TAX INFORMATION FYI

[Fkatz]

HERE IS A NOTE IN REFERENCE TO THE PER DIEM FOR 2005 IF YOU HAVE NOT FILED YOUR TAX RETURN

IN THE US IT IS $41.00 PER DAY
IN CANADA OR MEXICO IT IS $46.00 PER DAY

YOU MUST USE THESE PER DIEM FIGURES IF YOU WERE IN BUSINESS OR DRIVING FOR THE WHOLE YEAR.
F YOU STARTED IN BUSINESS FOR YOURSELF OR ARE A COMPANY DRIVER AFTER SEPTEMBER 30, 2005 THEN , AND ONLY THEN YOU MAY USE THE NEW PER DIEM RATES WHICH ARE LISTED BELOW

This is subject to 70% for the actual deduction that is put on line 24:
Meals & entertainment
if you are doing it by hand multiply the total amount by 70% and enter the final total on that line.
I do not know what Turbo Tax, Tax-cut or any of the Over the Counter Tax software calculates it. But If you are trying to save $$$$ by doing it yourself, then I would be careful.

THE 2006 PER DIEM IS $52.00 us AND $58.00 CANADA OR MEXICO

THERE ARE CERTAIN RULES THAT APPLY TO THE PER DIEM ALLOWANCE FOR TRUCK DRIVERS.

THE PER DIEM ALLOWANCE STARTS FROM THE DAY AND EXACT TIME YOU LEAVE YOUR HOME TO THE EXACT TIME YOU RETURN HOME. THE REASON FOR THIS IS THAT THE PER DIEM IS BROKEN DOWN BY 1/4 DAYS. MEANING MIDNIGHT TO 6AM, 6AM TO NOON, NOON TO 6 PM AND 6 PM TO MIDNIGHT.

HERE IS AN EXAMPLE:

YOU LEAVE OUT AT 3PM ON MONDAY, AND RETURN HOME SAT AT 9PM
YOU WOULD RECIEVE 1/2 DAY FOR MONDAY AND 3/4 DAY FOR SAT. PLUS FULL DAYS FOR TUES, WED, THURS, AND FRIDAY SO YOU WERE OUT FOR A TOTAL OF 5 1/4 DAYS FOR THE PER DIEM.

STANDARD MILEAGE RATE FOR 2005

THIS WOULD BE ONLY FOR PICK-UP TRUCK WITH A 8-12 FT BOX, FORD, CHEVY, DODGE, OR SPRINTER CARGO VAN, AND CARGO VANS WITH A WITH 12-14 FT BOXES ONLY. CLASS 7 AND 8 TRUCKS CANNOT TAKE THE STANDARD MILEAGE RATE.

THE RATE FROM JANUARY 1TH THROUGH AUGUST 31TH IS $ .44 1/2 AND FROM SEPTEMBER 1TH, THROUGH 12/31, 2005 IS $ .48 1/2

THE 2006 MILEAGE RATE IS BACK TO $ 44 1/2


I HAVE AVAILABLE TO YOU A DEDUCTION LIST AND TRUCK EXPENSE SHEET AVAILABLE TO YOU TO MY DIRECT E-MAIL ADDRESS OF FKATZ1@AOL.COM

SO IF ANYONE WOULD LIKE ONE JUST ASK

FRANKLIN KATZ, ATP
FRANKS TAX & BUSINESS SERVICE
226 S CHEROKEE ST
KINGS MOUNTAIN, NC 28086

[Foxfire]

That would be good to have on hand. I've already done taxes and almost spent the refund check.... lol. But I am starting a new adventure in the near future and these may be a big help to me. Please send me a copy @ margie53@tampabay.rr.com . Thx Frank

[David_Reed]

Per diem.

There are companies that pay $.xx cpm per diem.
Like, for instance at $.08 cpm, you have to run 455 miles PER DAY to equal the 70% of $52.00, $36.40.

How can one achieve a balance with the flat rate versus mileage rate if the miles don't average out to equal or greater than the flat rate?

However, if you are out on the road and sit for 1 or 2 days, you are not getting miles, but are away from home and have per diem type expenses, ie., meals.

I have heard it can be a red flag to claim both on the same return, but, would it not be fair to use the 70% rate on those days you drove no miles, but were away form home?

