Being a driver in the trucking industry entails a variety of expenses inclusive of fuel, food, and potentially hotels. This can make tax time particularly stressful, but for a truck driver, it’s also an opportunity to get some of your money back through deductions for expenses that aren’t covered under per diem.
Do trucking companies pay for fuel, food, and hotels? Some trucking companies pay a per diem to compensate for driver expenses including fuel, food, and hotels, to offset on-the-road expenses which can include lodging. Many also provide their drivers with gas cards to pay for fuel. Without these benefits, these expenses would fall to the driver.
When your livelihood depends on being on the road for extending periods of time, the cost of being away from home can add up quickly. Fortunately, most trucking companies realize this and offer different ways of compensating for different expenses incurred on the job. We’ll talk about what expenses you can expect to recoup as an over-the-road driver.
How Does a Per Diem Help to Compensate a Truck Driver?
Per diem is being used as a means for truck drivers to pay for their meals and other incidentals. The term per diem means per day pay which is a non-taxable reimbursement for expenses incurred by the driver.
When you receive this type of salary, it typically means that your paycheck is divided into two parts: the standard pay that is taxed and then the per diem. This pay, combined with the gas card for fuel, alleviates the monetary responsibility typically placed on the driver.
Do Trucking Companies Pay For Fuel?
Paying for fuel is usually the largest expense incurred by a trucking company. Fuel prices yo-yo drastically with spikes rising to extremely high rates particularly during busier seasons.
For an eighteen-wheel truck, you will find two gas tanks on each side of the vehicle with each holding approximately 200 gallons of gas. This can equate to well over $1500 in costs that the trucking company takes upon itself.
Many of the trucking companies today have several trucks as part of their fleet, meaning that their overall fuel costs are extreme. So how are these companies able to assume this expense from the drivers and maintain their revenue?
Traditional Resources For Fuel Payment
The traditional way that trucking companies are relying on to pay for fuel is either by giving their drivers a gas card or simply paying for the gas with the company cash flow to cover the cost.
Using cash flow has its drawbacks in that it can take time for a client to pay the invoice which leaves the company in limbo until previously completed jobs have been paid for.
These options lead to debt as the company opts to liquidize other forms of capital to pay for the fuel expenses until the invoices have been paid.
Charging a fuel surcharge is another way that companies look at covering their gas expenses. This is a good way to assist in alleviating the expense and keep the trucks full, but there are still downsides with this method in that this cost ultimately finds its way to the consumer.
The higher this charge, the more the consumables cost for the average working person, meaning the cost of goods is going to fluctuate as the fuel costs do.
Other issues with the fluctuation in fuel costs are that rises can happen so quickly, causing a lag with the money set aside for gas and the surcharge payment. This can potentially cause a disruption of cash flow and profit for the trucking company,
Long Term Fuel Contract
There are trucking companies that opt to sign a long-term contract with a fuel provider.
Many don’t like to do this, particularly during a high peak point due to the fact that they could get locked in at a rate much higher than what the pump price is. It can also end up being of no use when a driver has a need to fuel up in the middle of a haul.
A majority of the companies prefer the surcharge as opposed to taking a chance on getting locked in on a high-cost contract.
Freight Factoring Company
A freight factoring company will purchase a truck company’s invoice for discount and then pay immediately, allowing the trucking company its chance to turn a profit. The factoring company then works to collect from the shipper.
This is a very popular and common among trucking companies as some shippers can take as long as 45 days or longer to pay. The longer it takes a shipper to pay, the more difficult it is for the trucking company to pay essential operating costs such as fuel.
While the trucking company is taking a hit with the invoice, the improvement in cash flow makes the process worthwhile, and they don’t have to worry about the stress of collecting from the shipper since this is left to the factoring company.
Most companies seek out as many ways as possible to cut their costs in order to improve profits and keep the cash flowing. Trucking companies are no exception, particularly where fuel costs are concerned.
Do Trucking Companies Pay For Food?
A majority of trucking companies provide their drivers with per diem pay. This Internal Revenue Service (IRS) reimbursement is designed to cover meals and other types of incidental expenses that are incurred by drivers while they are on the road. Per diem pay gives more take-home pay to a driver as fewer taxes are being withheld.
Like any non-taxable expense, the IRS has regulations for truck drivers and trucking companies. In order for drivers to have prepaid per diem that won’t be taxed, these conditions need to be followed:
- There need to be accountable calculations/pay records. This is why drivers are responsible for providing receipts for any expenses or meals while working. A digital credit card footprint is used to trace per diem records.
- The driver needs to be working away from their residence longer than just for a normal workday time period. If your day begins with you waking at home and the day closes near your place, this disqualifies you from per diem.
- You need to have a designated residential address that you consider as a home place.
- The per diem rate cannot exceed the maximum allowed by the IRS. For example, if the standard rate for meals is set at $63 per day, you cannot receive an amount over that, or it will be taxed.
Whatever your daily per diem pay is, you don’t have to use the full amount each day on meals or other costs. Per diem pay lowers a driver’s gross income as well as their taxes, which can benefit them by making them eligible for decreased insurance premiums, public assistance, and student grants.
Do Trucking Companies Pay For Hotels?
Truck driving is a profession where you are expected to stay with the truck. Most trucks are fitted with bunks for sleeping needs when you need to be away for any length of time.
This is where trucking companies anticipate that you will be spending the night when driving long distances. If your truck happens to break down, a company can opt to provide you with break down pay in order to get a motel, if it goes longer than a 24-hour period. But they don’t have to do this.
If you don’t have sleeping accommodations or simply want to get out of the truck, you are responsible for payment. As a part of the driver’s benefits package, a majority of companies are providing their drivers with per diem pay.
This non-taxable pay is not only for meals but is also to be used for lodging and other incidental expenses while you are away from home. This alleviates some of the expense if a driver chooses to take some time away and stay in a hotel for a night.
Trucking companies look for ways to make the profession more attractive to potential drivers in order to bring quality help to the industry. It can be tough for the company to maintain revenue with the cost involved in operating expenses. But the happier the drivers, the more clients onboard, and the more profit generated for the business.