How Per Diem works now

I'm surprised this hasn't been talked about more around here, it's a big deal for company drivers. Companies that offer to split off your per diem from your taxable wages are offering a huge benefit.

Here's my question - Is there any reason a company might not be willing to split off your per diem for you? Does that cost them money?

 

IMHO it is no benefit, and negligible tax difference for those not having alternate income to report.

It is a way for folks to #### up their borrowing ability, and allow companies to screw them on workmans comp and social security payments.

 

You would rather not net an extra 4-5k a year so you can have more contribution to your social security? You could take that money and put it into your 401k or IRA and get much larger growth than that money sitting in SSI is getting you.

You could also take that money and use it as a down payment on whatever you're wanting to get financed for. That upfront cash will help a lot more than having it on your taxable gross income figure.

 

For the minuscule amount of tax it saves you it is not worth the risk for them. I will have the ability to use it.

Given that most of these companies " rebate" a drivers pay they are not gaining a thing in my opinion pay wise. Merely avoiding 450-500 tax liability. In exchange they are giving up a couple hundred or more.

Most companies pay less over all to a per diem driver.

In addition any wage based compensation would be reduced as per diem is not defined as income. Short term disability (AFLAC) or long term disability, workmans comp, and social security will all be drastically cut.

Companies sell this as a boon to drivers. Whenever one of these bottom feeding companies tells you how much they are helping you out you better put both hands over that sphincter between your cheeks because they are trying to #### you. That is a guarantee

 

That sounds great and all. The problem is no one is getting a $4-5000 check. Instead it' $76-96 per week. And at $15-19 a day its easily and quickly gone before you even see it.

 

The thing is that pay would be there without the company playing games.

Some companies pay a straight $.44 and you owe taxes on all of it. A dirt bag company says they will help you out and pay $.27 and $.12 per diem. You owe tax on the $.27.

Notice you are making a nickle less which they will explain as because of the great tax savings they are giving you. All while cutting their tax bill as well. Oh and pocketing that nickle

They have charts, and figures, and de demonstrations about how they are bending over backwards to help you. Don't mind the KY without a reach around.

 

This gets talked about A LOT. In order of topic frequency

1. I failed a drug test/hit stuff but it's not my fault, now what?
2. I have no money, no experience but I want to lease a truck
3. Swift hit something
4. CR England screwed me
5. Per diem

Yes, there is a cost to the company. Which is why many companies running such a program will cut driver pay.

It wouldn't be that much. At a maximum I would get an extra $2,000 a year. Probably much less - my company reduces my pay by 2 cpm for being paid per diem.

But assuming it was $4,000, and I got better than a 5% return, and assuming 30 years of payout I break even with Soc Security. Cut it to $2,000 and I lose money overall.

This is one of those things that there is no RIGHT ANSWER. It depends on so many different factors unique to the individual.

 

If your company separates $63 per day for you and you're on the road five days per week and work fifty weeks, that's $15,750. If that was taxed at say 22%, that's $3,465.

That's $3,465 that you can either give to the government where a portion will go into social security and see little growth, or the entirety can go into your pocket to do as you please with.

I'll take it in my pocket. I can make well over half of my yearly contribution to my IRA with that where it will help my retirement much more.

 

This suggests nobody knows how to budget their money.