And, of course, you could substantiate the claim if challenged, same as you do when you are ony taking the IRS rate, your log books are the proof, right?

BTW, I can't understand, but would like to, why do some companies pay this way? At some, it is mandatory, so I have to believe there is some advantage to them, otherwise, it would be optional, right?

[Fkatz]

David_Reed
Member


Joined: 03 Dec 2005
Posts: 84
Location: SW Missouri
Posted: Mon Mar 13, 2006 2:11 pm Post subject:

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Per diem.

There are companies that pay $.xx cpm per diem.
Like, for instance at $.08 cpm, you have to run 455 miles PER DAY to equal the 70% of $52.00, $36.40.

How can one achieve a balance with the flat rate versus mileage rate if the miles don't average out to equal or greater than the flat rate?

However, if you are out on the road and sit for 1 or 2 days, you are not getting miles, but are away from home and have per diem type expenses, ie., meals.

I have heard it can be a red flag to claim both on the same return, but, would it not be fair to use the 70% rate on those days you drove no miles, but were away form home?

And, of course, you could substantiate the claim if challenged, same as you do when you are ony taking the IRS rate, your log books are the proof, right?

BTW, I can't understand, but would like to, why do some companies pay this way? At some, it is mandatory, so I have to believe there is some advantage to them, otherwise, it would be optional, right?
_________________
David "Rusty" Reed

Former O/O, Now, a Full Time Company Dweller
OOIDA Member

Afternoon Dave,

I think you misunderstand, as a tractor trailer driver you cannot take mileage due to being a company driver. The per diem is to Cover Meals due to the fact that you stay in your truck and not take motels, unless you are either broke down, or laid over and dont want to stay in the truck.
The cpm per diem should be included in your gross income on your W-2 since you are a company driver. Otherwise is should be put in BOX 14. AS SHOWN LIKE THIS L $XXXX. If it is there is would be an offset of the total as a reimbursement. for example, the correct form that you should be using is 2106, EMPLOYEE BUSINESS EXPENSES. IF YOU ARE NOT GETTING THE DEDUCTION THEN YOUR TAX PREPARER KNOWS NOTHING ABOUT PREPARING TAXES. OR TRUCKING.

FORM 2106 IS USED FOR COMPANY DRIVERS

line 1a does not pertain to anyone but rural mail carriers.
Line 2a is for parking tolls and publice transportaiton expenses
Line 3a is for travel (motels)
Line 4a is for misc expenses not reimbursed
Line 5a is for your total per diem at the full amount
Line 5b states per diem for dot regualtions total full amount as 5a

REIMBURSMENTS NOT INCLUDED IN BOX 1 OF W-2

line 7a OTHER BUSINESS EXPENSE
THIS IS WHERE THE AMOUNT IN BOX 14 WOULD GO DUE TO NOT BEING A REIMBURSEMENT FOR MEALS BUT FOR MILEAGE AND NOT ON LINE 7B WHICHIS FOR MEALS.NOT ON LINE 7B

EACH AND EVERY DAY THAT YOU ARE OUT IS A PER DIEM DAY, BUT IT MUST BE BROKEN DOWN BY 1/4 DAYS OF THE DAY YOU LEFT AND THE DAY YOU RETURNED.

COMPANY DRIVER LOG BOOKS SHOULD BE KEEP FOR A PERIOD OF 3 YEARS NOT 30 DAYS AS THE DOT SUGGESTS, THIS IS FOR THE IRS, NOT THE DOT. AND THERE IS A 3 YEAR STATUE OF LIMITATIONS ON BEING AUDITED

iF YOU ARE AN 0/0 THEN IT IS A MIN OF 10 YEARS AND A MAX OF 15 YEARS DUE TO SELF EMPLOYMENT.

i HOPE i ANSWERED YOUR QUESTION OR STATEMENT

FRANK

[Uturn2001]

Frank, I think you may misunderstand what David is asking about. He is not asking about getting any type of mileage deductions for driving a company vehicle.

What he is saying is that some companies pay a per diem rate based on a cents per mile rate instead of a flat rate.

For example: Driver is paid 30 cpm with an 8 cpm per diem. Driver is taxed normally on 22 cpm and the 8 cpm he is not taxed on. Basicaly the driver is getting at least part of the meal allowance deduction at the time he is paid instead of waiting until the end of the year.

