A trucker asked the following question to our tax pros recently, “If I have two different home addresses can I claim per diem while off duty at either location? And can I claim per diem for off days spent visiting my wife in Oregon”
Facts: Bill is an OTR trucker who claims Las Vegas, Nevada as his tax home. He takes 4 days off for every 2 weeks he is on the road. He and his wife were married in June 2017 and listed the Nevada address where they maintain a home (a state with no income tax) on their 2017 Federal income tax return[iii]. However, one year later she still lives 920 miles away in Oregon (a state with an income tax) where he stays with her on his off days. His wife picks him up at the truck stop where he parks his truck. Bill has been claiming per diem for every day he is away from his Las Vegas home on a truck driving trip.
Self-employed truck drivers subject to DOT hours of service regulations are entitled to claim per diem for meals and incidental expenses and other travel-related expense as a tax deduction. A truck driver is not away from home unless his or her duties require the individual to be away from the general area of his or her tax home for a period substantially longer than an ordinary workday[i]. Furthermore, to claim travel-related expenses a trucker must have a tax home [where they park their truck] in a real and substantial sense[ii]. However, a deduction is only allowed for ordinary and necessary traveling expenses incurred by a taxpayer while away from home in the conduct of a trade or business.
Inquiry: Whether his tax home is Nevada or Oregon and whether the Las Vegas home is indeed his permanent residence for per diem purposes are factual questions resolved by the fact 1) a taxpayer can only have one tax home 2) Bill acknowledged that he does not spend any off days in Nevada 3) he bares household expenses in maintaining both the Las Vegas and Oregon home, and 4) visiting with his wife in Oregon on his off days does not meet the legal requirement of incurring ordinary and necessary traveling expenses in the conduct of a trade or business.
As this example demonstrates, per diem issues can be complicated. Per diem would be allowed for a driver who is away from home undergoing a 34-hour restart while in transit between a shipper and consignee, but not if the restart is done at home. Although, Bill claims Las Vegas, Nevada as his tax home, the facts dictate that Oregon is his tax home in a real and substantial sense, thus he does not qualify for per diem while visiting his wife. Additionally, attempting to claim per diem for every day he was away from his Las Vegas home – 365 days in this case – would be a red flag to IRS for audit.
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.
[i] IRS Rev. Proc. 2011-47 (most recently superseded by 2017-42) & IRC 162(a)(2); Reg 1.162-2)
[ii] Rev. Rul. 75-432
[iii] Bill did not disclose whether he and his wife filed an income tax return with Oregon. Nevada does not have an income tax.