Understanding Per Diems
Are you tired of being in the dark about Per Diem tax options? Look no further! Our team has created a simple guide to explain What Per Diem is and how it can benefit you!
To properly “seize the day” drivers might want to fully understand the concept of driver Per Diem.
In December 2017, the U.S. government approved a tax reform bill that affected many drivers. Part of the bill was the removal of a 2% itemized deduction given to truck drivers.
Without the deduction, some drivers will be exposed to a tax increase.
Veriha’s Per Diem Pay Package could offer drivers protection from the increase.
The Per Diem program is a voluntary option for Regional, OTR, and Entertainment Drivers that wish to take advantage of potential tax benefits.
An Overview of the Per Diem Program
Let’s put it in driver’s terms:
Your mileage pay is broken up into 2 separate rates:
Taxable Mileage Rate - if not currently on the per diem plan, your taxable mileage rate = current mileage rate less 14 cents. For example, if the current rate = 40 cents per mile then taxable mileage rate = 26 cents per mile.
Per Diem - the current Non-Taxable Per Diem Reimbursement Rate is 12.5 cents per mile
Entertainment pay is broken up into 2 separate rates:
Taxable Daily Rate - if not currently on the per diem plan, your taxable daily rate = current daily rate less $72 (example: current rate= 150 per day, then taxable daily rate = $78 per day)
Per Diem - the current Non-Taxable Per Diem Reimbursement Rate is $66 dollars per day. When calculating pay, only the taxable mileage rate will have taxes withheld and all Per Diem miles will be paid as a tax-free reimbursement.
FREQUENTLY ASKED QUESTIONS
Should I participate in the Per Diem plan?
We suggest consulting a tax professional to see if you would personally benefit from the plan. Every driver’s tax liability is a bit unique, so a tax professional would best be able to estimate the impact of the plan on your tax liability.
If the taxable mileage rate is reduced 14 cents, why isn’t the non-taxable per diem rate 14 cents instead of 12.5 cents?
Per Diem is considered an expense reimbursement by the IRS and a significant percentage of the cost is not deductible by the company. This Per Diem plan provides drivers with a benefit without increasing the company’s costs.
Am I required to retain receipts for meals and beverages if I am on the per diem plan?
You are not required to keep the receipts.