What David is wanting to know is how does a driver who is paid on a per diem basis handle this on his taxes at the end of the year especially if the flat rate and what he was paid by per diem does not equal out.
=================================================

why do some companies pay this way? At some, it is mandatory, so I have to believe there is some advantage to them, otherwise, it would be optional, right?

David, I can answer this one for you. Companies pay per diem because it saves them money since much of what they pay out in certain taxes and benefits are based on an employee's taxable income. Since the per diem rate they offer is not taxable they do not have to pay in for that amount. In essence if a company is paying its drivers on an 8 cpm per diem rate they are getting 8 cpm worth of work from their drivers tax free.

Hope that answers your question why some companies pay per diem. It really is not any advantage to the driver. Any advantages the driver may see is actually wiped out by losses to their SSI accounts, workers comp claim, vacation pay, etc.

[David_Reed]

Fkatz,

UTurn got it right, you misunderstood the question.

He did understand it and explained the part about the companies advantage and I should have thought of that myself. Makes sense.

The part about SSI also, and that to qualify for a loan, because your taxable income is what they look at as income, not the per diem pay.

Still, my question is, if the per diem paid, calculated on a per mile basis is not equal to the maximum flat rate for each full day a driver is on the road, in the truck, how can he achieve equity with the flat rate?

Fkatz, if you still do not understand the question, I will try again to state it clearer.

Thanks

[David_Reed]

It would seem during his brief visit today, Fkatz deemed to disregard the thread regarding per diem and respond to the ongoing discussion where his previous information was challenged.

Coincidentally, the same discussion arose on "that other" trucking forum and here is a response from a member who did the "legwork" that "kinda" addresses the issue, but does not address my very specific question.

to qoute;

The Special Rate for Transportation Workers increased on Oct 1st 2005. You are allowed to take this increase IF you are using the special transportation rate for Jan1st thru Sept. 30th period. So you get $41/day Jan1-Sept 30th then $52/day for the rest of the year.

The 4 six hour periods quoted by David Reed has not been in the IRS pub 463 examples for at least two years. While researching the $41/day increase in November two years ago I found only two examples on how to deduct a partial day. Both of these examples are still in the new pub 463 available on the IRS website. Here it is pasted from notepad. Taken from IRS pub 463.


Page 6 Chapter 1 Travel

United States) from October 1, 2005, through
December 31, 2005.

Using the special rate for transportation workers
eliminates the need for you to determine the
standard meal allowance for every area where
you stop for sleep or rest. If you choose to use
the special rate for any trip, you must use the
special rate (and not use the regular standard
meal allowance rates) for all trips you take that
year.

Travel for days you depart and return. For
both the day you depart for and the day you
return from a business trip, you must prorate the
standard meal allowance (figure a reduced
amount for each day). You can do so by one of
two methods.

• Method 1: You can claim 3/4 of the standard
meal allowance.
• Method 2: You can prorate using any
method that you consistently apply and
that is in accordance with reasonable business
practice.
Example. Jen is employed in New Orleans
as a convention planner. In March, her employer
sent her on a 3-day trip to Washington, DC, to
attend a planning seminar. She left her home in
New Orleans at 10 a.m. on Wednesday and
arrived in Washington, DC, at 5:30 p.m. After
spending two nights there, she flew back to New
Orleans on Friday and arrived back home at

8:00 p.m. Jen’s employer gave her a flat amount
to cover her expenses and included it with her
wages.
Under Method 1, Jen can claim 21/2 days of
the standard meal allowance for Washington,
DC: 3/4 of the daily rate for Wednesday and
Friday (the days she departed and returned),
and the full daily rate for Thursday.

Under Method 2, Jen could also use any
method that she applies consistently and that is
in accordance with reasonable business practice.
For example, she could claim 3 days of the
standard meal allowance even though a federal
employee would have to use Method 1 and be
limited to only 21/2 days.

So, drivers, it states you MUST use a method that is an acceptable business practice. Then you are given two examples and one of them says it is acceptable to claim the "ENTIRE DAY" for your partial days away from home. It does NOT give a length of time for that partial day. If you log getting home at 15 minutes after midnight that is an entire day at $52/day.


.................

