields Surprise Tax Bill, we showed you an example of a driver not receiving per diem. In this article, we will show you the negative impact of living in a high-tax state.
Johnny Mills is an over-the-road company driver
Since, Johnny elected not to enroll in the employer plan when he joined the company, he paid an extra $7,064 in federal income and payroll taxes. But how much extra state income tax did he pay? Would it make financial sense for him to move his family and transfer to one of the company's other terminals, like nearby Arizona?
No discussion on the benefits of per diem for truck drivers would be complete without considering state income taxes. State income taxes substantially impact a driver's overall income tax burden. Drivers in high-tax states like California, Connecticut or New York should consider the state tax savings of per diem. These savings are even more pronounced when compared to low-tax states like Arizona.
State Tax Savings: Enrolling in the company per diem plan would have saved Johnny $ 945 in Connecticut income tax for 2019.
State vs State Analysis: A Connecticut driver paid $4,718 of state income tax in 2019. An identical Arizona-based driver paid only $2,199 - a $2,519 difference.
The real value of a dollar (purchasing value) must be taken into consideration in order to make state-to-state comparisons. For example, $1.00 is only worth $0.92 cents in Connecticut but $1.04 in Arizona - a 11.5% difference.
No per diem tax analysis would be complete without addressing the state income tax considerations on driver per diem. Johnny Mills received an unpleasant surprise this tax season because he did not participate in his employer offered per diem plan - an additional $7,064 of federal and $ 945 in state income taxes. Living in high-cost, high-tax Connecticut further reduced the value of his earnings by over $11,136. However, if Johnny enrolls in the company per diem plan and moves his family to a low-cost, low-tax state like Arizona it would generate about $16,198 in real dollar value.
Per Diem Plus FLEETS is a proprietary mobile software application that was designed by truckers and built by tax pros. It is the only IRS-compliant mobile app for iOS and Android that automatically tracks each qualifying day of travel in the USA & Canada and replaces ELD backups (logbooks) to substantiate away-from-home travel.
This article was written by Mark W. Sullivan EA, Tax Counsel for Per Diem Plus, who has over a decade of experience advising trucking companies on per diem issues. Prior to starting a private practice in 1998, Mr. Sullivan was an Internal Revenue Officer with the New York, NY, Saint Louis, MO and Washington, D.C. offices of the Internal Revenue Service. Questions? Contact Mark W. Sullivan, EA.
Copyright 2020 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®
Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.
Reference:
https://taxfoundation.org/real-value-100-state-2019/
https://taxfoundation.org/state-individual-income-tax-rates-and-brackets-for-2020/
Billy is an over-the-road company driver who lives in a high-tax state with his wife and 3 children. His previous employer administered their plan through Per Diem Plus FLEETS. Unfortunately, his new company doesn't offer per diem. He understood per diem saves a driver significant taxes and worried his tax refund would be much smaller.
After quickly assembling his tax records for his accountant he received an unwelcome surprise:
The table highlights the federal and state tax consequence of Billy's employer not having a driver per diem program.
Billy received an unpleasant surprise this tax season because his employer did not offer per diem
Why does Billy's employer not have a per diem program? Like many trucking companies they incorrectly assume that a company-sponsored per diem program will cost them money. In fact, the table below shows the tax due on the 20% non-deductible portion of per diem is offset by the payroll tax savings. In addition, a CASE STUDY demonstrated a trucking company saved $3,000 per driver by imlementing the Per Diem Plus FLEETS. Billy's employer would actually have saved over a thousand dollars in taxes per driver.
Fleets that adopt the Per Diem Plus FLEETS mobile platform will not only enhance driver retention and recruiting, but save many thousands of dollars in the process.
Per Diem Plus FLEETS is a proprietary mobile software application that was designed by truckers and built by tax pros. Furthrmore, it is the only IRS-compliant mobile app for iOS and Android that automatically tracks each qualifying day of travel in the USA & Canada and replaces ELD backups (logbooks) to substantiate away-from-home travel.
This article was written by Mark W. Sullivan EA, Tax Counsel for Per Diem Plus, who has over a decade of experience advising trucking companies on per diem issues. Prior to starting a private practice in 1998, Mr. Sullivan was an Internal Revenue Officer with the New York, NY, Saint Louis, MO and Washington, D.C. offices of the Internal Revenue Service. Questions? Contact Mark W. Sullivan, EA.
Copyright 2020 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®
Disclaimer: This article is for information purposes only and cannot be cited as precedence or relied upon in a tax dispute before the IRS.
