Why do companies charge drivers for per diem?

Why do companies do it? Because it lowers *their* taxes.

If you itemize, and every OTR driver should, you can claim every bit of that per diem.

Technically, it does lower your taxes... by lowering your annual income.

 

You can’t itemize anymore after 2017 tax year. So now what?

 

And what gives you that idea? Don't believe everything you read on the Facebag. Itemizing your deductions is alive and well.

The standard deduction nearly doubles in 2018, so a lot of people will be better off taking it over itemizing. However, the break even is with 118 days on the road for a single person; double that if married. Personally, I'll be able to deduct an additional $4000 or so by itemizing in 2018.

 

Wait, your companies reduce your pay for per diem? My carrier pays me the same with or without per diem. It's just extra. Is that unusual?

 

Actually, the unreimbursed employee expenses are no longer allowed in 2018. Taxpayers can still itemize, but per diem is a unreimbursed employee expense, and can no longer be deducted by Company drivers.

One of the reasons that companies deduct two cents is because they can only deduct 80% of the Perdiem expense on their tax returns.

 

As a company driver, going forward you will no longer be able to itemize. Our company announced this morning that they will re-implement Per diem, which they had discontinued a few years ago. There will be no additional charge. They cited changes in tax law and the fact that we will no longer be able to itemize the Per diem as the reason.

 

Funny I said the same thing 30 years ago and it's still around.

 

Yup, the driver taking the per-diem on his own tax return is done for.

Even if it wasn't officially, the increase in the standard deduction would likely make it unfeasible.

Don't get the notion that someone in government did you a favor though, because the personal exemption is gone. Most truck drivers will likely be paying more in taxes.

Company paid per-diem used to be, almost always, a huge driver rip-off. Drivers would be conned into the notion they were cheating the government out of some tax money, when they were almost always cheating themselves out of their own earnings. Don't believe me, search this forum, the numbers have been gone over time after time, and unless the company is handing you the full per-diem amount each and every day, then driver is loosing out.

Not so anymore.

 

I worked at a company that kept .02 if you were on per diem, they said it was to pay for the per diem program, which was done by a 3rd party.

I told them to cancel it and I would "keep my 2 cents to myself".

...Pun intended. I also learned that office people don't like puns.