Team Driving & Per Diem Pay

sorry can't help, just wondering if you could explain per diem pay. Sounds like a holdback??
thx

 

Per diem programs are decided by each company. Some are optional and others are required. Try to avoid taking it if you can.

Good luck.

 

There are many threads on per diem . In a nutshell part of your pay is shown as meal expenses paid by the company and you aren't taxed for that portion resulting in slightly higher weekly pay .
Several negatives though . By that income not being taxed you earn less money towards Social Security for retirement or disability .
You show lower earnings on your W-2 . This affects your credit rating and the amount you are able to borrow .
Carriers always underpay per diem to avoid being fined for overpaying . You will not get full benefit unless you claim per diem yourself without carrier payments . If the carrier pays per mile wht about the days of layover and restarts away from home when you don't get any miles ?

 

Bowtie, see your from Canada, so I don't think per diem affects you.

Per diem is the tax deduction allowance for expenses while being away from home for business purposes. The current amount is $59. per day (actually, per night). A truck driver can take 80% of this amount. So, as a example, at the end of the year, a driver who has spent 200 nights away from his home domicile could apply a deduction of $9440. (80% x $59. = $47.20 x 200) to his Fed. taxes.

With the per diem option pushed by companies, they pay you a portion of your pay as that credit on a weekly basis. For example, if you make $.30cpm, they might pay you $.20 as regular wages and $.10 as per diem. The $.20 paycheck will have taxes taken out of it per usual, and the per diem check won't. It gives you a bit more in take home pay. One problem is that you are making a smaller contribution to your social security credit, another is that your reportable gross pay is less, which could effect a loan or mortgage application.

I don't fully understand the cost savings the companies realize (other than paying less of a contribution to SS for each employee), but it must be enough to make it worth them doing it. Unless they think the driver will be happier if he or she thinks they are making more money.

There are some instances were this takes on the form of a scam, where some companies will charge the driver for this feature, like 1 or 2 cpm, taken from that per diem check.

I asked 2 tax people about it, one of whom does O/O taxes. They both advised not taking the option. If done correctly, you'll still end up with the same total deduction for the year, but have to do a bit more work to figure it out. If done with a charge, in the long run the driver will lose a bit of money.

Hope this helps.

 

It's not optional at crst.

 

yep except the $59 per diem is an average. My CPA took the actual states this year and it came up to $62 instead of the $59

 

Musicmaker, can you get a reference from your CPA. That's the 1st time I've ever heard or read about a average. The Per Diem for you Fed taxes is set by the IRS. Can't see them allowing different rates for different states.

 

All states and some city's have different rates. But you have to be careful what number you use. We are only allowed to take the per diem for meals and such, not for lodging (unless you stay in a hotel every night).
The 59 a day is an average. But if you want to do it the other way you will need to be ready to prove your locations. If on a dedicated run and staying in the same locations allot it is fairly easy. In normal OTR operations it is a pain in the rear and usually not worth the trouble to try and figure it out.