per diem so confusing

So how much of the per diem are we allowed to keep.

OOIDA says The per diem rate for meals in 2012 is 80% of $59 per day.

Does that mean I pocket $47.20 a day? I never get that much back on my per diem.

 

I get paid $29.00 per day perdiem but turn it in as income (taxable) and deduct daily deduction makes me more money that way..

 

I assume you mean at the end of the year? All it does is lower your taxable income when you file taxes.

Let's just say the income tax was a flat 10% because I don't math well.

Say you made $50,000 for the year. You were on the road for 100 days. When you file taxes and figure your per diem, you would have a deduction of $4,720. So you subtract that from $50,000 which means you only owe taxes on $45,280.

So because you paid in $5,000 but only owed $4,528 you would receive a refund of $472.

Obviously there's more to your taxes than just per diem, but I hope that helps.

 

Per diem is a shell game, and it's to the benefit of the employer, not the driver.

Say you have a steady gig of 2500 miles per week at 40 cpm; $1000 gross per week. Federal taxes are about $150, so (ignoring state/local), your check is $850.

Your employer offers you per diem; they deduct 6% of your check and give you 5% per diem (the other 1% is a "handling fee"). That $10 you pay as a "handling fee" dropped your taxes by about $15. Hey, that's $250 a year in free money!

Well, it is *if* you only claim the standard deduction... You can claim the per diem when you itemize your taxes, and you can claim *all* of it, not just the bit your employer claimed, and you won't have to pay your employer that "handling fee" to do it!

Your employer benefits by not having to pay as much in taxes (you earn less, remember?). The down side is that since they are paying less, your benefits from these taxes (Social Security and such) are similarly reduced.

Bottom line: If you have the option, skip the per diem and claim it yourself on your taxes. You'll be money ahead in the long run.

http://www.truckmaster.com/blogs/trucking-software/efficiencies-ts/per-diem-to-pay-or-not-to-pay

 

That's the best advice ever. Too bad you are advocating tax fraud.

 

No, he isn't, as long as the 1040/A/EZ form shows the right numbers.

If you want, you can have NOTHING withheld, but you'll have to make estimated payments every quarter.

 

Pretty well on the mark. The main thing you left out is that a company's per diem plan also lowers your fica payroll tax (you pay 7.5% your employer pays 7.5%). So the guy making 52000/year saves 900 in fica if his company pays 12000 of that as perdiem (but they charge 500 in the process so the net savings is only 400). The savings are even greater for those subject to alimony.

Of course that means less ss when you retire.

 

Here is what the IRS says about depenents: http://www.irs.gov/pub/irs-pdf/p501.pdf

There is a lot of criteria for determining whether a person can be claimed as a dependent or not. I would speak to an expert before claiming anyone as a dependent.

 

Chibob, I am new to trucking, can you elaborate on the $59.00 perdiem on taxes? Is there a special form for that or a statement that I need to get? Thanks in advance.

 

While he said "dependants" he clearly meant "personal exemptions" (on the withholding form w-4: http://www.irs.gov/Individuals/Inte...g-Exemptions---Personal-Exemptions---Form-W-4 ). For example, despite being single I use "5" insead of "1" so my withholding more closely matches what I owe, maximizing my immediate paycheck but getting little or no refund.