No. The treatment of per diem as a portion of an employee’s wages is not considered an improper “wage reclassification”. The IRS first introduced per day allowances in Revenue Procedure 90-60 as a simplified method of substantiating employee business expenses. However, the first published guidance for the transportation industry was TAM 9146003 issued in 1991. According to the IRS:
The Special Transportation Industry substantiated method was introduced in 2000 to ease the burden on taxpayers, who would otherwise have to meet the extensive substantiation requirements in order to claim deductions for business related travel [See Rev. Proc. 2000-39, 2000-9 Sec. 4.04, Notice 2000-48], which among other things:
The Internal Revenue Code gives the IRS Commissioner discretionary authority to issue regulations, such as revenue rulings and procedures. The Revenue Procedures and Notices are updated annually and the relevant per diem provisions have remained substantially the same since 2011 [See Rev. Proc. 2011-47 ].
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A substantiated per diem program reimburses drivers a fixed amount per day (i.e. $66) in place of a rate per mile for travel away from home. As a result, it eliminates the need for drivers to turn in receipts for actual meals and incidental expenses. Most importantly, it reduces a fleets administratives burden while providing additional cash to drivers on a pre-tax basis. However, companies must have an accountable plan to qualify, which would include these requirements [See KMS Transport Advisors (NAFC March 2019 newsletter]:
Well-known motor carriers that utilize the substantiated method include Averitt Express, EPES Transport System, TMC Transportation, G&P Trucking, Transport America and Big G Express, Danny Herman Trucking and Oakley Transport.
Only Per Diem Plus FLEETS platform or DOT ELD backups with an itemized log listing "time, date & place" for each per diem event meet the IRS substantiation requirements.
Thirty years of IRS guidance and legislative history specifically reference an employer paying a driver in the transportation industry under the substantiated method and, therefore, contemplate that some portion of a driver’s wages will be treated as per diem. While, both the substantiated and cent-per-mile per diem methods are IRS-compliant, neither method has been considered an improper wage reclassification for over 30 years. However, a motor carrier that adopts the substantiated per diem method that is built into Per Diem Plus FLEETS will realize the most benefit for both the fleet and their drivers.
Per Diem Plus FLEETS is a proprietary mobile software application that was designed by truckers and built by tax pros. It is the only IRS-compliant mobile app for iOS and Android that automatically tracks each qualifying day of travel in the USA & Canada and replaces ELD backups (logbooks) to substantiate away-from-home travel.
Mark is tax counsel for Per Diem Plus. With nearly two decades of experience advising trucking companies on per diem issues, Mark was responsible for defining the Per Diem Plus software logic rules that automatically calculates trucker per diem in accordance with IRS regulations. He also previously served as the consulting per diem tax expert for Omnitracs.
In addition to his time working with Per Diem Plus, Mark works in private practice as an Enrolled Agent at Mark Sullivan Consulting, PLLC specializing in federal tax controversy representation and consulting. He also served as the consulting and expert witness for the Federal Defenders Office and private defense counsel in financial crimes cases in multiple federal district courts. Contact Mark W. Sullivan, EA
Copyright 2020-2022 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®
Disclaimer: This article is for information purposes only and cannot be cited as precedence or relied upon in a tax dispute before the IRS. Additional information can be found at IRS.gov
[i] The 2019 per diem rate for travel in the USA is $66 and $49.50 for a partial day.
ii] The raised the deductible percentage of employee travel related expenses to 80% in 2008
iii] Federal Register-1989-12-12 Vol 54 Page 51038 pursuant to “Family Support Act of 1988”
[iv] Rev. Ruling 2006-56, 2006-2 CB 274
[i] Updated annually IRS Notice 2019-55, 2018-77, 2017-54, 2016-58, 2015-63, 2014-57, 2013-65, 2012-63, Rev. Proc. 2011-47, 2010-39, 2009-47, 2008-59, 2007-63, 2006-41, 2005-67, 2004-60, 2003-80, 2002-63 and 2001-47.
Substantiated per diem provides the largest benefit to both a driver and fleet over the old cent-per-mile method. Decades before the advent of TMS software, telematics and ELD's fleets adopted cent-per-mile per diem. Why? Because it was easy to calculate and substantiate using trip sheets[i]. However, there is no correlation between the miles a driver travels and frequency of meal breaks.
Under the cent-per-mile method a driver is paid only for miles driven and not nights away from home. Although, a driver may travel 500 miles one day they may only clock 200 miles the next. In the end, the distance traveled does not affect the need to eat 3 meals a day.
The IRS introduced the Special Transportation Industry substantiated per diem to simplify tax compliance for fleets by relying on days away from home instead of miles traveled. This method accurately reflects the number of meals a driver eats and resolved the problem that driver’s regularly travel away from home and stop during a single trip at localities with differing federal M&IE rates.
Use our Fleet Per Diem Benefit Calculator to learn how much your fleet can save with Per Diem Plus Fleets.
