According to my math, a first year driver making $37,000 a year takes home more than a $40,000 year

SSN is paid on the gross wages before any adjustments ... but the rest of your points hold true.

 

So you are saying that you have to pay SS tax based on the gross before you take the perdium deduction?

 

I'm not saying it ... that's the way it is.

 

I don't believe so.

The reason companies like to pay you a portion of your miles owed to you in perdium is because it saves them money by not having to pay the matched amount that they must pay for your SS.

 

Think about what you just wrote. Because that is the answer.

 

If a company pays you a portion of your cpm in a perdium they do not pay your portion of the SS tax and neither do you.

It is a legitimate expense, you do not pay any tax on it.

 

You need to understand what per deim is. The company is cutting your gross pay and replacing it with reimbursed expenses ... because the company cut the gross pay they now pay the employer tax and withheld the employee portion on the new gross pay.

But that is neither here nor there ... your contention is that you deduct your SSN payments to reduce your AGI. What a company does or does not do in regards to per diem has no bearing on that. There is no deduction for an employee's SSN payments on form 1040 or on Schedule A.

 

If you take a per diem deduction at the end of the year you still paid SS on the gross income before the deduction. There's no mechanism to get that back afaik. If you are paid per diem as part of your wage then it already lowers you gross income as that per diem isn't "income" it's reimbursement which isn't taxable. Again, as far as I understand the tax law that is.

 

You guys need new accountants.

Per dieum is no different of a deduction than a building contractor deducting his materials he needed to build a structure.

It is a legitimate deduction . You don't pay SS taxes on the gross you receive for building a structure as a contractor, you pay taxes on the net or AGI after materials ,permits, expenses, lodging if you are out of town from your home base.

 

The contractor gets to double dip because in reality the building materials are paid for by the customer.