Per Diem??

that's basicaly how it works. I can't help too much since my Perdiem was a benifit ON TOP OF my pay and not a cheap way to make you think you are making more. But I have heard some say there is things you need to watch out for tax wise so you may want to run it past your tax guy.
Personally I would opt out but that's me. guess it all comes doen to if you need it now or want it at the end of the year

 

I would opt out at my age since it figures into my Social Security benefits...

 

I'd opt out as well.

While many people will refer to the Social Security issue, to sell you on it, if you are younger. Tellling you that you can opt out as you get older to increase your benefits.

If you become disabled at 30, your benefit will be greatly reduced.

Your year end deductions will be more than 10K if you are OTR. You can expect closer to 13K plus (per diem) and any other deductions you may have.

While others would offer the Roth IRA as a means to recoup that loss of retirement earnings. Not a bad idea, if you can stick to it faithfully.

 

opt out

unless you are running from child support... and want to show mamma you aren't making good wages and can't pony up the dollars.


often the answer is get paid now or later... this isn't totally correct and it goes beyond social security.

picture getting fired or breaking leg on the job or claiming personal disability insurance....

taking per diem lowers your taxable income which is the standard for figuring your benefits right now not just when you retire.

IMO perdiem only benefits guys hiding money and the company paying you since now they are paying less social security.

Cheaper for the company is why they try to sell it to you as the best thing since sliced bread at orientation.

 

something else to think about. It makes your yearly income look smaller. banks look at what you grossed and don't take into consideration that you had per diem when applying for a loan. Per diem shows on the pay stub, but some banks wont look at it. I took per diem and it messed me up trying to refinance my home for equity a few years ago. I wasn't able to get as low of a rate as i hoped for. Also you pay less into SSI. I guess it just depends on the individual and their situation.

 

The way I look at Per Diem is you have 2 options.

A. Take per diem pay & get an extra 30 or 40 bucks a week

-OR-

B. Do it the way you are now because at the end of the year your tax liability is going to be about the same anyway, get a refund, and don't worry about the downfalls of making less on paper. You can still deduct your expenses at the end of the year if you want, and keep in mind that the 1040 does show your Adjusted Gross Income which banks WILL use to determine your eligible or not for a loan. That is why they always ask for prior years tax return.

EXAMPLE:
Driver A Gross is 30k a year.
Driver B Gross is 22k a year and 8k per diem (30k)

If Driver A has 8,000 deductions on their taxes then guess what? Yep they BOTH have the SAME Adjusted Gross Income

Either way it does not matter. The only person who is really benefiting anything from Per Diem is the company who allows you to have it.

The company will pay less:

• unemployment tax
• Social Security
• Medicare
• pay to drivers!!!

The 2 or 3 cents they charge you... lets say you averaged 2,500 miles a week and worked 50 weeks a year. That is $50 to $75 a week and $2,500 to $3750 LESS the company has to pay you not to mention the taxes they save.

I haven't even started driving yet and coming from a family with a background in number crunching - I can see this is A BAD DEAL!..




If they want to fix it, here is what I would recommend...

Still pay social security and medicare tax for the full amount, and make the per diem amount exempt only from federal taxes.
Not allow companies to deduct from your pay just to let you have per diem - your really PAYING YOUR COMPANY a lot of money to do this.

If driver A is on regular pay and earns 30 cents a mile and driver B is on per diem... their mileage pay should still be the same

Driver A 30cpm
Driver B 22cpm + 8cpm per diem = 30cpm.

If your company is charging you then your giving them all of your tax savings.

just my 2 cents... (or, rather your 2 cents...lol)