Over-the-road truck drivers must make purchases every day while on the road to get the job done. The cost of food, showers, laundry services and phone access adds up fast. That’s why Transport America is introducing a new per diem plan for truck drivers. This is the reclassification of income as non-taxable reimbursement. Under the program, the IRS allows you to reduce your taxable income by up to $59 per day for each full day you work away from home.
Per diem allows you to maximize the amount you take home from your job by reducing payroll and income taxes. Be aware that the program reallocates your income; the non-taxable reimbursement is not in addition to your base wages.
Record Keeping Requirements
The per diem program does not require you to keep receipts or prove your time away from home. This simplifies your tax recordkeeping obligation for a less stressful experience when it’s time to file your taxes.
Effects of Reduced W-2 Wages
If you apply for a loan, Disability or Unemployment benefits, the income on your W-2 is an important point for officers to consider. Transport America provides truck drivers in the program with taxable income on a W-2 along with the per diem amount and an explanation letting officers know that the per diem amount is part of your income; it’s just not taxable income.
Note that the per diem pay plan will reduce social security benefits. However, you still come out ahead because you could save $2,000 in taxes each year under the per diem program and only lose out on $4 to $11 per month in social security benefits. Speak with a tax advisor for more information about your situation.
Contributions to your 401K retirement plan and workers compensation claim amounts may also be reduced by participation in the per diem program. Fortunately, the reductions are minor compared to the tax savings you can enjoy.
Standard Pay Rate Reduction
While Transport America strives to maximize truck drivers’ take home pay, a one-cent administration fee is needed to pay for the costs of tracking and processing per diem, paying additional income taxes owed and covering IRS audit fees.
Join Transport America’s per diem program today to maximize your benefits and eliminate the need to keep receipts for tax purposes. Enrollment lasts until March 31, 2015. You can pick up a form at any Transport America Service Center or by calling your Fleet Leader.