Per Diem?

Per diem in the transportation world is just a way to deal with your living expenses while you're away from your tax home without it becoming a receipt nightmare at tax time... nothing more. The IRS doesn't want to deal with a mountain of picky little receipts, and neither do you. So the IRS came up with a rather elegant way to deal with it... just prove you were really on the road, and we'll assume you spent $59 (now $63) and you can deduct 80% of the total. Done.

The carrier per diem plan takes advantage of the deduction by lowering the amount of payroll that they have to pay their share of social security and medicare tax on. Your advantage Mr Employee is you get part of your income shielded from taxation. There's nothing nefarious about this... if you can't itemize, you get the benefit of a deduction that you really can't claim, and some tax-free money.

 

It adds up for any employer.

 

80% of daily Per Diem for actual days away from Domicile.
75% of daily Per Diem for days arriving/departing Domicile.

Keep your logs. If audited and you cannot show logs that you were OTR you will be paying back along with fines/penalties. If Electronic, get copies. Carriers do not keep the logs past x months.

 

The major,major,major problem with a trucking companies per diem,is they take a portion of the advertise CPM that they pay you..Example: if they say they pay 40 cpm,but 15 cpm is pre diem..Your true pay is really 25cpm...Pre diem should always be an additional amount added to your cpm pay,, if they say they pay 40 cpm with a 15 cpm per diem for a total of 55 cpm,then you should consider it.per diem is ALWAYS A benefit added,not subtracted from you base pay.

 

That's why I said a short and abbreviated example of the deduction scenario. That's also why I always say NEVER base your decision on advice received from an internet forum. Spend a couple hundred dollars, hire a CPA who can look at your ENTIRE financial picture and give you the best advice for your particular situation. I have a conversation with mine every 3 months, she has me make adjustments to my withholding and I'm going on my 22nd year of not owing the IRS (Federal, State or Local) a single penny come April 15th. In fact I just adjusted both federal and state withholding a few weeks ago because I was having too much taken out and would wind up getting money back which is essentially loaning the government free money.

Now in the argument of the employer not paying in as much to Social Security therefore hurting you come retirement time (which BTW is not 65) then you have a whole plethora of financial problems coming your way when you do retire. Social Security should NEVER be viewed as a retirement fund because it's not. It should be supplemental income to YOUR retirement fund.

If I continue on the financial path I'm on now I'll walk away from work on my 61st birthday and never have to look back. Years before I'm even eligible to draw social security and what little bit I would get from social security will make absolutely zero difference in my lifestyle. I'm paying myself for retirement not relying on the government for my retirement. They aren't going to decide they've over-spent and tell me I have to work another 5 years to get my money.

 

I always believe in hiring the experts. Now can anyone tell me why it burns so much?

 

True, but you still want to get all of it that should be coming to you. I didn't say anything about relying solely on Social Security.

 

Stop hiring infected experts..

 

I split hairs once a year and save whats left for 3 year's