Per diem literally means ‘per day’ or ‘each day’. For truckers, per diem refers to meal deductions. This deduction will reduce the amount of taxable income you will have on your tax return. To claim per diem, you must be away from home for the night. You cannot leave home, work an 18-hour day, and then return home and still claim per diem. By IRS standards, this does not qualify as being away from home for a full day.
Both company drivers and owner-operators can claim per diem. If you are a company driver, make sure you do not receive an untaxed per diem allowance from your employer. For company drivers, per diem is an itemized deduction, and for owner-operators it is a total amount deducted on your Schedule C tax return. When deducting per diem, it will reduce both taxable income and self-employment tax.
There are two ways to deduct meals while on the road:
- Option 1: Keep track of the days you were on the road and take 80% of the per diem rate for each day.
- Option 2: Keep all your food receipts and deduct 80% of your total expenses.
The current federal per diem rate (as of October 1, 2015) is $63.00 per day when traveling inside the United States and $68 when traveling in Canada. If you choose Option 1, you can only deduct 80% of $63.00. So the actual deductible amount is $50.40 for each full day away from home in the United States and $54.40 in Canada. There is also a partial per diem rate for the days you arrive home and the days you leave home. This is $37.80 a day. For every trip you take, the per diem deductions are as follows:
- the day you leave home is a partial-day deduction
- the day you return home is a partial-day deduction
- every day in between is a full day
|You should keep a separate calendar to keep track of your per diem. Use an (X) on each day you are away for a full day and a (/) for a partial day.
It’s important to keep accurate logbooks so you can calculate your per diem correctly in case of an audit by the IRS. I recommend having a separate calendar just to keep track of your per diem. Use an (X) on each day you are away for a full day and a (/) for a partial day. You will probably be able to deduct somewhere between $10,000 and $14,000 for the year, depending on how many days you spent on the road.
Most people do not spend the full amount allotted by the IRS for food every day, so using per diem is actually more beneficial than the percentage method. The great thing about per diem is even if you do not spend $50.40 every day; you can still deduct the full amount. Every once in a while you might spend that much, but it is unlikely you are spending this much on a regular basis. If you choose to claim a percentage of your actual costs, you need to keep very meticulous records, and can still only deduct 80%. Those who claim the standard per diem deduction do not need to keep records of actual costs, but must still have records of their time of travel and destination, as well as the business purpose of their trip. Since you keep track of this in your logbooks, it is very simple to find out the number days you can claim per diem. You could save a lot of money by using per diem instead of using your actual meal receipts. Keep in mind you cannot combine these two methods. So, if you use per diem for one trip, you must use it for every trip.
There is no reason to go through all the work of keeping and cataloging each and every receipt. Using per diem will save time and most likely save more money than deducting a percentage of your expenses. Since the IRS allows you to write off the full applicable amount no matter how much actually spent, you should take advantage of it.