I may have made a mistake

Depends...

Non-per diem route increases your taxable gross income; yeah, you a larger deduction to decrease your AGI, but the increase in soc security and medicaid tax more than offsets the deduction. In the end, it's not enough to cover the difference you get by shielding some of your income from taxation. The only real benefit is the increase in AGI if you're going to do something like buy a home.

The per diem route provides a tax shield on a portion of your income. Typically the difference between the 32 and 38-cpm is the per diem rate. You get the difference tax free. You still get to take the per diem deduction at the end of the year, except you only claim the difference between what the IRS allows you to take and what your company pays you in per diem. Lets see... say 120k miles at 6 cpm... that's $7200 tax free. An added benefit is you end up in a lower tax bracket as well.

For a company driver, unless you really have a need to show the higher AGI, I think you're better off taking the per diem. It's different if you're running your own business either as a lease or owner-operator. There I think it's better keeping track of your expenses, and deducting them as a business expense. IMO, you screwed up, and should have taken the job with the per diem.

 

this is not bad...

I can assure you I make more on my milage per diem than I would if I claimed it at the end of the year for days out...

THIS IS INCORRECT. If you get per diem by the mile you then CAN NOT claim it again at tax time..

 

jeeeze orientation starts for me on Monday and I was fully planning on taking the non perdiem practical route but after reading these posts i'm not so sure anymore. I don't know which way to go. All I do know is they sure throw an awful lot of extra perks at you to try to get ya to go perdiem. That to me sends up a big ol red flag. I guess i'll figure it out by Monday.

 

when you do your taxes it will be like 12k that would be like money you spend on the road for your upkeep. on my taxes, they only file like 35k, that 12k is yours already

 

the company gets a tax incentive if you go perdiem also. That's why they push it so hard.

 

Yep, that's one of the reasons.. There's a host of others that benefit the company bottom line, including: reduced Work Comp expense, reduced Unemployment expense. These can generate substantial cost benefits to the company for anyone taking perdiem. What this also means, is that the employee stands to come up short in these same instances. If injured at work Work Comp would pay you an income benefit based on the reduced perdiem amount. If you become unemployed, you're unemployment benefit is based on the lower perdiem amount. Things you need to keep in mind when weighing the pro's and con's.

That said, Millis does one of the best jobs in making the perdiem option a reasonably attractive option. Whatever one's choice, do the math, and see what fits your financial situation the best.

ps - it was good meeting you in Richfield, Rick (back in February I think), hope to cross paths again.
Cheers, GD

 

So obviously they were not forcing per-diem on you-just strongly suggesting. You gotta learn to say NO when you have to. Me, I like that fat tax return in the Spring. It's like a savings account.

 

** Caveat ** After running these numbers throught Turbo Tax the first time I realized I hadn't provided the adjusted-gross-income in my numbers below. When I went back to get the AGI I found that it actually does a per diem calculation for a truck driver. I used that calculation and it actually lowered the deduction slightly. I left my original numbers alone and reported them below. I may do a more thorough scenario later if I get the chance.

My original result
I just ran some very simple numbers through Turbotax. This is by no means a thorough scenario. I just wanted to see what the basic difference was between accepting perdiem or not.

Assuming 120,000 miles for the year and 250 full days on the road.
250 days X $52 per day X .80 = $10400 of per diem deduction. (are these assumptions reasonable for the average situation?)

# $.38 cpm = $45,600
Married filing joint - deduct $9488 (perdiem). AGI $31192. Taxes owed $3566. Bring home $42034

# $.22 cpm taxable + $.10 cpm ($.32 cpm total). AGI $19400. Taxes owed $2111. Bring home $36300.

$5700 difference minus the value of an extra weeks vacation, 6 paid holidays, and for the first year the additional $900 sign on bonus (which I assume is taxable).

This is by no means a thorough analysis of the per diem question. It doesn't take into consideration tax deductible equipment (gloves, shoes, tools, etc), and other write-offs that are different for each individual such as, mortgages, child care, additional dependents.