Per diem

with the company we work for it is paid on you weekly check X pay and X per diem on one check

 

I was against the whole perdiem as part of pay thing for a long time. But last year I did allot of math at tax time and found I would have been better off if I had gotten 8 cpm or so. As long as it did not lower my mileage rate.
Some company's will charge you a few cpm for doing perdiem, this is where the big issue is.
And with the loan and unemployment things. Though I see no reason for a driver to be unemployed for more than a few months every decade.

Anyway.
Last year I wrote off over 16k on my taxes for perdiem. This changed my return by a total of 1000. That was it. I got a grand back more for 16k of write off.
If I had 8 cpm of pre tax perdiem I would have taken home over 10k in pretax money for the year. Granted, this is money that I would have been paid under my base rate. But it is probably about 2 grand more money in my pocket at the end of the year, and out of uncle sam's.
I would not take more than 1 or 2 cpm less to get perdiem though, and I would not want more than about 8 cpm. That way I still have quite a bit left that I can claim on my taxes. Since I can itemize anyway.

 

Agreed, per diem is not a bad thing unless your company is charging you for it. Technically it still wouldn't be a horrible deal depending on what they are charging, but it sure sounds like a ripoff when a company is charging you to save themselves money. For a new driver signing on with a carrier that is worried about per diem and has no choice in the matter? Find something else to worry about.

 

One of the reasons I have stated that it is a case by case decision.

If for instance you have extremely large itemized deductions it could be beneficial. However, the taxable income is something to project for the decision as well.

 

can't you write off the difference ? say 59-47 =12$ a day times 302=3624

 

Yes, but it is subject to the 2% floor as a miscellaneous deduction so it is not a dollar to dollar deduction.

 

My 2 cents worth, or more.

ChromeDome I think you need to sharpen your pencil. I assume you make enough money to pay taxes. The lowest federal tax bracket is 15%. In my state the tax rate is 6%. So anything I/you/anyone that can itemize will save at least 15% plus state rate. You came up with saving only $1000 for $16000 deduction. That is marginally over 6%.
You need to realize that the tax brackets are based on whatever the next dollar you earn, that will be your tax. Example. Earn $30k and with deductions you may not pay any taxes. But earn 30k plus $1.00 you pay 15% on that dollar. Thus my calculations are that you have breached the tax threshold.
These savings %'s only apply IF you already have enough itemized deductions that will be equal to or more than the standard deduction. Lucky or not I do, so I save $2.5 to $3.5k a year by using per diem as a deduction from my gross income and would never accept a position that would require you take per diem pay.
I don't figure the SS and Medicare taxes into my valuation because the more you pay in, the more you get at retirement(if anything).

Note: Bush's temporary tax cuts lowered the 15% rate to 10%. These rates should be permanent. Vote for your state reps so YOU don't have a 50% tax increase. Don't believe that only those making $250k will pay more.

 

This from a companies website.

SOLO COMPANY DRIVER PAY
EXPERIENCE PAY PER MILE*
0 - 6 Months $.28
6 - 12 Months $.29
1 - 2 Years $.30
2 - 3 Years $.305
3 - 4 Years $.31
4 - 5 Years $.315

Driver will receive pay increases
after 5 years with continued employment.
* 8¢ in each per mile rate is per diem, which is not taxed. Your take home pay is approximately 2¢ more per mile at each rate.

 

I found this on the web about per diem. it is a wall of post,Read at your on risk..LOL
As many trucking companies are still in the process of recovering from the recent high fuel prices and contemplating the uncertainties of future economic times, the pay per diem plan is rearing its head more and more. Trucking companies are beginning to “push” drivers toward this other option for pay, in regards to the more standard role of cents per mile pay. Many drivers are still confused about this per diem situation, and rightfully so. Anything related to governmental taxes can be difficult to understand. So which plan is the best plan? Pay per diem or CPM?

The per diem plan is supposedly calculated to provide the driver with the maximum savings possible under the rules of the IRS. The trucking company will begin with the drivers’ base mileage rate and then they will apply the per diem tax reduction amount by a certain CPM rate. For illustration purposes, let’s use the reduction amount of 11.5 CPM. The drivers’ taxes will then be calculated on that reduced amount. So if the trucking company is paying .10 cents per mile back as per diem, this qualifies as a non-taxable expense reimbursement, rather than showing as taxable income. The company will then take the 1.5 cent difference and use this to offset any administrative and additional taxes that the company may incur.

The per diem pay plan reclassifies a portion of your paycheck as “expense reimbursement” rather than actual income. Therefore, your taxable income is lower. In return, this will affect many other benefits that are calculated off of taxable income such as worker’s compensation, disability claims, unemployment benefits and the most important one…social security benefits.

Also, an important aspect to remember, is that by showing a lower taxable income, this could very well reduce your ability to secure loans at a decent rate, and to be able to obtain credit. This is because, of course, that banks and lending institutions look at your total income when basing their decision on extending loans and credit. Another important factor that could be disrupted by using the per diem, is any profit sharing plan your company may offer. Profit sharing plans are mostly based on taxable income, and any income tax savings you may receive from utilizing the per diem plan, would reduce your profit sharing contributions.

Per Diem pay used to mean the amount the company would give the driver, beyond the regular earned wages, to pay for meals while out on the road performing the job. However, it is now a way for the trucking companies to reduce their taxes along with reducing the drivers’ taxes, yet hurting the driver in the ways stated above. The per diem plan causes the drivers’ yearly income to look smaller, which again, can cause problems when applying for loans and credit.

Also keep in mind, that the per diem portion the driver receives is tax free when the trucking company pays it. At the end of the year, if the driver has been over paid what the IRS allows, then the driver…not the company…will have to pay the difference in taxes. We will all have to pay taxes anyway. Why give up hundreds of dollars it will cost us over our lifetime of earnings, in order to “bring home” $35 to $75 more per week? Drivers are basically trading their future retirement earnings, while the trucking company is increasing their daily earnings, by reducing their tax liabilities.

The trucking companies are really the ones benefiting from the pay per diem plan. The company will pay less in unemployment tax, medicare, driver pay and social security. The per diem pay plan can drastically reduce the drivers’ future social security benefits as well as other retirement plans such as the 401K.

Always check with your accountant who specializes in transportation if you are still uncertain about the per diem pay plan. Trucking companies are in business to make money. Any business is in business to make money, that is understandable. Just remember, the plan the trucking company is pushing for the driver to utilize, is often the plan the driver wants to stay away from the most. As for me, I would always go with the CPM pay plan.

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