Under the 2017 Tax Reform and Jobs Act company drivers who travel away from home overnight will no longer be allowed to claim unreimbursed employee business expenses on Schedule A, Itemized Deductions, which includes per diem and other job-related expenses[1]. The good news is that more motor carriers are evaluating implementing a company-paid per diem program using the Per Diem Plus® mobile application platform to offset the lost tax deductions for their drivers. The following tables are designed to assist employee truck drivers in evaluating whether company-paid per diem will lower their taxes over 2017 and put more money in their pocket.

Single Driver
Example A:
  • In 2017 the driver earned $60,000 and claimed itemized deductions of $16,852, which included $12,852 of net per diem ($63 x 255 days = $16,065 – 20% non-deductible portion) [2], $2,000 for cell phone, tools, GPS unit, etc. and $2,000 of state income taxes.
  • In 2018 the driver earns $60,000 and elects to enroll in a company-paid per diem plan at $63 / day for each night he is away from home; his tax bill will decrease by $2,261.
Example B:
  • In 2017 the driver earned $60,000, claimed one (1) personal exemption, did not elect to itemize deductions and claimed the standard deduction of $6,350.
  • In 2018 the driver earns $60,000 and elects to enroll in a company-paid per diem plan at $63 / day for each night he is away from home; his tax bill will decrease by $4,598.

Single Driver Table Image

Married Driver – One Earner Household & No Dependent Children
Example A:
  • In 2017 the driver earned $60,000 and claimed itemized deductions of $16,852, which included $12,852 of net per diem ($63 x 255 days = $16,065 – 20% non-deductible portion) [4], $2,000 for cell phone, tools, GPS unit, etc. and $2,000 of state income taxes.
  • In 2018 the driver earns $60,000 and elects to enroll in a company-paid per diem plan at $63 / day for each night he is away from home; his tax bill will decrease by $2,584.
Example B:
  • In 2017 the driver earned $60,000, claimed two (2) personal exemptions, did not elect to itemize deductions and claimed the standard deduction of $12,700.
  • In 2018 the driver earns $60,000 and elects to enroll in a company-paid per diem plan at $63 / day for each night he is away from home; his tax bill will decrease by $3,034.

Married Driver Table Image

Weekly Pay Comparison Table

Per Diem Rate Scenario Table Image

Is your motor carrier struggling with implementing a per diem program? The Per Diem Plus mobile application platform is an easy and cost-effective solution that enables fleets to implement IRS-compliant substantiated per diem plan[iii] that will not only raise employee driver take-home pay, enhance recruiting and retention, but offsets the elimination of driver tax deductions for per diem and unreimbursed employee business expenses[iv]. Contact us at Info@perdiemplus.com to schedule a free demonstration.

Drivers, try Per Diem Plus for free for 30 days – No Credit Card Required.

   
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This article was written by Mark W. Sullivan, EA, who has been providing taxpayer advocacy, consulting, and litigation services since 1998. Prior to starting a private practice, 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. He has over a decade of experience advising transportation industry clients with respect to per diem issues.

 

Please remember that everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult your own tax or accounting professional.

 

Copyright 2018 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®

[1] Under H.R. 1 “Tax Cuts and Job Act” OTR employee truck drivers will no longer be allowed a tax deduction for unreimbursed business expenses, which includes “meal expenses that take place during or incident to any period subject to the Department of Transportation’s “hours of service” limits” and miscellaneous expenses.

[2] In accordance with IRS Revenue Procedure 2011-47 Sec 4.04 (superseded most recently by Notice 2017-54) covers meals and incidental expenses only. A driver can deduct 80% of per diem.

[3] Miscellaneous itemized deductions are subject an additional reduction calculated at 2% of adjusted gross income (AGI)

[4] In accordance with IRS Revenue Procedure 2011-47 Sec 4.04 (superseded most recently by Notice 2017-54) covers meals and incidental expenses only. A driver can deduct 80% of per diem.

[i] Tax Tables – 2017 Publication 17

[ii] Tax Tables – 2017 Publication 17

[iii] All amounts paid under the arrangement are treated as paid under an accountable plan and are excluded from income and wages.

[iv] Under H.R. 1 “Tax Cuts and Job Act” OTR employee truck drivers will no longer be allowed a tax deduction for unreimbursed business expenses, which includes “meal expenses that take place during or incident to any period subject to the Department of Transportation’s “hours of service” limits” and other job-related expenses.

Per Diem, Tax, Trucker Impact, truckers