Per diem?

The deduction went away for company drivers this year so apparently company paid per diem is the only way to get i.t

 

If you stay out on the road for long periods then not being able to claim per diem is a bad thing. The payroll dept at my company stated that sticking with company paid per diem is more beneficial but then they benefit too so who knows how straight up they were being with me.

 

If the do it right it will be tax free. Even if it comes off your pay you are ahead. I worked for a company in 2005 and was netting more in per diem than salary. Sweet!

 

Per Diem does nothing more than increase your take-home pay, and decrease the amount of taxable income you receive.

In my experience, I get paid less with per diem as my company kept 2 cpm as a "service charge".
Before the new tax law, you were able to itemize deductions for business, personal, entertainment, food, on a per day basis(up to $65/day I believe, I might be wrong).
With your Tax deduction now DOUBLE what it was, the new law does not allow for that type of deduction, except through the companies who offer it as a pay structure.

It lowers your "Gross Pay" substantially, so if you're looking to get a loan or line of credit, your income will be far less than you actually make from a paperwork point of view.

I've already grossed what I made last year, and I do not noticed a big change in my paycheck since cancelling Per Diem

 

Yes, it is good if you don't want to pay the government to hold your money until tax season.
It will not show up on your W-2 at the end of the year and if applying for a home loan it will hurt you. When paying into Social Security it lowers the amount you will get (if) when you retire. So, in that sense it is bad.

 

Hopefully he takes the extra money and invests in something that has a better return than SS.

 

It's none of my business what he spends the money on. I was just giving him the information that he asked for.

 

Per Diem is intended to give the driver UNTAXED income which is supposed to benefit him by paying him in each paycheck money he could otherwise deduct from his income tax form. The IRS used to, not anymore, allow transportation workers to deduct $50-something dollars daily (no receipts required) for each day their work required to to be away from their tax home.

There are numerous ways for companies to pay Per Diem, some needlessly complicated which leaves room for the company to make money and cheat the driver. Since the latest tax changes doubled the standard deduction for most people Per Diem is likely to be a thing of the past for most company truck drivers. In my opinion, per diem is neither something to want ot something to avoid. For simplicity reasons I would prefer to e paid no Per Diem and take the IRS deduction, when it was allowed.

Think of it like if you had an office job and the place you worked was in a city where you had to pay for parking each day. Company A pays you a salary of $1k per week, and they don't pay parking fees. Company B pays you $850 per week and they also pay for your parking fees, which are $150 per week. It's the same pay just divided in different ways. That's not to say all Per Diem pay is exactly equal, just that if you do the math it should be nearly equal. If it's not it's because one company pays more or they are using Per Diem as camouflage for paying you less. You have to run the numbers to know.