[Fkatz]

DAVID,

I have addressed the Per Diem, in reference to All Drivers weather it be O/O's or company

The Ruling on this is basically simple and that is This. I know what Terry Quoted, and I read it and answered it if you looked, But the example was for a Convention Organizer not a Truck Driver. This Explaination does not pertain to US. and the other is also not for truckdrivers either it is for the ALL PERSONS who have transportation expenses and are able to use the standard mileage, Meals, and Motel rates. We Cannot use thoughs rates due to the nature of the trucking industry, by being in different places every day, not just going to one place and staying for any length of time. like 3, 4 or even a week, using the example New Orleans.

in the transportation Industry, particually truck drivers, bus drivers, or passenger boats, etc use only the per diem based on 1/3 or 1/4 days only. Since there mode of transportation requires DOT Regulation and a Sleeper, or motel provided either by the company or in the Truck.

The main item that is considered is QUOTE: DOT REGULATIONS WHEN YOU ARE SUBJECT TO THESE REGULATIONS EVEN IF YOU SIT AND NOT ROLL THE PER DIEM IS FOR YOU AND CAN BE TAKEN.
"PERIOD" . YOU ARE ENTITLED TO IT JUST FOR BEING ON THE ROAD AND USING YOUR SLEEPER ON YOUR LOG BOOK. THE LOG BOOK IS YOUR BIBLE IN REFERENCE TO THE PER DIEM.. THIS ITEM IS A MUST TO KEEP FOR 3 YEARS, JUST IN CASE IT IS YOUR PROOF AND IT MUST BE FIGURED WITH PARTIAL DAYS. DUE TO THE NATURE OF THE TRUCKING INDUSTRY,

YOU MUST USE THE PER DIEM THAT IS ALLOWED OF $41.00 AND $46 ALL YEAR IF YOU HAVE AND BEEN A DRIVER PRIOR TO OCT 1, 2005. IF YOU STARTED IN WORKING AFTER OR ON OCT 1, 2005 THEN THE HIGHER PER DIEM IS ALLOWED. IF NOT YOU WILL BE AUDITED. A RED FLAG ON THE TOTAL FIGURE WILL SHOW HOW IT WAS ARRIVED AT WHEN THERE IS A SPLIT FIGURE YOU MUST DESCRIBE HOW THAT FIGURE WAS OBTAINED. BY BREAKING DOWN THE DAYS SHOWING THE FOLLOWING

XXX DAYS SUBJECT TO DOT REGS PRIOR TO 10/1/05 @ $41
XXX DAYS SUBJECT TO DOT REGS CANADA PRIOR TO 10/1 @$46 PER DAY
THE SAME FOR AFTER 10/1 ETC. AT 52, AND 58

These figures then will be figured by the 70% for 2005

[u][b] COMPANY DRIVERS[b][u]

Here is where a Company driver might not be able to claim the per diem deduction at all.

Company drivers must itemize on 2106 emplyee business expenses which carries over to the Sch A iitemized deductions n order to qualify for the deduction due to the standard deductions as follows

MARRIED FILING jOINT $10,000

SINGLE $ 5000.00

HEAD OF HOUSEHOLD, MUST HAVE CHILDERN AND SEPARATED(MORE THAN 6 MONTHS AND HAS CUSTODY OR DIVORCED $7,300

MARRIED FILING SEPARTELY, $5,000.00

EXAMPLE: IF YOU ARE A SINGLE COMPANY DRIVER AND YOUR ONLY DEDUCTION IS YOUR PER DIEM FOR OVERNIGHTS, YOUR DEDUCTION MUST TOTAL MORE THAN THE STANDARD DEDUCTION STATED ABOVE.

IF YOU ARE REIMBUSED AND IT SHOWS ON BOX 14 ON YOUR W-2 THEN AND ONLY THEN IT MUST BE ENTERED ON LINE 7A OF THE FORM 2106 AND THIS COULD REDUCE YOUR TOTAL TO LESS THAN THE STANDARD DEDUCTION. AT THAT POINT THE TOTAL DEDUCTION IS NOT ALLOWED.

HAVE I ANSWERED YOUR QUESTION THAT YOU ARE PERTAINING TO. AS FAR A COMPANY DRIVERS ARE CONCERNED.

fRANK

[Fkatz]

David,

even if you are reimbursed by the mile, it really does not make a difference on how that reimbursment is paid. itdepends how it shows on the w-2
if there is not a figure in box 14, then the reimbursement was included in your income in box 1 and you do not have to report it on the form 2106 at all. the $1700.00 that you received must show as a separate entity on the w-2. if it does not you are not responsible for reporting it. period.

the per diem you are entitled to no matter as long as you are on the road, even if you are just sitting at a truck stop on the weekend.

