What's wrong with per diem pay?

Per Diem hurts with Social Security. Instead of making 53,000 you are making 38.000. You are not paying your full share of SS taxes and will not draw as much out. Also, your employer is not paying his 7.5% on the addition money. So, you are being screwed by your employer.

 

Social Security is the least of my worries. If you took the difference and invested it until retirement, you would have more than what SS would pay back. SS as a savings plan is always a losing proposition, especially since it is NOT a savings plan, but rather a pass through account, where all the money collected from you today goes to currently retired recipients. It is not set aside for you. So any money that you could save in SS and set aside would be a better deal.

Back when I was in high school we wrote and ran a computer program that calculated how long you would have to live to break even on SS if you worked until age 65. The results were pretty amazing and the most optimistic models put me somewhere in my 90's just to break even, but more realistically it would be in the 100's. So if I could avoid participating in SS altogether and invest the money in something else (like congressional representatives do) I would.

 

1 k about but it seemed to realy boost my income tax. Somthing I wouldn't let the company take away right. Thank you.

Now I get a real per deim, good miliage pay and $40 a day. And a check maid out for about $700 at the end of every month for per diem alone.

I'm not sure how my tax guy going to work it out as this will be my first per dia year.

 

I think the difference with this per diem deal is mileage per diem or what other drivers here have said they get so much a day. The company I talked to pays $55.00 a day for every day out even if you had to sit a day you get the per diem, This is a small mom & pop company, I talked to the owner's wife about this thread and from what I understand this per diem will not show up on your W-2 I'm not sure but I believe the IRS allows $ 57-58 a day in per diem so they are in that range and not over doing it, not sure on how per diem can be considered earned income if paid in this fashion compared to mileage per diem, everybody is correct though that this does hurt with Social Security and so on, with the older drivers that are or will be retired then the this low taxable income would not hurt them as much, most would do it just on a part time basis......

 

Ya I think your right on the daily rate. As I don't think It'll affect my taxes. Wich I'm fine with me cuase like I was trying to explain I actually make a real miliage pay as well, not the 22-24 cents these bigger companies are trying to get over on these other drivers with.
Back in the days,that's how per diem was supposed to supplement the drivers expences, these companies just kinda went in there, and turned it around to supplement they're right off's.

Your right about the company as well. We only have eight drivers the one with the least amount of experience has about 7.5 years under his belt.
But he been working they're for about ten years. He used to be a yard guy.

 

Oh if only that were true, I'm not right, just opinionated but I appreciate the thought

Nothing to be sorry about, I just see people come on here and ask about per diem because quite frankly trucking may be their first time in a job where that is used. What I disagree with is all the people who jump on here and say that it's bad, run from it, you aren't going to be able to buy a house and so forth. The people on here for the most part are not CPA's and have no idea who you are or your particular situation. No one answer is right for everyone, it's something that each person individually needs to figure out with their tax person if it's a good or bad thing. FYI, it's a good thing for me, I have almost always worked in jobs where they pay per diem, have NEVER had a problem buying a house (own two now), a car or anything else.

Please seek the advise of a CPA that understands trucking and have them look over your particular situation. It may be that not taking the per diem will be in your best interest or it may be an actual benefit for you.

Personally I don't give $.02 about the Social Security aspect. Social Security is supposed to be a benefit to older American's not a retirement package. My personal opinion, if a person is planning on relying on Social Security for their retirement they have way bigger things to worry about than the very few dollars a month difference it's going to make based on whether they took per diem or not. I can't stress enough that Social Security was NEVER intended to be a retirement plan and shouldn't be looked at that way. If someone is so concerned about it then open a saving account and have that small portion of what would be paid to SSI if you were not taking per diem direct deposited into it then at the end of the year drop that money into a Roth IRA on some middle of the road aggressive money market accounts and the benefit to you in the end will be 50 times what it would if paid into SSI. My wife and I drop $600 a month between us into that savings account and every quarter my banker transfers it to our Roth IRA. I am not going to discuss it more than that but quite frankly we're at the point where SSI is going to make no difference in our quality of life once we retire.


And finally, I'm just a truck driver (and an opinionated one at that) not a CPA but I did stay at a Holiday Inn Express once. I keep saying that money paid Per Diem will show up on your W-2. Well I got a PM from someone followed by an e-mail showing me that theirs did not last year. So I stand corrected and will say that in my case with my employer and the way it's done it shows up on my W-2 and always has. I do believe that its not legal for a company to not report it and if it's not reported and not on your W-2 then what reason is there for someone to not take the full standard deduction IN ADDITION to the non taxed earnings of the per diem.

 

Run, flea it's gonna gettcha. Lol.

 

Are you 100% certain about this?

 

Basically per diem is good for some and not for others. Since this is the government you are dealing with, someone who deals and is trained to deal with them should be consulted. Such as for myself, well the lower reported pay, taxes,and SSI forced donation works fine for me. I make too much now, and am already collecting SSI, so I dont need more going to SSi, and uncle sam already blows enough of my tax dollars (and yours too). Dont plan on purchasing a new home, or car. Dont need unemployment, disability (already collecting from the military), etc. So in my case Per Diem is worth my while. But, someone else it could be robery, and yes it should be voluntary.