Per Diem vs standard deductions

If you want to claim per diem you have to itemize. therefore you cannot take the standard deduction.

 

first of all, per diem is in itemizing deductions...cant have it both ways. secondly, im not sure youve accurately assessed the amount od per diem you are entitled to. are you home for LESS than 24 hours per week, every week? if not ( ie. if you get home friday nite at 9pm and leave sunday morning at 4 am), you must divide the day into equal parts...do it the same for the whole year, and claim PARTIAL per diem for those days when you are home part of the day. (example...divide day by 24...in example above for friday you would be entitled to per diem for 21/24 or $51.62, on sunday 20/24 or $49.16). MOST people receiving w2 income dont benefit from itemized deductions UNLESS they have a mortgage. for renters, or those that own a home outright, standard deduction usually is better.

however, and i thought this is what the question would be about...a company driver should NOT just listen blindly to their company's per diem pay pitch. if you are married, have one or more children, and are the primary breadwinner for the family, per diem is stealing money out of your pocket. a family with 2 children will not owe taxes until theyve cleared over 40k income (i forget the exact number) so if your income is the only income, and you make lets say 50k, you will owe taxes on only a small portion of that income come tax time. so if they offer you per diem pay like my company tried to argue me into taking (we will take 12 cpm away and give you 9 cpm in per diem), they essentially are offering to relieve you of 3cpm, or $3600 per year, in order to save you perhaps $1000 in taxes.

 

dont forget you will also pay a lower social security rate, meaning less money when you retire. you will b payed a lower rate on your workers comp. claims and any other type insurance you have. the big companys make money on this because they pay less for workmen comp. i am not sure if there share of fica will change or not. jon b careful out there

 

Actually in his case he can have it both ways ... He's 1099 and will be taking his per diem, along with his other business deductions on his Schedule C as a business. He will then take his standard deduction on his form 1040.

 

One further update to the per diem daily deduction in reference to partial days. Partial days CAN be claimed at 75% per day rather than the old system of dviding each day into quarters. In order to qualify for per diem the driver must have been away from his tax home for a "required rest break" that translates into a 10 hour break away from your tax home before returning. Partial days would be claimed as .75 for the day you left your tax home and .75 for the day you returned.
This method must be used uniformly throughout the year. For example; A driver leaves his tax home Monday morning at 5 am, remains on the road all week and returns home Friday at 1 pm. This driver would be able to claim Monday as .75 and Friday as .75. Tuesday, Wednesday, Thursday would all qualify for full days. In the above example the driver would be able to claim 4.5 days perdiem for this particular week.

 

you guys that posted so far need to read more in this section or else hire someone. first the 59 dollar deduction has to be multiplied by .80 , you only get to claim 80 per cent.

 

That is true; 80% of $59.00 is the correct amount the IRS permits but when using tax software such as Turbo Tax you should enter the full amount eg; 300 days x $59.00 per day = $17,700.00. The tax software automatically does the necessary calculations and enters the correct total.

 

Clear as mud.............

 

What form would the per diem go on?