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Per Diem (per day) is one of your largest tax deductions as an owner-operator, but what is it exactly? In its simplest terms, the Per Diem deduction is a tax deduction that the IRS allows to substantiate ordinary and necessary business expenses paid or incurred while traveling away from home. In this article, we address the specific rules around using this significant tax deduction.

The IRS allows people who travel for business to deduct their meal expenses from their income. The IRS sets the Per Diem rate. The current rate (as of October 1, 2018) is $66 per day in the Continental US. You may hear the amount of the deduction quoted as $52.80. That is because the IRS only allows you to deduct 80% of that rate. Non-CDL riders who are performing other duties (bookkeeping, dispatching, assisting loading, and unloading) may deduct 50% of $66 which comes out to $33 per day for travel in the Continental US.

IMPORTANT NOTICE: The Per Diem rate from January 1, 2018 - September 30, 2018 was $63 per day in the Continental US. You need to keep this mind when you are filing your taxes for the 2018 tax year. If you need help calculating your Per Diem deduction and filing your taxes, please give us a call at 866-920-2827.

In order to qualify for these deductions, IRS publication 463 states that you are traveling from home if:

  1. Your duties require you to be away from the general area of your tax home substantially longer than an ordinary day's work, AND
  2. You need to sleep or rest to meet the demands of your work while away from home.   

It further states that taking a nap does not satisfy the requirement. However, “you do not need to be away from home for a whole day, as long as your relief from duty is long enough to get necessary sleep or rest.”

What does this mean to a driver? If you are an over-the-road driver, the rule is simple. You get to claim the tax deduction for each day that you are away from your “tax home”. On the days that you depart and the days that you arrive at home, you must claim a partial day allowance instead of a full day allowance. That is ¾ of the standard allowance.

Things become a little more complicated if you are a local driver. Are you gone from home long hours? Local and regional drivers are frequently away from their home much longer than an average eight-hour workday. Therefore, fulfilling the first part of the requirements is simple. However, notice the “AND” between the two requirements? This means that you must meet both conditions in order to claim the deduction. Another way to think of it is, drivers who start and end a trip at home on the same DOT HOS work day cannot claim per diem.

Furthermore, IRS publication 463 states that you must have a “tax home”. There are three tests to determine your tax home. In order to meet the requirements, you must satisfy at least two of the three following items:

  1. You have living expenses at your main home that you duplicate because your business requires you to be away from that home.
  2. You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging.
  3. You perform part of your business in the area of your main home, and use that home for lodging while doing business in the area.

So what does this all mean? In a nutshell:

  • You must be away from home for 'substantially longer than a normal work day', per the IRS.
  • You must have a home from which to be away.
  • If you meet both requirements above, you can deduct $52.80 for each full day away from home as a driver and $33 as a non-CDL rider. You can deduct $39.60 per partial day as a driver and $24.75 as a non-CDL rider.

At ATBS, we believe that a good way to start tracking Per Diem is to keep a Per Diem calendar, where you put an ‘X’ on full days away, and a ‘/’ on partial days. That way you can count up exactly how many days of Per Diem you have for your tax preparer come tax season. In order to prove your Per Diem, you will need to be able to provide DOT ELD logs with time, date and location. Also, it's good practice to keep all receipts and documentation of travel for at least 3 years.

The Department of the Treasury and Internal Revenue Service continue to work on regulations clarifying various tax matters that were affected by the Tax Cuts and Jobs Act. If future regulations are published that impacts the per diem deduction, ATBS will update this information and communicate any changes.

If you have more questions on Per Diem, please contact ATBS at 866-920-2827.

This article was originally featured on ATBS.com.

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I am familiar with the per diem for OTR, but since my husband has gone to regional driving I am not sure how much we can deduct. He leaves on Sunday night and returns on Saturday. We live in East Texas and he usually delivers in Dallas, Conroe or LaFayette, LA. He overnights in the truck even though he may not be more than a couple hours from home in order to get enough sleep to keep going all week. The actual driving time for these locations is 5-6 hours from home, but he may wait 6-8 hours to unload. How do I handle the per diem for these days?

February 21, 2016 7:30:51 AM

Good advise, short sweet and to the point

February 03, 2016 11:31:47 AM

My husband's employer offers to take care of the per diem on their end at a flat rate of $295 (I have asked if they updated that since the rate has gone up-no answer yet). This would just mean that amount is not being taxed, right?

So, if we had his employer do this all year then at tax time we would not have to itemize anything and could take the standard deduction? That would sort of be like being able to itemize and still get the standard, right?

January 26, 2016 18:44:14 PM

This is a great information for all o/o

January 02, 2016 18:16:16 PM

Great article! I had forgotten the rate change. Linda, hope you don't mind terribly, I'm going to try your file name idea too.

December 14, 2015 12:34:47 PM

My husband and I are just beginning the journey in team driving. My question is: even if we are not owner/operators, and are not having a per diem deduction through pay, can we take the deduction on our yearly taxes, and would it be times 2 for each day driven?

October 28, 2015 10:29:56 AM

If it helps anyone else the $59.00 deduction between Jan 1 and Sep 30, 2015 is $47.20 at 80 percent and 3/4 of that for a partial day is $35.40.

October 17, 2015 21:44:27 PM

I figured it out, it's 80 percent of $63.00, which is $50.40 and 3/4 of that is $37.80, and the same formula can be used to calculate the partial rate at $59.00.

October 17, 2015 21:26:08 PM

" You can deduct $37.80 per partial day as a driver". Is that based on $59.00 a day through September, or $63.00 a day through December? Is the 80 percent being taken from that or not? How is that calculated?

October 17, 2015 21:10:29 PM

Ofelia: If you are both leaving for work and then returning home on the same day, and you are not spending overnight in the truck, then more than likely you will not be able to claim per diem or meal expenses.

October 01, 2015 15:54:50 PM

Hello Luis,
am runing from Austin to Dallas to San Antonio and back to Austin. My home town is Ausitn. Can I claim the the ful per diem for this run?

March 03, 2014 20:47:04 PM

Sorry for the bubble post.

January 21, 2014 18:21:13 PM

This states non-cdl rider. What if they are a cdl holding rider?

January 21, 2014 17:40:52 PM

This states non-cdl rider. What if they are a cdl holding rider?

January 21, 2014 17:40:36 PM

Being a short-haul driver, I sure do miss my Per Diem! It was such a leg up when I would run over-the-road and should be tracked by every OTR driver to maximize the benefit!

January 18, 2014 7:47:04 AM

Good Article !

January 16, 2014 14:10:04 PM

Luis, great article!

January 16, 2014 14:00:12 PM

Luis, great article!

January 16, 2014 14:00:07 PM

Very well written Luis. Thank you for boiling down the IRS jargon into simple to understand concepts and language.

January 15, 2014 13:45:54 PM

This is a huge deduction for a team and I one that I am very careful to keep track of. We are on electronic logs and I save a copy of our logs from the server to my computer. As I look through each log I count the full days away from as well as the partial days from home and then I add those days to the file name; January Linda 25_5 is an example. At the end of the year I add up the days and I am done.

January 14, 2014 15:55:45 PM

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