The Tax Cuts and Jobs Act ordered in late 2017 was generally valuable to trucking industry partners. Notwithstanding cutting rates for enterprises and littler go through element organizations, the law re designed individual duty filings, as well, permitting bigger standard reasoning for all filers and bringing down rates no matter how you look at it.
In any case, cleared away with the old assessment code was the remittance for transportation specialists —, for example, truck drivers — to take a salary finding for day by day costs on dinners and miscellaneous items, otherwise known as the routine set of expenses derivation. The change just influences organization drivers, as proprietor administrators will in any case record their routine set of expenses as organizations costs.
Until the 2018 duty year (filings for which are expected April 2019), drivers could deduct from their yearly pay 80 percent of the permitted $63 for consistently spent far from home. Regularly, that added up to a strong reasoning and could spare drivers thousands every year in assessment risk. For example, a driver out and about four days seven days could take a conclusion of almost $10,500. A driver out and about five days seven days could deduct more than $13,100. Contingent upon the driver’s salary, those conclusions alone could thump $1,500 or progressively off of a driver’s yearly expense bill.
In spite of the fact that numerous transporters know about this change, which will be reflected out of the blue this year on yearly expense forms, numerous drivers aren’t mindful, says Kehl Carter, CEO of Atlantic HR Solutions, a counseling firm that works with many bearers across the country.
He recently polled 400 drivers at a major fleet that operates more than 5,000 trucks. “Of those 400, only three or four knew that the law had been changed,” he said. “That’s a pretty good test,” he says, showing that many drivers will likely be caught by surprise when they file their taxes this year. Since last January, when the change took effect, some carriers have sought to alter their driver compensation packages to help account for the bygone per diem deduction, either by factoring per diem pay into drivers’ per-mile pay or by paying the actual $63 (now $66 in 2019) per diem to drivers for the days spent on the road. That means drivers receive a lower base pay, but they’ll benefit from the tax-free per diem reimbursement. Again, the 80 percent rate applies, so $50.40 of last year’s $63 per diem would be tax free under those restructured pay plans. Likewise, carriers avoid paying items like payroll taxes and worker’s comp on those reimbursements. Carter says there’s a pronounced trend among carriers to shift to a pay model that includes per diem compensation. “It’s a huge movement right now for retention and recruiting,” he says. “Because of the driver shortage, you don’t want to be the carrier that doesn’t offer drivers an alternative. We know a driver will leave an employer” for even a small bonus, says Carter, “let alone something that could be [worth] $4,000” or more annually. The larger standard personal deductions instituted by the 2017 law will somewhat offset the effects of the removal of the per diem deduction. Married couples now take a standard deduction of up to $24,000, nearly double that of the previous $12,700. Single filers also got a boost in the standard deduction — now $12,000, up from the previous $6,350. Kevin Rutherford, a former small fleet owner and now a radio personality and owner-operator coach, said early last year he estimated that company drivers would pay on average $600 or more a year in taxes due to the loss of the per diem allowance.