October 1st Brought Changes to Per Diem: What You Need to Know
The last thing any of us want to read up on is tax codes.
Complex jargon, statements and provisions that sound contradictory, and more math-related vocabulary than we'd like to see all year are just some of the unpleasant parts of studying tax code.
But since recent changes to trucker per diem rates were made effective on October 1st for the 2019 fiscal year we've done the heavy lifting for you, and we've outlined relevant updates below.
There are three different methods to choose from, when calculating your per diem rates: M&IE, incidental expenses only, and high-low substantiation.
M&IE (Meal and Incidental Expenses)
Most of our owner operators use this method, in which one standard rate is charged depending on your location.
The 2019 rate for M&IE is $66/per day for those within the continental United States (CONUS) and $71/per day for those outside the continental U.S. (OCONUS).
Incidental Expenses Only
If you choose to be reimbursed for incidental expenses only, this is defined as "fees and tips given to porters, baggage carriers, hotel staff, and staff on ships." It's rare for a driver to choose this method.
Within both CONUS and OCONUS, the rate for Incidental Expenses Only is $5.00/per day.
The high-low substantiation method is a system that employers can choose to utilize when reimbursing their drivers, instead of M&IE.
The high-low method uses one rate for a high-cost locality and another for a lower-cost locality. You'll notice a significant increase in the dollar amount when using this method, but when it's broken down, it's not that different.
The additional money offered with this method is meant to be used for lodging. Since most drivers don't use lodging, it's rare that this method is utilized in our industry.
For 2019, the high-cost locality rate is $287.00/per day, and the low-cost rate is $195.00/per day.
As you enter the 2019 fiscal year, keep these updates in mind as you're recording expenses on the road. And as always, if you aren't self-employed, be sure to speak directly with your employer to learn how they'll be handling per diem.
Plus, check out our post on 5 Deductions That You Do Not Want To Forget.