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**Dude** · 12-28-2018, 05:57 PM

Only the second W-2 was processed correctly provided the driver was actually reimbursed those expenses. Scenario 1 is either incorrect or a really lousy place to work as a driver since you are paying for expenses out of your pocket. Scenario 3 is classifying reimbursements as taxable income. Unreimbursed employee business expense is no longer available for the W-2 driver so the per diem really just exists as a metric with which to gauge reimbursements. A reimbursement is not taxable and should not be included in box1 (or a 1099 for that matter). I think there will be alot of w-2 truck drivers upset this tax season especially if their payroll office did not develop a clear reimbursement policy. Sch C independent operators on the other hand are going to be in for a nice surprise.

**ardu1994** · 12-29-2018, 05:53 PM

In each scenario, how would the return be prepared? In scenario 1 and 3, is there a way to exclude the amount of per diem they were eligible to receive from taxable income? In scenario 2, is the amount in box 14 already subtracted out of the figure in box 1 for wages? or am I supposed to subtract it?

**Dude** · 12-29-2018, 08:08 PM

Box 14 is information only so this w-2 can be used as is just ask the driver if he was reimbursed. 1 can be used but the driver must find out where his reimbursement is so they should contact their payroll office or supervisor. 3 also requires a conversation with the payroll dept and a request for a new w-2. If they do not comply file for 4852 with the amount deemed correct (reimbursed expenses subtracted). Probably going to be alot of these with drivers this year.

**ValRose** · 12-30-2018, 02:04 AM

Yes so sad, but if the driver wasn't reimbursed under an accountable reimbursement plan, they are just out of luck now. Simply no misc/employee deductions allowed anymore (except possibly on his state tax return (e.g., California and New York still allow employee deductions/2% limited misc in 2018).
Driver one out of luck. He should try to talk his company into setting up an accountable reimbursement plan in 2019, even if it means an equivalent or partial pay cut.
Driver two ok if you've confirmed the per diem amount wasn't included in wages. Box 14 is just informational.
Driver three: If reimbursed/paid per diems under an accountable plan, it should NOT have been included in wages (W-2 should be redone). If, however, he was paid per diems without them being part of a structured, accountable reimbursement plan, than the employer was correct to include them in wages, and the driver is out of luck. If that be the case, like driver one, he should get his employer to set up an accountable reimbursement plan!

One last note... I suppose it's possible that even under an accountable reimbursement plan, not ALL reimbursements would be excluded from wages. For instance, if the employer has a policy to give perdiems even if under the DOT hours or distance needed for the perdiems to be deductible, some of the perdiems might thus end up in wages. (This subject, I don't feel as knowledgeable in).

**Dude** · 12-30-2018, 01:09 PM

Many truck drivers lease their truck and then have the lease reimbursement included on 1099 and W-2 as income. For schedule C drivers these payments can be offset as an expense. I wonder how w-2 drivers will deal with this?

**ardu1994** · 12-30-2018, 01:51 PM

ALL 3 of these scenarios are real for me and I appreciate all the help. I'm clear on the owner operator and others receiving a 1099 ..... it is the w-2 drivers that I am at a loss for answers/solutions.

Would driver 1 be allowed to file a form 4852, allowing the driver to show part of those wages were eligible to be per diem? His employer treated payroll as if it were not the trucking industry. So, wouldn't he be able to file the form 4852, legally? Isn't he still entitled to recover the lost per diem and exclude it from wages on his tax return?

**ardu1994** · 12-30-2018, 01:53 PM

When you say "1 can be used but the driver must find out where his reimbursement is so they should contact their payroll office or supervisor." What do you mean by where his reimbursement is? His company did absolutely nothing with per diem, so how would he find out where it is if the employer treated payroll as if it didn't exist?

**Dude** · 12-30-2018, 02:37 PM

Like I said, you can file with scenario one, but if it was my client I would want them to understand the company policy. If the average driver spends $14000 out of pocket and they can no longer deduct this amount, the company should either reimburse them or the driver should understand they just had their pay cut. His initial reaction is going to be to blame you for the lower refund which he has been conditioned to include in his annual income.

