Per Diem as Other Income

[tetertax]

I have an OTR truck driver that in prior years (with another accountant) has had "Other Income" for per diem days. For example, in 2023 he had 174 days and they reported $2153 as other income for a rate of $12.3735 per day. Can anyone tell me what this rate is for $2024? All I can find is the actual rates for per diem. This is not actual income that he receives, it is days that he has to report that he was eligible.

[BobKamman]

Are you sure that's not a negative number on the "other income" line?  Does it have a minus sign in front of it, or is it in parentheses?

[tetertax]

No, it's a positive.

[tetertax]

It says see Statement 1 and Statement 1 says "Other Income".

[qbteachmt]

This assumes your taxpayer is an owner operator. You'll find info if you search "transportation owner operator per diem" as there are a lot of trucking blog resources.

Per diem for a self-employed person is in lieu of actual expenses because they are incurring unusual costs being away from their tax home overnight. It isn't income if they are not paid by an employer (or customer). It's an expense deduction item, similar to a travel allowance under an accountable plan.

Keep in mind that DOT per diem is different than your usual business per diem. If you are researching, make sure to use the right tables and the right partial day provision and the right deduction %.

From: https://www.irs.gov/instructions/i1040sc

"For business meals, you can deduct 50% of your business meal expenses, including meals incurred while away from home on business. However, for individuals subject to the Department of Transportation (DOT) hours of service limits, the percentage for other business meals is increased to 80% for business meals consumed during, or incident to, any period of duty for which those limits are in effect. Individuals subject to the DOT hours of service limits include the following."

There are high/low considerations, as well, if they operate in resort zones as an example. And it might be incidental costs only, as noted in IRS notices: https://www.irs.gov/pub/irs-drop/n-24-68.pdf

"The rate for any CONUS or OCONUS locality of travel for the incidental expenses only deduction is $5 per day."

"The per diem rates in lieu of the rates described in Notice 2023-68 (the meal and incidental expenses only substantiation method) are $86 for travel to any high-cost locality and $74 for travel to any other locality within CONUS."

"Effective Oct. 1, 2024, the transportation industry per diem rates will increase to $80 (currently $69) for any locality of travel within the continental U.S. and $86 (currently $74) for travel outside the continental U.S. Of this amount, 80% is deductible for federal income tax purposes."

https://www.irs.gov/pub/irs-drop/n-23-68.pdf

"The special M&IE rates for taxpayers in the transportation industry are $69 for any locality of travel in the continental United States (CONUS) and $74 for any locality of travel outside the continental United States (OCONUS)."

For employees, it would be added to pay as nontaxable if it is paid per IRS rates.

[dkh]

Maybe the prior accountant was not preparing the return properly ?     Does your client know ?   

I wouldn't hesitate to ask because I sure wouldn't try to replicate something I didn't know the purpose of.

[qbteachmt]

I was trying to understand this: "days that he has to report that he was eligible"

Report to whom? To be eligible for what? That's not a tax issue.