'Per Diem Plan' Can someone explain this to me?

do yourself a favor and Google per diem, check out the pros and cons these companies wouldnt be pushing these plans if it was good for the drivers. It is good for the company on their taxes, it hurts a driver in the long run. Look at your pay on a yearly basis and what you are paying taxes, to me I would rather have the deduction at the end of the year because it is in MY best interest......

 

drivers, if a company gives you perdiem,you should take what they will give you,on mthat money you are not taxed and it works like insurance dedsbefore taxes, its like 52.00 a day now, if you are given so much a day like that driver said,10 a mile times 500, that would be 50.00..if your at a truck stop all weekend with no miles you take the 50,or52 ded yourself at the end of the year.on the weekend setting you are still out of your home county and get that deduction,you must save your logs and show your accountant or add them all up. don't forget about those half days of 12 hrs.2 of these 12hrs is another 50 ,the worst part is not letting the company give you any perdiem,that money is before all deductions up front like health insurance,thru the company,if you wait until the end of the year to get all of,you will only get about2thirds of it,because all year you paid full taxesand social security,state taxes,medicare. i am told by my accountant that if your company gives you so much perdiem,say its 40.00 from the company pretaxed,you can claim the other 10.00 at tax time,plus your half days, alot nof drivers i have helped thru the years never even claimed perdiem,they lost out on average of 270 days out about a 10,000 dollar deduction. h anr block doesn't know trucks really good,a private accountant ,a good one doesn't miss these things plus more,if you drive or own a truck you need a good private accountant that knows the trucking profession,ya have a great day,i hope i helped you a little bit,dont forget perdiem deduction at tax time,never never'''

 

My first question is, why would a company do anything they wouldn't have to for a driver? And trust me this per diem thing adds to their work load in HR. I don't like it, it just gives them a reason not to pay more taxes.

 

Let me start off by mentioning that I am not a tax professional, and the tax code changes all the time, so what I think I know may not be true come next tax season.

Per Diem is a deduction taken by a person who spends time away from home. The IRS assumes that you will spend $52 per day for 2006 on food on the road. You are allowed to deduct 75% of this number as a DOT regulated truck driver. This is for meals and incidental expenses. You count your time using your log books, and some people go as far as dividing up their day into quarters, some just count nights spent away from home. The last thing to mention is that this goes on schedule A of your personal tax return, so if you don't have enough other things to make itemizing worth your while you might not bother with it. For example: 200 nights spent away at 75% of $52 is $7800. The standard deduction that you will replace by itemizing is $5000 per person, $10000 for a couple married filing jointly, so the itemizable deductions have to be more than the standard deduction. If you have other itemizeable schedule A deductions it might work in your favor. Some medical expenses (not covered by insurance) and some types of Interest payments are the biggest things that add up quick on schedule A. The other thing that you may accumulate is un-reimbursed employee expenses such as tolls, lumpers, truck washes, repairs, etc that total more than 2% of your adjusted gross income.

So if your company offers per diem pay and doesn't stick you with un-reimbursed expenses this is what I suggest. Take the per-diem pay since it is tax free (assuming that it isn't MORE than your allowed per-diem deduction) and take the standard deduction on your taxes. You won't have to itemize deductions and keep track of much.

It will reduce the contribution to Social security. This may reduce your social security benefit at retirement IF social security is still around. I say that taking the extra tax free money and investing it in a Roth IRA that will earn interest that won't be taxed is a better deal anyway. You will have a lot more money to spend as you please at retirement. Social Security won't be enough to pay your living expenses anyway.

 

Last year we took the married deduction and did NOT take the itemized route, we did just fine on our taxes and hubby gets 41.50 per diem per day out. I was worried about our tax issues but we did not get hit at the end of the year...per diem is a good thing and more companies should offer better plans.


tjgosurf your question is interesting, I think the company offers the per diem as a way to get/keep good drivers. I view it as sort of a bouns for a driver being gone from home, and really when your out on the road expenses can add up, so why should it costs a driver to do their job? On the road expenses should be covered by the employer. With the per diem that hubby gets he can easily live on the road and not use his paycheck to cover his needs....

 

Understand this about the per diem plan that most of these companies have come up with in the last year and a half or so. Whle they offer the per diem option and tout it as being to the driver's benefit, many of the plans are accompanied by a reduction in the cpm you get. So you are getting some money in a differing tax status, but they pay you less on your actual income in return.

Two things come into play here, first of which is it reduces your reportable income, and way down the line this can have an effect on the calculation of your income from social security.

Second item. From listening to the financial advisors on trucking and financial shows, the repeated advice from all of them is if it reduces your cpm by 1 cent per mile, then it's okay to take the perdiem option. If it reduces it by 2 cents per mile or more, it's not a good deal and you will make out worse on overall income, regardless of what tax categories the income falls into.

I have an extremely simple per diem plan at work, not related at all to mileage or the work that I do. I simply turn in my receipts for meals, and the company reimburses me up to 12 dollars a day for any day I am away from home after the first 24 hours. It may not be as lucrative as some of the plans the big companies came up with, but it pays for my meals on the road, and that's good enough for me.

 

hence the really good reason to not drive where you get paid by the mile

 

I would have to stand fully in agreement with that. One of my cardinal rules is that I never drive by the mile. And I am getting close to doing my 2/3 of the year financial predictions, and even with the slowness that we encountered over Jan and Feb, it looks like I will be making about 3,000 more than last year.

I update my income estimates first quarter, first third, half, second third, and last quarter. So far, so good.

 

I agree 100%. Forgot to address this issue in my post, thank you for bringing it up.