Oh by the way, if you are under load, and it takes you past the house, it is considered a drive through, and not considered as though you are home. it would still be figured as time away from home. due to underload status.

Frank

[David_Reed]

Frank,

the mileage based per diem pay ($.08 cpm) does appear separately from the income on the W-2.
It is not taxed and no deduction for tax is withheld by the employer.
It is not shown as a reimbursement.

From what yo uhave shown and what I take it to understand, I can do as I described before.

Calculate the daily flat rate per diem based upon days on the road the logbook shows. Take the amount paid by the employer for per diem, subtract that from the gross daily flat rate after the 70% calculation and then take the balance as a deduction, factored against the single unmarried $5,000.00 deduction.

[Fkatz]

David, If it is not stated on the w-3 it is not reportable, at all unless the company actually stated that the reimbursement must be reported.
Was it put on a 1099Misc, or on any other government form. if it is not it is not reportable on your return. only the per diem rate with no reimbursement is deductiable.

IT MUST SHOW ON YOUR W-2, 1099MISC, OR ON ANY FORM WHERE IT SHOWS THAT IT IS TAXABLE, OTHERWISE IT IS NOT NECESSARY TO REPORT DUE TO THE FACT THAT IT IS ALREADY INCLUDED IN YOUR GROSS WAGE IN BOX 1. THEY ARE JUST STATING THAT PART OF THAT WAGE THE PER MILE PER DIEM WAS INCLUDED.

Frank

[Fkatz]

dAVE,

i MEANT W-2

[Fkatz]

Calculate the daily flat rate per diem based upon days on the road the logbook shows. Take the amount paid by the employer for per diem, subtract that from the gross daily flat rate after the 70% calculation and then take the balance as a deduction, factored against the single unmarried $5,000.00 deduction.
_________________

aFTER READING CLOSLY, YOUR STILL DOING IT INCORRECTLY

YOU MUST FILL OUT FORM 2106 AND SCH A, ITEMIZED DEDUCTION BEFORE YOU CAN CLAIM IT PROPERLY,

YOU ENTER THE INFORMATION ON THE FORM 2016 WHERE SPECIFIED,
ADD UP THE TOTAL AFTER FIGURING YOUR RATE TIMES THE DAYS OUT THEN DO NOT FORGET TO WRITE DOT REG ON THE LINE 5 AND PUT THE FINAL FIGURE ON LINE 6, BRING DOWN THE TOTAL OF THE ITEMS THAT YOU EXPENSED ON LINE 2,3, AND 4 ALSO ON LINE 6 BUT IN BOX A NOT B ADD THE 2 TOWGETHER AND PUT THE FINAL AMOUNT ON LINE 10

THEN ON SCH A, ITEMIZED DEDUCTIONS LINE 20 UNDER JOB EXPENSES YOU ENTER THE TOTAL FROM FORM 2106 THERE. THEN ON THE DESCRIPTION LINE 20 YOU ENTER FORM 2106

THEN ON SCH A LINE 24 YOU PUT THE FIGURE FROM LINE 38 ON YOUR 1040 AND MULTIPLY BY 2% AND ENTER THAT NUMBER ON LINE 25
ON LINE 26 YOU SUBSTRACT THE DIFFERENCE BETWEEN LINE 21 AND 25 AND THAT BECOMES YOUR STANDARD DEDUCTION FIGURE ON FORM 1040 LINE 40 IF IT IS OVER $5000.00, IF IS IS NOT THEN ALL YOU CAN TAKE IS THE STANDARD DEDUCTION OF THE $5000.00 AND THAT IS ALL YOU GET. PLUS THE $3200 DEPENDANCY DEDUCTION ON LINE 42.

ITS MORE COMPLICATED THEN ITS SEEMS BUT THAT IS THE PROPER WAY TO DO IT. THAT IS ONLY IF YOU ARE A COMPANY DRIVER.
IF YOU DID NOT DO IT THAT WAY AND YOU ALREADY FILED YOU WILL HAVE TO AMEND THE RETURN,

fRANK