Carpe per diem: How to seize the tax deduction
Per diem is the daily allowance truckers receive to cover expenses, such as meals, when they are away from home.
Self-employed truck drivers or owner-operators can utilize these expenses as a tax deduction.
The IRS increased the per diem rate in 2021 for self-employed truckers or owner-operators to $69 per day, up from $66 per day. Per diem for travel in Canada increased from $71 to $74. Rates have remained unchanged since the IRS announced the 2023-24 per diem rates on Sept. 23, 2023. As of press time, a new rate had not been announced for next year.
Barry Fowler, who writes the Trucking & Taxes column for Land Line Magazine, has covered the issue of per diem several times.
“Self-employed truckers who are subject to the U.S. Department of Transportation’s hours-of-service regulations and who travel away from home overnight where sleep or rest is required can claim the per diem credit,” Fowler wrote. “As of Jan. 1, 2018, employee drivers can no longer claim per diem on their Form 1040 U.S. income tax return as an itemized deduction on Schedule A.”
To deduct your travel expenses, you, as the taxpayer, must be away from your home residence or tax home longer than what would constitute your ordinary work day. You must be away from your home long enough that you cannot complete the trip without sufficient sleep or rest.
It is not necessary that you be away for more than 24 hours in order to meet the overnight rule. An example would be if you were traveling on business and rented a room to sleep or rest during a layover. An example of not meeting the rule would be if you were traveling several hundred miles and needed to stop to rest for an hour.
Company drivers, however, have not been able to utilize the deduction in recent years. The Tax Cuts and Jobs Act of 2017 eliminated employee drivers’ ability to use the per diem deduction on their taxes.
The Tax Fairness for Workers Act, which has been in introduced in the House and Senate, would restore the tax credit for company drivers. LL