Per Diems

Let us start by saying the following:  

We’re not a CPA, not a lawyer, nor an expert on these matters - please consult your own professional advisors and do not rely solely on the information we’re providing below.

That said, here's a very good article which explains the ins and outs of per diems for the trucking space:

  https://www.perdiemplus.com/trucker-per-diem-rules-simply-explained/

(We’re not recommending PerDiemPlus, but they have a good article explaining the rules)

And another one that explains it in slightly different terms:

    https://www.nonforceddispatch.com/truck-driver-per-diem-tax-break/

And finally an article which explains the changes back in 2018 which caused a lot of the confusion in the trucking space.

   https://www.freightwaves.com/news/2018/1/16/ending-the-confusion-over-per-diem

(As we understand it, in the past company drivers could retroactively take the per diem deduction when they calculated their personal taxes, but the rule changed made that a no-no.  However the rules DID allow the company to deduct the per diem up front at the time of paying drivers.  But many people mistakenly thought per diems had been abolished when they said drivers couldn't do it on their own taxes after-the-fact.)

Essentially the per diem approach is to reclassify a portion of a driver's pay from "cpm pay" to "daily per diem reimbursement".  As an example, imagine a driver who has driven 2,000 miles and his cpm rate is $0.70/mile, so his pay would be $1,400 for the week.  But since the driver is a team driver and was away from home for 5 nights, he is eligible for 5 days of per diem at $66/day (2021 rate = $66/day.  2022 rate = $69/day).  So according to the IRS $330 of his pay is eligible to be classified as per diem reimbursement.  So in our system we create a per diem entry with a total amount of $0, which deducts $330 from the taxable portion of his pay and adds $330 to the non-taxable portion of his pay.  The net result is that his taxable pay becomes $1,070 in this example and his non-taxable portion is $330 while his total gross pay is $1,400.  This results in lower income taxes to the driver, along with a lower SS/medicare tax amount to both the driver and to the company.

What we cannot guarantee compliance on, however, is that you as the employer are responsible for making sure that you're correctly accounting for the # of days for which the driver is eligible for per diem each week.  We provide a screen (Days Worked) on the payroll which shows the # of miles dispatched each day of the week, and attempts to auto-calculate this for you based on rules we've written (and which you can change), but at the end of the day you have the ability to override what # we guessed for the actual  # of days worked (e.g. days of per diem) and you can enter whatever number you like there.  So in that sense we can't guarantee that you won't get your hand slapped by the IRS if you enter a bogus number of days worked into the system.