Long Distance Trucker Per Diem Deduction

[TSW]

Can an S-Corp owner operator long distance truck driver (paid by W-2) deduct per diem meals on 1120-S or can they only deduct actual meal and lodging expenses?  If per diem is it still 80% and if actual expenses, is it 50% or 80%?

[TaxGuyBill]

Yes, they can use the Standard Meal Allowance (using the Per Diem rate for meals).  They deduct 80%, and have the option to use the higher "transportation worker" rate.

They can only use Actual Expenses for lodging.

[TSW]

So for all the days he was away from his tax home, he can deduct 80% of $69 per day on his 1120-S? Even though was the owner operator while paying himself a W-2 salary throughout the year correct? 

[qbteachmt]

"As of now, the IRS allows $69 per day in the continental United States. Keep in mind that you’re only permitted to take this deduction while traveling a distance that requires you to sleep or rest away from home."

From: https://www.rivierafinance.com/finance-blog/tax-deductions-for-owner-operator-truck-drivers/

The disqualification for lodging per diem assumes your client is a more than 10% shareholder.

[PATAX]

you may also want to check state rules for the state return, to see per diem and actual expense rules.

[TaxGuyBill]

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@TSW  wrote:

So for all the days he was away from his tax home, he can deduct 80% of $69 per day on his 1120-S? Even though was the owner operator while paying himself a W-2 salary throughout the year correct? 

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I missed the part about an S-corporation in your original post.  Has the corporation been reimbursing the employee using those rates, using an Accountable Plan?

I would need to look it up, but offhand, I don't think the corporation can deduct anything unless it actually paid the employee for meals (or could probably deduct actual expenses for meals the corporation paid for directly).

[TSW]

He has not been repaid from the corporation. I believe that the corporation can only deduct actual expenses because the corporation is not driving the truck, the employee is and as a w2 employee, he can no longer deduct the expenses on Schedule A. 

I continue to see mixed responses on the topic so I am confused as to what the correct answer is. 

[TaxGuyBill]

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@TSW  wrote:

He has not been repaid from the corporation. I believe that the corporation can only deduct actual expenses because the corporation is not driving the truck, the employee is and as a w2 employee, he can no longer deduct the expenses on Schedule A.

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I agree with you.

What SHOULD have been happening is that the corporation would be reimbursing the shareholder via an Accountable Plan, using the Per Diem rate.

[qbteachmt]

This has gotten very confusing. Let's take it a bit at a time:

"He has not been repaid from the corporation."

He submits for the actuals, to be repaid by actuals. Otherwise, the company just gives him the allowable amount = "per diem." If the company hasn't paid him at all, there is nothing for the company to expense; they didn't incur it.

"I believe that the corporation can only deduct actual expenses because the corporation is not driving the truck"

You stated "owner operator" but you didn't specify "owner" of what?

Owner of shares in the S Corp, 10% or more?

Owner of the truck, which is not titled to the S Corp?

", the employee is and as a w2 employee"

"he can no longer deduct the expenses on Schedule A."

An employee was able to enter job-related expenses on Form 2106, and still might be able to in that State. But if you are not an employee, that would be self-employed on Schedule C. Your person is an employee for this corporation, so no Schedule C.

"I continue to see mixed responses on the topic so I am confused as to what the correct answer is."

Closely-related party (>10% shareholder) has different rules than a regular employee.

[qbteachmt]

"I continue to see mixed responses on the topic so I am confused as to what the correct answer is."

Closely-related party (>10% shareholder) has different rules than a regular employee.

[qbteachmt]

Oh: "because the corporation is not driving the truck"

Yes it is. That's why it has an employee that is a driver.

[BobKamman]

Notwithstanding the Supreme Court decision in Citizens United (holding that corporations are the same as people, when it comes to political spending), it is still the case that corporations do not eat anything. Therefore, they do not consume meals.  If they reimburse their employees for meals, then those might be fully or partially deductible.  An S Corp with one shareholder would follow the same rules on that, as UPS and FedEx.  

[TSW]

He is 100% share owner of the corporation but he is also the employee that drives the truck. The truck is not his.