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.
What's wrong with per diem pay?
Discussion in 'Experienced Truckers' Advice' started by Gitana, Nov 27, 2013.
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I still don't like the Social Security issue, unless the per diem puts your pay over the current market, then it would make perfect sense.
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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.Last edited: Nov 28, 2013
Gitana, catalinaflyer, Guntoter and 1 other person Thank this. -
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.Last edited: Nov 27, 2013
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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......
Last edited: Nov 27, 2013
full speed Thanks this. -
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.Last edited: Nov 28, 2013
rocknroll81 Thanks this. -
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.Menehune, airforcetoo and Gitana Thank this. -
Run, flea it's gonna gettcha. Lol.
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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.
Gitana Thanks this.
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