How Truck Drivers Can Easily Claim Per Diem on Their Taxes

Understand what per diem is and why it matters for truck drivers

What is Per Diem?

Per diem is a Latin term that means “per day.” In the trucking industry, it refers to the daily allowance paid to drivers to cover their meals and other incidental expenses while they are on the road. The per diem rate varies from year to year, but it is usually around $63 per day.

Why Does Per Diem Matter?

Per diem matters because it can significantly reduce the amount of income tax that truck drivers have to pay. The Internal Revenue Service (IRS) allows truck drivers to deduct 80% of their per diem payments from their taxable income. This deduction applies regardless of whether the driver itemizes their deductions or takes the standard deduction.

How Does Per Diem Affect Taxes?

Per diem affects taxes because it reduces the amount of taxable income that a truck driver has. For example, if a driver earns $50,000 in wages and receives $15,000 in per diem payments, their taxable income will only be $35,000. This can result in significant tax savings for the driver.

It’s important to note that per diem payments are not subject to Social Security or Medicare taxes, which means that drivers can also save on their payroll taxes. However, drivers need to keep accurate records of their per diem expenses and payments to claim the deduction accurately.

Keep accurate records of your expenses and receipts

Track Your Expenses

Truck drivers must keep accurate records of their expenses to claim per diem on their taxes. Keeping track of your expenses can also help you maintain a budget and reduce unnecessary spending. You can use a spreadsheet or a mobile app to record your expenses, including meals, lodging, and other travel-related expenses. Be sure to include the date, amount, and description of each expense.

Save Your Receipts

In addition to tracking your expenses, it’s important to keep all your receipts. The IRS requires that you have documentation for every expense you claim, including receipts for meals that cost more than $75. Make sure the receipts are itemized and show the name of the establishment, date, amount, and the items purchased. You can keep physical copies of your receipts or use digital methods such as scanning them or taking photos.

Organize Your Records

To make tax filing easier, it’s important to keep your expense and receipt records organized. This can be done by creating a filing system for physical receipts or using a digital organization tool. Make sure you have a system in place that allows you to quickly and easily access your records when needed. Keep your records in a safe place and make backups, especially for digital records. By keeping detailed and organized records, you can easily claim per diem on your taxes and avoid any issues with the IRS.

Determine the per diem rate for the area you’re traveling to

Research the per diem rates

Before determining the per diem rate for the area you’re traveling to, you need to know what the per diem rates are. The rates vary depending on the location of travel and the time of year. You can find the per diem rates on the General Services Administration (GSA) website. The GSA updates the per diem rates every fiscal year, and they are broken down by location and month.

Determine your eligibility

To claim per diem on your taxes, you must meet certain eligibility requirements. First, you must be away from your tax home, which is usually your place of business or residence, for longer than a normal workday and you have to sleep away from home. Second, you must be traveling for business purposes, such as driving to a different city or state for work or attending a conference. If you meet these requirements, you may be able to claim per diem on your taxes.

Calculate your per diem rate

To calculate your per diem rate, first, determine the per diem rate for the location you’re traveling to. Then, multiply that rate by the number of days you spend traveling for business. If you’re traveling to multiple locations with different per diem rates, you’ll need to calculate the per diem rate for each location and add them together. Remember, you can only claim the per diem rate for the days you were away from home for business purposes, not for personal days.

Calculate your per diem deductions accurately and correctly

Use the correct per diem rates

The first step in calculating your per diem deductions accurately is to use the correct per diem rates. The IRS sets different rates for different locations, so it’s essential to ensure that you’re using the right rate for the city or area you’re traveling to. These rates can change annually, so always check the latest rates before filing your taxes.

Keep accurate records

To claim per diem deductions on your taxes, you need to keep accurate records of your travel expenses. Make sure to keep receipts for any meals and lodging expenses you incur while on the road. It’s also advisable to maintain a detailed log of your travel dates, locations, and expenses.

Understand the limitations of per diem deductions

While per diem deductions can help you save money on your taxes, it’s essential to understand their limitations. For example, you can only claim per diem deductions for business travel, not personal travel. Additionally, you can’t claim per diem deductions for expenses that are reimbursed by your employer. Finally, if you’re self-employed, you can’t claim per diem deductions for meals and lodging that you provide for yourself.

File your taxes correctly and on time to claim your per diem deductions

File Your Taxes on Time

It is essential to file your taxes on time to claim your per diem deductions. The IRS imposes penalties and interest for late filing. As a truck driver, it may be challenging to keep track of all the necessary paperwork and information required to file your returns accurately. However, it is crucial to make an effort to file your taxes on time to avoid penalties and claim all available deductions.

Correctly Claim Your Per Diem Deductions

To correctly claim your per diem deductions, you must maintain accurate records of all your expenses, including meals, lodging, and incidental expenses. Keep in mind that the IRS has different rules for per diem deductions based on whether you are an employee or an independent contractor. Ensure that you understand these rules before claiming your per diem deductions to avoid audit triggers and other issues.

Seek Professional Help if Necessary

If you are uncertain about how to claim your per diem deductions or have special circumstances that require professional advice, do not hesitate to seek help from a tax professional. These experts can provide guidance on how to correctly claim your per diem deductions and ensure that you take advantage of all available tax credits and deductions. However, ensure that you choose a reputable and experienced tax professional who understands the unique challenges faced by truck drivers.

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