Good News From the IRS! Per Diem Increase

[FreeSpirit]

Hello again. This is Freespirit, "the quieter half of ATeam," as TerryandRene put it. Here is a tax news update for you.

The IRS is actually giving truckers good news for once. On 10/17/05 the IRS issued Internal Revenue Bulletin 2005-42 for Rev. Proc. 2005-67. This bulletin states that as of 10/1/05 per diem increases go into effect. When you do your taxes you should note that per diem is as follows:

January 1, 2005 - September 30, 2005
$41.00 per day for US
$46.00 per day for Canada

October 1, 2005 - December 30, 2005
$52.00 per day for US
$58.00 per day for Canada

This is a significant increase and should help us all on tax day. Remember, for 2005 the deduction is still 70%. That will increase for 2006 and 2007 to 75% and then to 80% in 2008, but for this year, stay with the 70% figure.

Here is a link to the bulletin if you wish to read it.

http://www.irs.gov/irb/2005-42_IRB/ar09.html

The IRS should be issuing a 2005 version of Publication 463 soon. When they do, the per diem information should be in that, in a bit more of plain English format.

 

[terryandrene]

That is great news. This, along with the increaed mileage allownace on 1 Sept, will get our taxable income to near zero.

 

[guest]

Wow, that is great news. Thanks for the information.

As for the being the silent partner of ATeam, I assumed you both collaborated on all of the ATeam posts. Perhaps he should change his handle to AMan.:7

Thanks again, and best of luck on getting the truck built. Despite all of the wild talk about it here and elsewhere, I know you will be very happy once it is done and proud of it for a long time.

 

[terryandrene]

A note of caution: the Federal Regulations state, in part...

(6) Transition rules. Under the calendar-year convention provided in section 4.04(3), a taxpayer who used the federal M&IE rates during the first 9 months of calendar year 2005 to substantiate the amount of an individual’s travel expenses under sections 4.02 or 4.03 of Rev. Proc. 2005-10 may not use, for that individual, the special transportation industry rates provided in this section 4.04 until January 1, 2006. Similarly, a taxpayer who used the special transportation industry rates during the first 9 months of calendar year 2005 to substantiate the amount of an individual’s travel expenses may not use, for that individual, the federal M&IE rates until January 1, 2006.

In summary, those of us that used the $41 per diem rate this year are not eligible for the $52 rate until Jan 1,2006. Only those drivers that started after October 1, 2005 may use the $52 daily rate.

 

[Marty]

What rate did the mileage allowance increase to?

 

[terryandrene]

JANUARY 1, 2005 THROUGH AUGUST 31, 2005 IS $ 40.5 PER MILE
SEPT 1, 2005 THROUGH DECEMBER 31, 2005 THE NEW RATE IS $ 48.5 PER MILE.

The mileage allowance combined with the Std Meal Allowance for a van doing 100,000 miles during 5 days a week for 50 weeks will provide a combined deduction of over $49,000.

Terry