Help understanding Per diem

O.K. were are at the core of your misunderstanding and our disagreement. Just to let other drivers know how this per-diem scam works for these companies, let me expound. All the CPM companies like to pay piece work. In no way do they want to pay a flat rate for anything. Post #40 hit on some of the reasons.

Now the per-diem trucking company wants a piece the tax break that the government allows truck drivers. No sense wasting that good tax-break on a crumby truck driver! To bring the trucking expense of food, lodging, and incidentals under the trucking companies tax statement so they can claim the tax break for themselves, they have to pay the driver that incurred the actual expenditures for said food, lodging, and incidentals. They could pay the full amount allowed by the IRS to the truck driver of $63 a day but they won't. They cannot deduct that much. They could pay the full amount of the tax deduction allowed $50.4 (80% of $63) a day but that would be a flat rate guarenteed to a truck driver and they don't want to pay that either. They know they often get a day of work from a driver for less.

To solve this problem, and still reap the rewards from the tax break and dodging the payroll taxes, they pay the portion of the CPM offered to the driver as a tax free per-diem reimbursement for said food, lodging, and incidentals. That portion of the daily piece work (CPM) wage has to be less then the $63 a day allowed by the IRS. Since the trucking company has accountants, you best believe that CPM reimbursement is less then the $50.4(80%x63) the IRS allows the trucking company to deduct.

To make sure that this piece-work payment scam with per-diem reimbursement, is less the $50.4 a day, the trucking company has to estimate how many miles the best driver in the company will get. They cannot claim more than $63 dollars a day and they loose money at over $50.4 so you know that isn't going to happen.

What the trucking company is doing is buying a truck drivers per diem tax deduction ($50.4) with a piece of the CPM pay offered to the driver. In exchange the driver agrees to a lower paycheck and some perverse satisfaction that he has screwed the government some how!

The fact is a trucking company is never going to pay you the full amount granted by the IRS. Certainly never going to pay you more! By agreeing to per-diem scheme a truck driver is basically selling his $50.4 tax exemption for Cents Per a Mile. Hoping, that he is the best performer in the company, gets the most miles and recoupes as much of the $50.4 dollar tax benefit. He will never get back the full $50.4 tax advantage, he sold that to the company for pennies.

Per-diem will almost always screw the driver.

I don't know what elog has to to with it?

But, MysticHZ has basically answered your comment.

However to add, a lot of these crappy that do per-diem companies get a driver to work for less then $50.40 a day. They don't want to pay anymore then they have to to have a driver sit at a dock all day, detained while his truck is getting loaded or unloaded. Nor do they want to pay any layover if the can get out of it. They guarantee a $50.40 day per diem they are basically guaranteeing a layover pay and a driver take that fact to the Dept. of Labor and collect that money on them.

 

If you have the option of per diem don't take it.
1. It lowers your SSI retirement
2. If you get hurt it lowers your disability Payment
3. If affects your income debt ratio when buying a house and what you can get a loan for.
4. You can get more money back from the IRS filing a 2106 form for meal allowance then the company per diem

Ps you can still get the meal deduction if you get paid per diem but you must add back the company paid per diem to your income on the irs2106 before you can deduct it. So you are not double dipping. But you are still getting screwed on points 1,2 and 3

 

I have some pondering to do.

My one question is a simple one. Is a company claiming 50.40 in wages per day to you the driver as a minimum wage that is lawful to pay in lieu of actual wages over a number of hours for many other on duty related tasks?

I recall in covered wagon work and earlier flatbed work on the deck we were paid tarp, detention, safety bonus weekly for 60 mph or less and no detection of heavy breaking, abuse etc of equiptent. Theoratically the same dog that interacted with you may be leaning towards marriage.

 

Both false.

3) When you apply for a conforming mortgage, they will add back per diem to your income. For instance, at Wells Fargo (the largest mortgage underwriter), they get the info from your tax returns enter it straight into their computer program. The loan officer might not even understand what they are doing -- they just enter the amounts from various boxes like the program asks. But one of those boxes is per diem (I know, I just went through this).

4) You actually get less back because you don't get refunded SS and medicare.

 

False

3) What ever "forms" you fill out make no difference. Per diem looks, and is, to any qualified loan officer as an expense not an income. Now, they may offer a place for you to enter it in on a loan application but they do not consider it the same, or give it the same weight as taxable income.

Bottom line, if they didn't offer that input to the prospective borrower they would have to waste time filing a bunch of revisions to income statement to satisfy the prospective customer. Whatever number is entered their has little weight in the competitive market of loans.

4) Obviously you did't read or understand my prior posts.

The company will never pay a driver the full amount allowed by IRS. It will never happen; trucking companies are in the business to make money not give it away to drivers.

Except in a few rare cases the amount paid by the company will be far less then the saving a driver would accrue from not paying the SS and medicare on the same money.

You find the miracle company that will give a driver the full $50.4 cash each and every day he is out. That company cannot also take an "accounting fee" like they all do. Only after you find that company come back to me with your point of saving money.

 

I am that company, even though I only have 3 trucks. I pay 23% of gross, full gross including fsc, before anything has been taken out(except permits and escorts) and $50.40 per diem for every night your out. I also pay myself the same way.