Single member LLC owns truck. Boyfriend of single member drives truck and is not paid wages or 1099. Owner pays all expenses - meals, etc. (Uses a debit card) Said she didn't keep track because they knew per diem was more that he was spending. But, they are not married!! Sounds good but how do I report on paper? Is his pay what she spends on him on the road and that is what she gets to expense? Then he reports this amount and takes per diem off his tax return? OR can she expense per diem for nights away from home on her Sch C? He is not an employee, does that upset the per diem cart? I need some discussion and guidance and help. These always show up close to the deadline.
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Truck Driver expenses
One option you have:
1. Track income and expenses outside the LLC with 50/50 split (or whatever allocation they desire) and file two Schedule Cs (I am assuming LLC is filing a Schedule C). I have done this many times over the years with a relatively simple Excel spreadsheet.
2. Per diem cannot be used for deducting lodging expense, so delving through CC receipts could get tedious.
3. Using per diem or actual expense for meals is simply a matter of which figure you input to the Schedule C for each.
4. Depending on your state, it might be wise to suggest they elect S-Corp status and put both taxpayers into it as shareholders. How beneficial this is for saving SE tax depends on their profit, which is marginal for many truck owners. This COULD affect other things, depending on what commodity is being carried and how the truck is registered, e.g., DOT, ICC, FMCSA, PUC, and IFTA registrations, to name a few - but this COULD be more work for you!
5. You could also suggest 1065.
6. One "wrinkle" is potential of 1099s issued to the LLC, which may need "pass-through" treatment on the tax returns.
7. One comment you made, "...she didn't keep track because they knew per diem was more that he was spending." could be a problem, since per diem requires that the "number of days away overnight" be known. Hopefully they have kept the Driver's Daily Log Books.
8. You also said, " He is not an employee, does that upset the per diem cart?" "Employee" status is not a requirement for per diem use. Per diem is fine on Schedule C. -
Per Diem works for the owner,correct? What about the owner's boyfriend who is driving the truck and not taking any pay. (I don't know what exactly their situation is) He is the one who is getting the per diem or the per diem is being used for him. Can she deduct a per diem payment on the Sch C. She knows nights away from home. If she deducts a per diem amount on her Sch C, is that then income to the boyfriend who is driving the truck? and then would he report the amount she deducted and then take his own per diem? I'm having a hard time getting this straight in my head. Help!Comment
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My Notions
I believe per diem can work for both parties.
Officially he has to get paid in money for his driving. Since they don't have anything else in place, half the profit will do As Dave suggested - do two Sch C's starting with either an excel sheet as Dave suggested or a "master" Sch C you could do in your tax software under a dummy name and ssn.
Another alternative would be for him to work for a percentage of what she is paid. He would then have no expenses and she would take them all including what she paid to him.Comment
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The "plot" gets thicker!!!
JenMO,
You said, "Per Diem works for the owner,correct?" The status (title) of the person taking the Per Diem is irrelevant. The requirement for taking the Per Diem is that the person taking the deduction has to be the person who is "away from home overnight." From your post, the "boy friend" is driving and HE is the one (the ONLY one) who is "away overnight." If BOTH are "away overnight," then BOTH can take the Per Diem, provided SHE, the owner, is also (1) a qualified driver, possessing a CDL and (2) is actually driving and (3) maintaining a log book. The "expense" comes first, then the reimbursement to be applied against it. The driver shows the expense on his tax return with the (any) reimbursement deducted from the expense - if reimbursement exceeds expense, income is produced. If expense exceeds reimbursement, deductible expense remains. On the owner's tax return, she can deduct the expense paid to the driver as reimbursement (calculated on the Per Diem method), deducted on the "Travel" line of Schedule C. The driver deducts it either on Form 2106, if he is an employee, or on HIS Schedule C, if he is NOT an employee.
You said, "What about the owner's boyfriend who is driving the truck and not taking any pay?" Really? Why is he working if not to make any money? In order to apply the Per Diem, as an expense, there MUST be income (actually "reimbursement" in his case) against which to apply it. The Per Diem is simply a method of having an expense. The OWNER can use the Per Diem amount as a "Reimbursement" amount to the driver, but this "reimbursement" would need to be applied to the expense, and if those two figures are not the same, either income or expense remains from the calculation (reported on the driver's ((boy friend's)) tax return). The driver has the expense and the owner reimburses that expense.
You said, "If she deducts a per diem amount on her Sch C, is that then income to the boyfriend who is driving the truck?" Simple answer, yes, BUT, if she wants to make an expense deduction on HER Schedule C, there must be a payment of expense, to the driver, to "create" the Schedule C deduction. Having an "expense" without documentation of paying the expense is not legal!Comment
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You're right, the plot is very thick. Boyfriend and owner are a couple. She owns the truck, he drives. She is reporting all income. Can she take a per diem expense without paying him a salary or a percentage of the income or a 1099 income? But if she did not actually pay him a per diem amount, only expenses incurred, there would be no per diem amount. Per diem could be deducted on her Sch C only if she were the driver? Or if she was actually paying the per diem to an employee?
If income was split, as suggested, does owner actually have to give him that much money, or is this just on paper? I'm getting more confused, and they are coming in this afternoon to talk over. What questions should I ask? All help is appreciated.Comment
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$52 per day
For a truck driver, $52 per day can be paid as per diem for meals without anyone having to show income, so long as there is an "accountable plan" (for all practical purposes, a proper expense report)
However, who (if anyone) takes the 50% hit on meals? The owner? The driver? Does the answer change if the driver is an employee of the owner??Comment
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