**Dude** · 12-30-2018, 02:58 PM

Would driver 1 be allowed to file a form 4852, allowing the driver to show part of those wages were eligible to be per diem? His employer treated payroll as if it were not the trucking industry. So, wouldn't he be able to file the form 4852, legally? Isn't he still entitled to recover the lost per diem and exclude it from wages on his tax return?

Driver 1 SHOULD have been reimbursed but he wasn't. This does not mean he can then exact his revenge by making part of his taxable income non-taxable. Only in scenario 3 where the driver was actually paid a reimbursement and then had it added back as income can he file the 4852.

**ardu1994** · 12-31-2018, 11:36 AM

When you say driver 1 'can file' are you meaning he can file in such a way to recover per diem? or just that he can (and should, and will) file his annual return?

In speaking to his employer, would he be asking to be reimbursed $14K or only the tax on it?

I don't think he is wanting revenge, per say, just better understanding. Going forward, the employer is paying him per diem but he is in a mess for this year and I'm searching high and low for ways to help.

My guess is commercial drivers will be included in the short list of people still allowed to use form 2106 after the massive amount of driver tax returns that are messed up! I'm betting if anything were to ever motivate drivers to go on strike, this will be it. In commercial transportation, owner ops are the minority, so if they do strike it will get noticed.

**Dude** · 12-31-2018, 12:45 PM

$14k is a national average, he should be reimbursed for whatever he paid out of pocket that was deductible last year. Problem is this is no longer the governments problem it is an issue between the employer and employee. I agree that there will be rage but it should be directed at the right place: payroll offices that were too slow to respond to the changes.

**TaxGuyBill** · 12-31-2018, 03:59 PM

Ardu - Driver #1 can't do anything for this year. He needs to pay tax on the full amount on the W-2, with no deductions. If he wants to ask his employer for a taxable 'bonus' to help pay for taxes, he can do that, but it would be taxable. From the employer's point of view, the employer would have no reason to give a 'bonus' just because the driver owes taxes.

EDIT: I just saw that you said the employer is paying him a Per Diem now (make sure it is being done under an "Accountable Plan"), so the next paragraph may be redundant, but I'll keep it here just in case ...

Driver #1 needs to talk to his employer NOW to negotiate things. In the following example, let's say the annual total Per Diem amount would be $10,000 and the driver's wages are currently $50,000. In this example, Driver #1 can ask his employer to change how he is paid, and to pay him $40,000 in wages and set up an "Accountable Plan" to pay the $10,000 in Per Diem amounts. Driver #1 can explain to his employer that even though the employer is still paying the same amount ($50,000), this new method will save BOTH the employee AND the employer taxes (the employer might also save in other ways, such as lower State Unemployment, Worker's Compensation, etc.). So it would be a win-win arrangement.

**Dude** · 12-31-2018, 04:09 PM

Driver #1 needs to talk to his employer NOW to negotiate things. In the following example, let's say the annual total Per Diem amount would be $10,000 and the driver's wages are currently $50,000. In this example, Driver #1 can ask his employer to change how he is paid, and to pay him $40,000 in wages and set up an "Accountable Plan" to pay the $10,000 in Per Diem amounts. Driver #1 can explain to his employer that even though the employer is still paying the same amount ($50,000), this new method will save BOTH the employee AND the employer taxes (the employer might also save in other ways, such as lower State Unemployment, Worker's Compensation, etc.). So it would be a win-win arrangement.

I would not call it a win win I would say it's a something something. Last year he was paid $50k plus he was allowed to deduct $10k ($9k after floor). This year he gets $40 k and in turn gets $10k of his own money returned and loses a big part of his refund. Maybe the benefits will keep the drivers there.

**TaxGuyBill** · 12-31-2018, 04:32 PM

Huh?

In 2017, he would have received a total of $50,000, and paid tax on $41,000.

2018 (no Accountable Plan), he would have received total of $50,000 and paid tax on $50,000.

In 2019 (with an Accountable Plan), he would receive a total of $50,000 and pay tax on $40,000.

It seems like a win to me.

EDIT: Plus, the Accountable Plan in 2019 would also save Social Security and Medicare taxes on that $10,000

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Per Diem for Transportation Employees receiving a W-2

Per Diem for Transportation Employees receiving a W-2

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