The process of paying business taxes as an over-the-road driver includes exploring all legal ways that will help you save money. Being an independent contractor and having high costs connected to the operation of a truck, filing Form 2290 in order to get a stamped Schedule 1, as well as using per diem deduction, is very helpful.

What Is a Truck Driver Per Diem?

Per Diem is derived from Latin and means “per day.” It is a fixed daily allowance authorized by the Internal Revenue Service to be used toward M&IE when traveling away from your tax home for business purposes. Rather than keeping track of hundreds of receipts during the course of a year, drivers can take deductions based on the set standard rate per each qualifying day.

This deduction is restricted only to the meals and incidental expenses; however, expenses relating to accommodations and truck-related costs should be recorded and claimed separately through receipts.

Current IRS Per Diem Rates

For transportation businesses, the IRS sets out certain standard meal allowance rates. The rate per full day for travel within the continental United States (CONUS) is $80, whereas the rate per full day for travel outside the continental United States (OCONUS) is $86.

Given that drivers for hire are regulated by DOT regulations on hours of service, the IRS provides a special formula for deduction. The per diem rate for transportation industry employees can be deducted at 80 percent, which is much higher than the 50 percent deduction limit that applies to most other industries. On a full-day basis in CONUS, the deductible amount is $64 a day. Partial days of travel are deductible at three-fourths the standard rate.

Who Is Eligible to Claim Per Diem?

Qualifying criteria is based solely on your employment status:

• Owner-Operators and 1099 Independent Contractors: If you work as an independent operator, sole proprietor on Schedule C, or sole member of an LLC, you qualify to claim per diem as a reduction of business income.
• W-2 Company Drivers: Because of changes in the tax laws via the Tax Cuts and Jobs Act, employee drivers employed by the fleet cannot deduct unreimbursed employee business expenses from their personal tax return. Most motor carriers have company-funded per diem programs whereby a part of your salary is distributed to you as nontaxable reimbursement.

Documenting Days Away From Home

In order to claim per diem without triggering an audit by the Internal Revenue Service, record keeping is absolutely essential. The individual will have to show proof that they have traveled away from their tax home overnight for business purposes. Day trips that end with the individual returning home the same day are not allowed.

In place of meal receipts, you need to provide ELD logs, dispatch logs, fuel logs, and a calendar detailing all days that you have been on the road.

Connecting Tax Strategy with Trucking Compliance

Running a profitable trucking business is really about trying to maximize what comes in, while still handling the mandatory federal filings part, and you can’t really skip it. Like, keeping a tidy logbook does help protect your per diem deductions, and getting the heavy vehicle use tax properly done through Form 2290 is what guards your operating authority. When you combine smart daily tax deductions with rigid compliance across every required regulatory submission, owner operators can keep the cashflow in the right direction, and also have the kind of steadiness that lets the operation run smoothly through the whole year.

Note: For more information, visit IRS website