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February 11, 2020

No Driver Per Diem Yields Surpise Tax Bill

Mark Sullivan- Per Diem Plus
Mark W. Sullivan, EA
Mark is our transportation industry expert and has over a decade of experience advising clients on IRS accountable per diem programs. 
Driver per diem report and trip summary
Trip Summary


Billy Millis received an unpleasant surprise tax bill because his employer did not offer driver per diem.

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.

  • He spent 304 nights away from home on the road in 2019,
  • Averaged 2700 miles/week,
  • Had a banner year in earnings.

His accountant called with an unwelcome surprise

After quickly assembling his tax records for his accountant he received an unwelcome surprise:

  • Exceptional earnings moved him into the 22% federal income tax bracket.
  • His total tax burden was $7,064 higher due to his employer not offering per diem.
  • The 304 days away from home were equal to $19,486 of non-taxable per diem that was considered taxable income.
  • Had his employer offered per diem his tax savings would have been about $138 per week or 5.1 cents per mile additional tax free cash.

Per diem vs. no per diem

The table highlights the federal and state tax consequence of Billy's employer not having a driver per diem program.

Per Diem vs. No Per Diem Tax Analysis

No driver per diem yields an unpleasant surprise

Billy received an unpleasant surprise this tax season because his employer did not offer per diem

  • $7,064 higher tax bill
  • $19,486 worth of per diem being treated as taxable income
  • $138 per week in additional taxes

Fleets are missing a tax savings opportunity

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.

Fleet Benefit of a Per Diem Program

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. 

About Per Diem Plus FLEETS

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.

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