[i] 1-274-5T(c) Rules of substantiation, Rev. Proc. 2011-47 § 4.02(5)
Both the substantiated and cent-per-mile per diem methods are IRS-compliant. However, a motor carrier that adopts the substantiated per diem method that is built into Per Diem Plus FLEETS will realize the most benefit for both the fleet and their drivers.
Per Diem Plus FLEETS is a configurable mobile application enterprise platform that automates administration of an IRS-compliant accountable per diem plan for truck drivers and fleets managers. No matter how big or small your company is, Per Diem Plus has a solution for you.
Per Diem Plus FLEETS is a proprietary mobile software application that was designed by truckers and built by tax pros. It is the only IRS-compliant mobile app for iOS and Android that automatically tracks each qualifying day of travel in the USA & Canada and replaces ELD backups (logbooks) to substantiate away-from-home travel.
This article was written by Mark W. Sullivan EA, Tax Counsel for Per Diem Plus, who has over a decade of experience advising trucking companies on per diem issues. Prior to starting a private practice in 1998, Mr. Sullivan was an Internal Revenue Officer with the New York, NY, Saint Louis, MO and Washington, D.C. offices of the Internal Revenue Service.
Questions? Contact Mark W. Sullivan, EA.
Disclaimer: This article is for information purposes only and cannot be cited as precedence or relied upon in a tax dispute before the IRS.
Copyright 2019-2022 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®
Which per diem method saves a fleet more money? Substantiated per diem saves a motor carrier the most money, since the fleet benefits are directly proportional to total per diem paid to drivers. So how did cent-per-mile per diem become so popular in the trucking industry? Decades before the advent of telematics fleets adopted cent-per-mile per diem for because it was easy to calculate. However, there is no correlation between the miles a driver travels and meal breaks.
Drivers prefer substantiated special trucker per diem. Why? They eat 3 meals a day regardless of whether they drive 200 or 600 miles. The IRS introduced the Special Transportation Industry substantiated per diem to remedy this issue. In addition it simplified tax compliance for fleets by relying on nights away from home instead of miles traveled. It is also a more accurate reflection of anticipated meal expenses for drivers.
Use our Fleet Per Diem Benefit Calculator to learn how much your fleet can save with Per Diem Plus Fleets.
Adding an accountable per diem program for employee drivers is a sure-fire way to enhance driver recruiting and retention. Consider the following:
Both substantiated and cent-per-mile per diem must comply with the IRS substantiation by adequate records rules. According to the IRS, "a motor carrier must maintain lrecords to establish "time, place and location" for each per diem event". The Per Diem Plus FLEETS platform satisfies this requirement since it is maintained in such manner that each recording of an element of an expenditure is made at or near the time of the expenditure.
Document retention rules:
The transportation industry has been unique in its treatment of driver per diem for over 30 years. The substantiated per diem method saves a motor carrier more money than cent-per-mile method. While, substantiated and cent-per-mile per diem methods are IRS-compliant, both require a motor carrier to comply with the adequate records and document retention rules.
Per Diem Plus FLEETS is a configurable mobile application enterprise platform that automates administration of an IRS-compliant accountable per diem plan for truck drivers and fleets managers. No matter how big or small your company is, Per Diem Plus has a solution for you.
Per Diem Plus FLEETS is a proprietary mobile software application that was designed by truckers and built by tax pros. It is the only IRS-compliant mobile app for iOS and Android that automatically tracks each qualifying day of travel in the USA & Canada and replaces ELD backups to substantiate away-from-home travel.
This article was written by Mark W. Sullivan EA, Tax Counsel for Per Diem Plus, who has over a decade of experience advising trucking companies on per diem issues. Prior to starting a private practice in 1998, Mr. Sullivan was an Internal Revenue Officer with the New York, NY, Saint Louis, MO and Washington, D.C. offices of the Internal Revenue Service. Questions? Contact Mark W. Sullivan, EA.
Copyright 2019-2022 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®
Disclaimer: This article is for information purposes only and cannot be cited as precedence or relied upon in a tax dispute before the IRS.
The term"per diem allowance" means a payment under a reimbursement or other expense allowance arrangement that is — (1)
Trucker per diem rules for fleets eliminate the need for proving actual costs for meals & incidental expenses incurred.
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Yes. Drivers that receive a non-taxable per diem reimbursement from their employer (trucking company) do so under IRC Sec 62(2)(a).
Under the trucker per diem rules for fleets a motor carrier can offer per diem only to drivers who are:
No. Drivers who start and end a trip at home on the same DOT HOS 14-hour work day cannot receive per diem.
A fleet will save approximately $3,000 annually or $0.03/mile/driver as the payroll tax and worker compensation savings exceed the tax on the 20% nondeductible portion of per diem.
