If you are an owner-operator or independent contractor, the Internal Revenue Service delivered some good news in September. The federal government is increasing the per diem allowance from the current $66 per day to $69 per day. The increase in the allowance in per diem for days spent traveling away from home is effective beginning on October 1, 2021.
Following the changes included as part of the tax reforms signed into law in 2017, the per diem deduction within the trucking industry has become limited to owner-operators and independent contractors – part of the nationwide group of taxpayers who file an IRS Schedule C their tax returns.
The increase in the per diem rate is the first since 2018 when the daily allowance also was raised by $3 at that time.
In reviewing the rate change and the effective date, the team at Equinox Owner-Operator Solutions would like to share the following important reminders with owner-operators and independent contractors:
As noted, the effective date of the change is October 1, 2021. Any days spent on the road and away from home from October 1 through December 31 this year will utilize the new $69 per diem rate. For January 1 of this year through September 30 of 2021, the old per diem rate of $66 would still apply.
In terms of calculating per diem for the 2021 tax year, the change in the per diem rate means that owner-operators and independent contractors will need to track and account your days on the road and away from home in two categories. The first category, which will use the per diem rate of $66 per day, would be assigned to all qualifying days from the beginning of the year until September 30, 2021. The second category would use the new per diem rate of $69 for all qualifying days beginning on October 1, 2021, through December 31 of this year.
The Trucker CFO Is Ready To Help!
Our Trucker CFO Team has extensive expertise in working with per diem and calculating the allowed deductions for a tax year. We would be glad to assist you in any way with the changes to the per diem allowance or any other tax, accounting or business advisory questions or concerns that you need to address. If you have any questions related to per diem or the rate change going into effect, please reach out to us at the Trucker CFO. You can contact us by email through the following address, firstname.lastname@example.org.