Calculating taxes for trucking can be difficult. Truck drivers can be fully employed, self-employed, or part-time. They can also be commission-based. Many also receive per diem allowances. If you’re one of those who have them, here a few details you should keep in mind.
What is Per Diem?
Per diem translates to per day. It refers to the allowance for meals, transport, and other expenses while you’re on the road. It's also in addition to your salary. Per diem allowances are reimbursable, so you don’t need to wait for the tax period to get a refund.
The biggest advantage of per diem is you can get the money as soon as possible. It’s a great way to tide you over the next payday. It also lowers your taxable income and thus your taxes. There are some things you need to keep in mind, though. As per diem lowers your wage, you may find it difficult to qualify for applications that would need a certain income level. Moreover, you need to meet certain requirements before you can claim allowances.
How Do You Calculate the Taxes?
When you’re declaring your expenses, you need to exclude those that are already reimbursed. In the U.S., per diem rate can change over time. In 2016, for example, the amount for meals is $63 per day. Note that the rates can differ among localities, which makes declaring the right taxes complicated. Furthermore, it can change once you’re outside the country.
You cannot make a mistake when declaring your income and expenses, as the Internal Revenue Service (IRS) will make sure you get the penalties for your violations. Equinoxbusiness.com noted that it's, therefore, more practical and even economical to hire tax services for truck drivers.
Per diem may seem complicated at first, but if you have a deeper knowledge of it, you can get the right allowances for your job.