Use our Fleet Per Diem Benefit Calculator to learn how much your fleet can save with Per Diem Plus Fleets.
Yes. On average driver pay will increase from $0.03 - $0.04/per mile.
A motor carrier must substantiate the “time, date, and place” for each day of travel. Here is how the IRS-friendly Per Diem Plus FLEETS web services portal output report handles this requirement:
Only Per Diem Plus FLEETS platform or DOT ELD backups with an itemized log listing "time, date & place" for each per diem event. Per Diem Plus automatically records per diem for travel in the USA and Canada for solo and team drivers.
No. Per diem is classified as a non-taxable reimbursement to an employee driver and is not reported under wages on Form W-2.
IRS increased per diem rates effective October 1, 2018 (Revised 10/01/2021)
USA $69 from $66
Canada $74 from $71
Yes. A partial day is 75% of the per diem rate.
A fleet can deduct 80% of per diem on their income tax return. However, the payroll tax and worker compensation savings ordinarily exceed the tax on the nondeductible portion of per diem.
Paper or electronic receipts that identify what, when and the amount are required. Drivers can upload and store receipts on the Per Diem Plus FLEETS app. Watch Run IRS Compliant Reports with Receipts video to see how easy drivers can send an itemized expense reports with receipts to payroll or accounting.
No. There is no published guidance from IRS that allows a fleet to pay a lodging per diem.
A self-employed driver (owner operator) falls under the related party rules of IRC 267(b) & Rev. Proc 2011-47.6.07 and, therefore, cannot use per diem substantiation that includes a meals and lodging per diem.
No less than 3 years from the filing date of an income tax return. Per Diem Plus FLEETS customers have instant access to itemized per diem tax records for four years.
ELD backups used to substantiate "time, date and place" are considered tax records.
Refer to IRS Revenue Procedure 2011-47. Or, use the Per Diem Plus FLEETS platform that automates administration of a company-paid per diem plan and takes the guesswork out of tax-related record keeping. Our How it Works video demonstrates just easy the app is to use.
Per Diem Plus FLEETS is a configurable mobile application enterprise platform that automates administration of an IRS-compliant accountable per diem plan for truck drivers and fleets managers. No matter how big or small your company is, Per Diem Plus has a solution for you.
Per Diem Plus Fleets is also available on the Truckstop Marketplace, Samsara App Marketplace and Platform Science Marketplace
Per Diem Plus is a proprietary mobile software application that was designed by truckers and built by tax pros. It is the only IRS-compliant mobile enabled solution that automatically tracks each qualifying day of travel in the USA & Canada for solo and team drivers and replaces ELD backups (logbooks) to substantiate away-from-home travel.
Mark is tax counsel for Per Diem Plus. With nearly two decades of experience advising trucking companies on per diem issues, Mark was responsible for defining the Per Diem Plus software logic rules that automatically calculates trucker per diem in accordance with IRS regulations. He also previously served as the consulting per diem tax expert for Omnitracs.
In addition to his time working with Per Diem Plus, Mark works in private practice as an Enrolled Agent at Mark Sullivan Consulting, PLLC specializing in federal tax controversy representation and consulting. He also served as the consulting and expert witness for the Federal Defenders Office and private defense counsel in financial crimes cases in multiple federal district courts. Contact Mark W. Sullivan, EA
Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.
Copyright 2019-2022 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®
The following excerpt on the home office deduction is from "Making The IRS Work In Your Favor" presented by Mark W. Sullivan, EA at the 2018 CMC LIVE hosted by Kevin Rutherford and Let's Truck.
Taxpayers are not entitled to claim the home office deduction unless the expenses are attributable to a portion of the home, or a separate structure, used exclusively on a regular basis for business purposes. Here is what you need to know to take advantage of a great tax saving opportunity.
Only self-employed individuals may claim the home office deduction.
Portion of home used exclusively
(Refer to IRC Sec 280A(a), 280A(c), 280A(c)(1)(A))
(Refer to IRC Sec 280A(c)(5)(A))
PDP Small Fleets requires users to complete the account setup HERE before using the app.
Mark is tax counsel for Per Diem Plus. With nearly two decades of experience advising trucking companies on per diem issues, Mark was responsible for defining the Per Diem Plus software logic rules that automatically calculates trucker per diem in accordance with IRS regulations. He also previously served as the consulting per diem tax expert for Omnitracs.
In addition to his time working with Per Diem Plus, Mark works in private practice as an Enrolled Agent at Mark Sullivan Consulting, PLLC specializing in federal tax controversy representation and consulting. He also served as the consulting and expert witness for the Federal Defenders Office and private defense counsel in financial crimes cases in multiple federal district courts. Contact Mark W. Sullivan, EA
Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.
Copyright 2018-2023 Mark Sullivan Consulting, PLLC; Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®