Per Diem?

If Per Diem is a daily tax free allowance, how is that translated into CPM in your pay?. If I sit in a truckstop for two days waiting on a load, that still counts as days away from home, yet I haven't driven any miles so how would a CPM per diem plan work?.

 

For me per diem is the biggest rip off on this bussines per diem is a money free of tax the company pay you for your meals they pay you , you dont have to work for it in my case was 56 dolllars a day now when we go in to a hotel the company ask for the receipt ,why ? If that money paid on the hotel was per diem belong to me not to them , why per diem if i get pay by miles , boxes and stop ? When really per diem is for my meals not for working

 

And that is where you are wrong. For transportation workers, per diem is an IRS allowance to DEDUCT the $58 per full day on the road while subject to HOS. Your employer doesn't pay it. It's not a $58 payment, it's a $58 deduction from your taxable income. Which has ZERO value if you don't itemize on your taxes.

So, if you don't itemize on your taxes, taking part of your pay as per diem is a way the company uses to give you the same tax deduction as those who DO itemize. The only thing the company does is change the book keeping. You get the vast majority of the benefit.

 

Do you have a good understanding of how taking part of your pay as per diem works?. I am seeing that it is paid as a CPM, but if you don't drive any miles and are still available for dispatch, how will you receive it? and will you receive all that you are entitled to?.

For example, Driver A and driver B are both in a company CPM per diem plan which is paid as .08 CPM. Driver A does 3,000 miles while away from home for 7 full days. Driver B does 1,000 miles while away for the same length of time. A gets $240 as paid per diem and B gets $80.

How does that pay correlate to the $408 tax deduction they are both entitled to for that period away from home?. Would either/both driver be losing out by not itemizing and claiming the full tax deduction?.

 

They aren't entitled to $408. They are allowed a $58 x 7 deduction from their taxable income.

Whatever they do not get in per diem from the carrier, they can still take on their personal tax return (if they itemize).

 

Sorry, bad math, $58 X 7 is only $406. In the above scenario, would either driver be better off not taking the pay plan?. Is there ever a scenario where a driver would gain more or increase their net income by taking per-diem pay vs itemizing at tax time?.

If it isn't already apparent, I have no clue how this per-diem thing works. I understand the $58 tax deduction per full day away from home, but where I get completely lost is how that translates to a CPM/monetary value by a company.

 

The CPM is just an accounting mechanism to make the program manageable (companies generally track miles, not days). It's an approximation only, for administrative purposes.

The only difference for the drivers is that they save their 7% FICA taxes on the company pay issued as per diem, IF THEY ALREADY ITEMIZE on their taxes. If they don't itemize, all their per diem tax benefit is lost if they don't take their allowable per diem as part of their pay.

 

Thanks for your replies. It seems to me the best way to ensure you are getting the full deduction you are entitled to would be to opt out of a company plan and itemize your taxes.

I suppose the downsides to that would be the additional cost for itemizing if you have your taxes done by a third party and keeping acceptable records of your days away from home should the IRS want to see them.

 

Actually, if you can itemize and you do take the per diem option, the amount sheltered from taxation should be on your W2. You can still deduct the difference between the maximum allowable and what your company reports through their plan.

 

Thanks for the reply. From what you are saying that would cover any shortfall. I am sure I am overthinking it, but I just couldn't fully comprehend the conversion between a CPM company system and an IRS daily deduction. It would be better if the company plans just paid a flat daily "away from home" amount rather than trying to index it with miles covered.

What about drivers that are paid hourly and spend days away from home. How would companies handle that?.