Per Diem help

Your personal situation and needs/wants will help dictate if you want to take Per-Diem or not. Personally, I would recommend calling the person that you use to do your yearly taxes and discuss it with them, as Per-Diem pay shows up in different places on the W-2 at the end of the year.

The only thing I can tell you for sure from what I was told is that is that you will get 1 weeks vacation after 6 months, then 2 weeks after 1 year, which technically is different then 3 weeks after 1 year, but things might have changed since I went thru it.

 

As Suspect said per diem varies person to person. Its been debated on here over and over and over and over and over lol. Per diem will show your gross wages being less than if you were on straight pay. It could have an adverse effect on you if you are wanting a home loan, car loan, etc at the top of your budget. If you have a reason like child support or something else that you wpuld benefit from showing a lower gross income then its a benefit. Talk to whoever does your taxes and make sure they know how to do a OTR drivers taxes.
As for the vacation on per diem I though you get 1 wk vaca that must be used within your 1st 6months of employment, and then you have 2 weeks to either use or cash in before your 1yr mark. My memory sucks so I could be wrong, but Steve can explain it. Also if I'm not mistaken on per diem you still recieve a weekly mileage bonus for over 2k, 2500, and over 3k miles where on straight pay you don't. Could be wrong on that too, but when Millis made changes to the payscale last yr things got changed and quite honestly I dont feel the drivers got a really good explanation of what exactly was being changed. We just got told you'r getting a 5cpm raise, which was kinda true but they also lowered our safety bonus pay in half so it wasn't exactly a 5 cpm raise as we lost roughly $1500 a yr in safety bonuses. If I'm wrong bout any of this feel free to correct me but this is how I've been understanding it.

 

Hummmmm..... now you have me wondering if I'm right about how the vacation works.

I'm on straight pay, so I could be wrong in my understanding from what was explaining, it was a while ago.

 

This is going to be long and hopefully I explain it well enough.

I researched this topic extensively prior to making my decision on per diem vs straight pay. As a result I am very anti per diem which I will explain below but as others said it is something best discussed with whoever does your taxes and your personal situation dictates your choice.

When you speak with them, your tax person needs to understand that as a OTR driver away from home, you are allowed to claim a $62 per day deduction for every night you spend away from home. You are allowed to claim 80% of that $62 per day which makes it actually $49 per day. Last year I was gone for 225 days, and recieved a deduction of $11,025 (225x$49) when I filed my taxes. Not every tax advisor knows this. You can also write off any supplies or tools needed to do your job. GPS, hand tools, window cleaner, work gloves etc....

If you take per diem you cannot claim that because you already got your tax break up front. Basically you accept less pay per mile to lower your taxble income upfront through the year instead of claiming the deduction at the end of the year for however many days you are away from home as a driver as I described above. You could still claim for your supplies but likely would not be itemizing your taxes if you took per diem.

First off, are you sure that per diem starts the same as straight, .42 per mile? One reason I am against per diem is that your per mile rate goes down since the raise this past January by .06 per mile. So you will not make ,42 per mile, you will make .36. It used to be .05 per mile less but with the January pay raise I am pretty sure it is now .06 less. I would definately clear that up before you decide anything because I am 100% sure you WILL NOT be paid .42 per mile on per diem.

Companies always encourage drivers take per diem because they pay you less per mile which lowers their costs. That is why they entice you with extra perks to take it but it really does not add up overall. The question you have to ask yourself is this. IF per diem is such a great thing for ME, why are THEY offering me perks to take it?

So like on the Millis web site, for example if you drive the fleet average of 115,000 miles per year on straight pay (.42) you will make $48,300 just on mileage pay. If you take per diem of .36 per mile you will make $41,400. That is a difference of $6,900.

There is a mileage bonus pay when on per diem IF you hit certain mileage thresholds but you have to meet those mileage thresholds to get the bonus. On straight pay you are basically getting the bonus all of the time because you are making all the extra mileage pay on every mile, whether you drive 1,500 miles that week or 4,000. The mileage bonus pay is never going to exceed the .06 per mile you get for every mile on straight pay.

The point that is always made for per diem is you get an upfront tax break because out of that .36 per mile you are making, .10 of it is paid untaxed in your payroll. Sounds great right? Until you realize you are giving up a lot of pay to get this upfront tax, in my example above $6,900 per year. Also you have to hope that you still paid enough tax thru the year to cover that .10 you did not pay tax on. You are still obligated to pay whatever taxes at the end of the year that you may still owe regardless.---Is it worth giving up $6,900 in pay to get the tax break up front instead of claiming it on your taxes at the end of the year and getting it then? My personal example above was a $11,025 deduction I took on my taxes at the end of last year and I took a lot more hometime than many do.

Now on straight pay you no longer receive vacation pay. That is true. If you self save .01 per mile of that extra .06 per mile you are earning on straight pay you will have $1,150 in the bank towards vacation after driving 115,000 miles and still have made $5,750 more than on per diem. Getting the vacation pay would have given you roughly $1,500 in pay for 3 weeks if they pay you $500 per week. I am not sure what the vacation pay is but it is not a whole lot more than that. Subtract $1,500 from the $6,900 extra you would make on straight pay, you are still $5,400 behind on per diem.

I am pretty sure safety bonus pay is the same across the board now. ,01 per mile driven per quarter & .01 per mile on all miles driven at the end of the year.

Per diem could be a good thing if you have no deductions to claim on your income taxes at the end of the year or trying to artificially lower your pay for child support or allimony purposes. Of course while you may lower what you pay towards those things you are still also lowering what you end up with even after paying those obligations.

Besides the pay issues I described above, it will also lower your income that you can list on loan applications, what you would get if you became disabled and needed to claim disability. It also affects what goes towards your social security. sxince your income will be lower they contribute less towards your social security. Social security may not matter now but it will someday. I personally would try to make all that you can.

If you have any other questions feel free to ask or private message me.

 

I felt the same way and contacted Ethan in finance and he emailed me a spread sheet explaining everthing and a pay chart including everything. I also had some follow up questions which he answered and cleared up all my questions.

 

Ya see if there was a spread sheet why not give it to every driver? Would eliminate all the confusion amongst everyone.

Good post bout per diem by the way. Vacation pay is an average of your gross weekly pay for the last 6months pay so its basically a normal pay check.

 

I agree, you should not have to go looking for the info. When the raise first happened I was talking with some other drivers in Trenton and everyone was complaining that they did not understand the new plan or even know what it actually entailed, me included. I was expecting some type of paperwork, email, QC message detailing it but that never came. So I decided then that I am going to ask for the info.

Thanks for the vacation pay explanation.

 

Most of your explaination was great, but you never mentioned what the "Tax Free" per-diem was that needs to be added back into the pay equation. Also the new tax bill probably makes deducting "necessary tools" impossible.