Per diem

their are many threads about per diem on here

 

Per diem is payment a company makes to you to cover food and other non-labor related expenses. The benefit to you is that per diem is not taxed because it is not considered to be "income." In your case, your 'real' mileage is 40 cents, only 32 of which is taxed.

ADDED: Based on a slower read of the post, let me change my answer. The true taxable income would be 24 cents per mile, NOT 40 cents. My bad!

 

R U sure that is Not 24 cpm,

plus the 8 cpm,

making a total of 32 cpm ??

 

That's how I read it. 32 cents minus 8 cents per diem left 24 cents. On the surface, doing the per diem thing sounds cool. In reality, it can sometimes mess things up. It does make accounting on the driver's end a little more difficult. You can deduct standard per diem off of taxes, but now you have to subtract what you got in per diem from the company. Next, your reported income will be lower. That can snap you in the back side if you want to take out a loan for car or house. That lower income will also affect social security benefits in the future. That is assuming there is any social security left in the future. It works well for some, but I have found it almost always is to the advantage of the company. They do it to limit their payroll tax obligation.

 

The other thing to keep in mind about the per diem pay is that most people don't itemize on their taxes unless they are home owners. If there are kids at home, most likely they are doing the standard deductions etc, since that works out better. If you are doing the standard deductions, you can't take the other expenses anyway.

Don't bother with the company 'per diem' pay, as the only one that benefits is the company.

 

I redid my original answer since I misspoke based on a quick reading. The others are absolutely correct! So much depends on the details and how one reads the post, eh? Whether per diem benefits the employee or not depends on the details. As always, the OP should get details specific to his or her situatation from an employer directly.

 

Obviously the company benefits or they wouldn't be doing it, but getting the 8 cents per mile tax free is also a benefit for the driver. As far as I know, there aren't too many opportunities out there to get tax free money.

The supposed disadvantages are overstated. While your taxable income will be lower, it doesn't necessarily mean you can't get as big of a loan. It could I suppose in some situations, but once you explain the situation to a banker about how your pay works, and provide sufficient proof, you shouldn't have any problems. I know, I've done it.

As for reduced SS benefits? Yes. Your contributions and those by your employer will be reduced. But thats not much of a problem is it? Just to use an easy number, lets say you make $1,000 per week with a regular job. Your SS contribution is $130.00. 7.65% paid by you, 7.65% paid by your employer. With the per diem, your taxable income is reduced to $750.00 and your SS contribution is reduced to $114.75.

So the question is, would you be willing to accept $250 in tax free money in exchange for lowering your SS contribution by $15.25? Wouldn't the $250 in tax free money be the much better value? If you were really that worried about the $15.25 affecting your eventual SS payout dramatically, aren't you in a position to invest the $15.25 yourself, (or even double that amount, and still have money left over) with the benefit of getting the $250 tax free?

Anytime you get a chance to get tax free money, my advice is to take it.

 

Well stated rusty266.

 

Please do a little more research,

before taking alot of per diem !!!!