Per Diem Screwup

Most states calculate in per diem pay as "income" for child support... Any regular form of income is subject to child support in Texas for example.

 

Actually ... No.

 

I would not go to work for a company that makes you take the per diem. I'm not sure that legally they can make you take that option, but they can just hang you out to dry.

Taking the per diem option is about the most shoot yourself in the foot with your 12 gauge thing you can do.

 

I couldn't believe how hard one of the dweebs at Knight tried to talk me into taking it.

 

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Good one, MysticHZ. The per diem is confusing, though, like HOS and HazMat regs. I never used it for a couple of reasons. A "few" reasons, specifically, for those critical TTR members who love to pick up small details and magnify them.
1. The company charges a "handling fee" for doing the bookkeeping. I will not pay that fee to any company I pull for. Crazy to pay them, don't you agree? Plus, it adds up in the course of 50 or 52 weeks work.
2. I prefer to adjust my tax withholding by adjusting the number of dependents on my W-4. I own my truck, so some of this no longer applies, but I prefer to get what I earn in my direct deposit, and manage my taxes without the company's intrusion.
3. I believe I pay lower taxes without the per diem approach.

 

Per diem can also be an advantage if you live in a state with a high personal income tax.

 

If you know you will have a large per diem deduction at the end of the year you can simply increase the number of exemptions you claim on your W4. That will increase your weekly take home pay without lowering the wages reported to Social Security. I've never used a company per diem program.

 

Yes they withhold $0.02 or $0.03 per mile for all the hassle of entering, OR, having the computer automatically enter your payroll information in two columns of a spread sheet instead of one.

Even at only 2500 miles a week @ $0.02 that's $50. That's $50 worth of labor? Really? Multiple by 52 = $2600 yearly the mega's beat you out of. Not to mention the cost they save on workmans comp, because the premium is based on payroll, and the money they cheat the government AND YOU out of for your SS contribution. This is just the so called " handling fee " portion.

For $2600 year. you could hire the very BEST accounting firm in The United States, and they would send you on a cruise every year.

The only people that advocate per diem up front are corporate stooges.

 

No, it isn't. Whether you get paid per diem or paid correctly, you still get the same deduction at the end of the year. Per diem, that deduction has already been figured, so you're just making sure they didn't over/under figure and either deduct or add the difference. If you were paid properly, you take that deduction. That alters your AGI, which is what the state income tax is based upon. The only way you'd make out better on your state income taxes is if you made less money...but then you really didn't do better at all.

It never ceases to amaze me how many people think these companies are looking out for the drivers. Whether we're talking lease purchases or per diem or any other number of schemes these companies have come up with that amount to nothing more than the company saving money while screwing the driver out of his, there are folks who are convinced they are LUCKY to have these companies so graciously offering to pick their pockets.

Per Diem works great for the company. There is no benefit for the driver. As has been noted, if you get a large refund at the end of the year due to the deduction allowed for being out on the road, change the number of dependents you're claiming to have less withheld. I don't understand people who are "happy" to get a large tax refund, even though it was nothing more than an interest free loan THEY gave to the government! IT IS YOUR MONEY they have been holding onto, and are just now giving back. What could you have done last year with an extra $200-300/month? Put it in a savings account @ 0.5% interest and you'd end up with more than the government is giving you back...because they DON'T pay interest. So you're going to use that $2400-3600 refund to pay off a high interest credit card? Imagine how much you would've saved on interest charges throughout the year had you had that extra $200-300/month to keep the card paid off? When folks brag about their big tax refunds, I feel like taking a Sharpie and writing "SUCKER" across their forehead...

 

Excellent post, Pedigreed Bulldog. I believe that people who want excess withholding think they're "saving money" because they can't manage their income and fear having to write a check by 04/15. Not good business, and not good thinking. Passbook interest on savings is all the way up to .75% now. That's right, your money will earn 3/4 of 1 percent in a passbook savings account. Or if you want to commit to a 2 year CD, you can go all the way to 2%. The main takeaway is that it's your money, and having it sit in an IRS account all year gives you zero choices to make with your savings.

All the tax people I've worked with advise to adjust your dependents so that your withholding, or your tax deposits, zero out at tax time, that's a plus/minus of $100. Works.

No matter what you do, never trust an outside source to take care of your earned income. Never. If you use an advisor or investment firm, watch your statements like a hawk.

Don't use debt, as PB said, sucker's play.