Just a question. Anyone know of a formula to figure out how much tax savings .10 per diem would give me? Not sure how to figure it out. I’ve researched all the good and bad of taking per diem from my employer, that’s not the issue. Just curious how much more “cash” I would have by not paying .10 mile in taxes. Thanks. Yes, I know the title is spelled wrong. Couldn’t figure out how to edit the darn thing.
It can be calculated by the company as $60 from your taxable income every day you're more than 50 miles away from home. Lots of companies do it differently and just do a regular rate per mile when they don't use the ELD utilities, or don't have them available. The extra income is significant. But the biggest concern is that you show significantly less for Social Security benefits upon retirement.
Depends on which tax bracket it could take you out of by taking the company per diem. Depends on which state you do or do not pay income tax too. With FICA, you would not pay the 6.2% contribution. Multiply your expected miles by .10 for the amount not to be taxed. Then you can approximate your total wages, minus 401k, IRA, personal deduction. Estimate your tax bracket with or without the company per diem.
Let’s see. I’ve been out of school for a while now. Let me try TR = Non per diem CPM rate (amount that is taxed) PR = per diem CPM rate (amount not taxed) (10 cpm?) Total = Total CPM paid PP = Per diem percentage TR + PR = Total PR/Total = PP Now take whatever you’re current tax withholding is. Include federal, SS, and Medicare. Let’s say on a paycheck, this was $200 $200 x PP = the amount of tax savings you would effectively see I think this is at least roughly right. Maybe somebody else can add in some clarification.
Also, a couple of other points that bears mentioning. Carriers offer varying per diem CPM rates. Not sure how they go about determining what they will use. Where I work (48 state OTR with extended tours required) they pay 16 cpm as per diem. Also any raises you may receive will be typically tacked onto the NON per diem side, leaving the per diem the same.
Per diem pay used to be more of a penalty than a benefit, but now that they changed the tax laws we no longer get per diem unless we're o/o. What that means is if you can make a livable wage off of the pay before per diem, it is worth it down the line when you retire. If you can't, you're better off sticking to a job that doesn't split their pay into per diem.
How do you figure that (under the current tax law and as it pertains to company drivers)? The “per diem model” offered by some carriers to company drivers is now the [only available] offset to owner op ability to itemize as far as tax liability reduction. You’d be a fool now to not take the per diem option if available. Take the tax saved and reinvest elsewhere for retirement savings.
My company doesn’t require us either way. It’s up to the driver. I was just trying to see if it was worth it since we lost the deduction on taxes. Seems like my “new”married standard deduction will more than cover that part. I don’t have that many years (less than ten) until retirement. I’m just trying to figure out if I invest the extra money will I come out ahead of the game. House is almost paid for and no big purchases on the horizon. I pay the bills and wife’s job is for savings and vacations. We both have pretty fat 401k’s. Seems like I’d missing out if I didn’t take per diem.
Because if you still can't make a living wage before per diem, then you get next to nothing for social security. Sure, it's possible to save up yourself for retirement and really you should, but most people don't. I figure that if you don't know whether to take per diem or not, you probably aren't financially focused yet. Hence my advice for the financial layman.
