Designed by drivers, built by tax pros
Our tax experts jotted down some common questions customers have asked us about trucker per diem rules for fleets.
What is per diem?
The term"per diem allowance" means a payment under a reimbursement or other expense allowance arrangement that is — (1)
- Paid for ordinary and necessary business expenses incurred, or that the payor reasonably anticipates will be incurred, by an employee for meal and incidental expenses, for travel away from home performing services as an employee of the employer.
- Paid at or below the applicable transportation industry per diem rate.
Trucker per diem rules for fleets eliminate the need for proving actual costs for meals & incidental expenses incurred.
“Partnering with Per Diem Plus provided us a turn-key solution configured to meet the needs of our fleet”Nick A., Controller
Under the 2017 Tax Cuts & Job Act can motor carriers still offer per diem to employee drivers?
Yes. Drivers that receive a non-taxable per diem reimbursement from their employer (trucking company) do so under IRC Sec 62(2)(a).
Which employee drivers qualify for per diem?
Under the trucker per diem rules for fleets a motor carrier can offer per diem only to drivers who are:
- Subject to DOT HOS,
- Who travel away from home overnight where sleep or rest is required, and
- Do not start and end a trip at home on the same DOT HOS 14-hour work day.
Can all truck drivers receive per diem?
No. Drivers who start and end a trip at home on the same DOT HOS 14-hour work day cannot receive per diem.
- As of January 1, 2018 employee (company) drivers can no longer claim per diem on their Form 1040, US Income Tax Return, as an itemized deduction on Schedule A.
Will a motor carrier save money by implementing a company-paid per diem plan?
A fleet will save approximately $0.02/mile/driver as the payroll tax and worker compensation savings exceed the tax on the 20% nondeductible portion of per diem. Read the Case Study.
Will a per diem plan raise driver pay?
Yes. On average driver pay will increase from $0.03 - $0.04/per mile.
What documentation is required to substantiate driver per diem?
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:
What documentation meets the IRS substantiation requirements?
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.
Is company-paid per diem taxable as income to an employee driver under an accountable fleet per diem plan?
No. Per diem is classified as a non-taxable reimbursement to an employee driver and is not reported under wages on Form W-2.
What are the current per diem rates for travel in USA & Canada?
IRS increased per diem rates effective October 1, 2018
USA $66 from $63
Canada $71 from $68
How much per diem can a fleet deduct on the corporate income tax return?
A fleet can deduct 80% of per diem on their income tax return. However, the payroll tax and worker comepnsation savings ordinarily exceed the tax on the nondeductible portion of per diem.
What documentation is required to prove other expenses?
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.
Can a fleet pay per diem for lodging?
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.
How long should tax records be retained?
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.
What published guidance has the IRS issued that explains trucker per diem?
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.
Get in touch with the experts at Per Diem Plus today to discuss a smooth rollout for your system.
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. 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 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®