Per diem

Correct, The per diem used that way does benefit the Company. ALso if you ever claim unemployment it will make your weekly benefit lower. It also lowers your income for the Social Security benefits.
Your employer doing this lowers their payroll tax deduction.
It transfers the tax liability from the employer to the employee.

 

It is great for the Company. You also get more money every week.
You will have to pay the income tax on this money. Consult a tax preparer that knows about Per Diem.
I did this for a year because it was recommended by an accountant.
When I found out the whole picture, I stopped doing the per diem deduction from weekly payroll.
Like I said above. It transfers the tax liability from the Employer to the Employee.

 

Per diem is not taxed. When I ran over the road as a company driver, I took the deduction which was $59 per day out at the time and wrote it off on my tax return. The deduction is 80% of the allowable deduction. The allowance is now $63 a day as a general rule.

My first 2 years out as an OTR driver, I wrote off 300 days (give or take) each of the two years. The IRS flagged it and asked me to prove the deduction. They wanted a letter from my employer stating that the per diem wasn't already included in wages and they wanted logs showing I was out that many nights, which I provided.

They sent me a letter stating the deduction was allowed and closed the file.

 

80% of the days you are away from your domicile (24 hour day).

75% of the days you are leaving/going to your domicile

 

It gets more complicated than that....

Full days out: 80% of $63 per day. $50.40 a day deduction.

Partial days out: 75% of $63, or 47.25 and you can take 80% of that as deduction. $37.80

 

I'm sorry but you are wrong.

You can take per diem on your taxes, OR the company can pay you. Either way, it lowers your income for tax purposes. The difference, primarily, is in the FICO taxes. If you deduct it on your 1040, you still pay your portion of the FICO taxes (i.e. 7.5%). If the company deducts it, it also lowers your taxes for income tax purposes. However, it also removes the per diem from your income for FICO purposes.

This will lower your income for social security, disability, unemployment and workman's comp purposes as well. So, you pay lower taxes, but also get lower benefits. This also comes into play if you have garnishments, child support, and credit applications. Your wage will also be lower for those purposes.

The MAIN difference is that if you do not itemize your taxes (without the per diem), then by taking the per diem from your employer, you also get to take the $6,300 standard deduction. That is a HUGE benefit.

 

Not sure what you mean. Taking per diem and standard deduction. Being a huge benefit.
Standard deduction you would take anyway.(I assume you/ they qualify)
The IRS will get tax due on the per diem.
Either from the employer or the employee.
If you remove it pre-tax. It gets added on weekly but must be included as income for the annual tax return. You may pay a reduced tax rate.
But you still pay tax on it. Tax deferred from employer to employee.