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Overdrive February 2019

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February 2019 | Overdrive | 25 Swept away with tax code enacted in late 2017 was the allowance for truck drivers and other transportation workers to take an income deduction for daily expenses on meals and inci- dentals, known as the per diem. The change affects only company drivers. Owner-operators still can file per diem as a business expense. In the year since the law took effect in January 2018, there's been a trend among carriers to shift to a pay model that effectively compensates company drivers for the missing per diem benefit, says Kehl Carter, chief executive officer for Atlantic HR Solutions, a consulting firm that works with hundreds of carriers. "It's a huge movement right now for retention and recruiting," Carter says. "Because of the driver short- age, you don't want to be the carrier that doesn't offer drivers an alterna- tive. We know a driver will leave an employer for even a small bonus, let alone something that could be [worth] $4,000" or more annually. A more beneficial part of tax code change was the increase in standard personal deductions, which reduce taxable income for most professional drivers. Married couples now take a standard deduction of up to $24,000, nearly double that of the previous $12,700. Single filers also got a boost in the standard deduction — now $12,000, up from the previous $6,350. Until the 2018 tax year, filings for which are due in April, drivers could deduct from their annual income 80 percent of the allowed $63 per diem ($50.40) for every day spent away from home. Often, that could reduce a tax bill by $1,500 or more. Carter recently polled 400 drivers at a fleet of more than 5,000 trucks about the per diem, and "only three or four knew that the law had been changed," he says. That indicates many drivers likely will be caught by surprise when they file their 2018 taxes in April. One way carriers have changed their driver compensation packages to make up for the lost deduction was by factoring per diem pay into driv- ers' regular pay. Another was to reimburse $63 – now $66, at 2019's level – to driv- ers for each day spent on the road. Because the money comes from drivers' regular pay, they receive a lower base pay, but they'll benefit from the tax-free treatment of each reimbursement. Likewise, carriers save some money because they avoid paying items such as payroll taxes and workers compensation on those reimbursements. Kevin Rutherford, a trucking radio personality and owner-operator coach, last year estimated that com- pany drivers would pay $600 or more a year in taxes due to the loss of the per diem allowance, assuming the carrier had made no changes to help compensate for the loss. — James Jaillet Carriers alter pay plans following loss of per diem Some company drivers could suffer from the elimination of the per diem tax deduction that compensated them for meal costs. The changes in standard deductions should benefit most owner-operators and company drivers. U.S. XPRESS sold its ownership stake in its U.S.-Mexico cross-border trucking business. The Chattanooga, Tennessee-based carrier expects the divestment to generate $40 mil- lion in savings. U.S. Xpress says that while the business brings in $50 million yearly, its impact on profit is "insignificant." A NEW DUMP-TRUCK-FOCUSED online load platform, Trux, has opened for business in the Los Angeles market as the first step in a national rollout this year. Trux also offers owner-operators and others cloud-based ser- vices via truxnow.com that include dispatch- ing, tracking, payments and group discounts. TRUCKER TOOLS has been integrated into Schneider Transportation Management for shipment tracking software services to sup- port the brokerage's growing network. The broker is incorporating Trucker Tools' Load Track in-transit visibility and Smart Capacity predictive freight matching application.

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