Leasing at Prime

"Per Diem" is a way that the IRS deals with a zillion little receipts that they don't want to deal with when it comes to your deductions. You can still collect a zillion receipts, and use them to support deductions for your actual cash outlays for your day-to-day living expenses if you really want to go through the hassle of dealing with them. Or you can claim the per diem deduction for those days that you were on the road and can show that you were away from your tax home. It has nothing to do with your status as an employee or as an independent contractor.

Being on a qualified per diem plan as an employee is different. Your employer can provide you with per diem payments (as long as they don't exceed the daily maximum set forth in the tax deduction) that are tax free as part of your compensation. Typically they'll set the per diem payment at some cpm value - say 5 cpm in round numbers. Let's also say your employer is paying you 35 cpm to run down the road. What you'll see on your settlement is your income based on 30 cpm that is taxible, and a 5 cpm payment for per diem that is tax free. You're still paid 35 cpm, but you get an advantage of paying lower payroll taxes. There are some scams associated with this by unscrupulous employers, and it may or may not be to your advantage to participate... there are plenty of threads on TTR that debate this.

Bottom line is as an independent contractor, it's to your advantage to just claim the daily deduction on schedule C. It lower's your adjusted gross income - what you're eventually going to pay taxes on.

 

Here's a little update...

I got my overhead set at Central Detroit Diesel in Springfield a couple of weeks ago. Now I waited until the original factory settings started giving me trouble, around 340,000 miles before I went in. My mileage is on the upswing, and given that its only been a couple of weeks, I believe I'll get another 0.5 mpg out of it putting me solidly in the 8's.

Detroit recommends that you get it set at 100,000 miles - and I wish I'd done this sooner. It just seemed to be running well enough to not do it. Prime has a $250 special price with Central Detroit, so it's really very cheap, and it's a one day deal. Go git 'er done!

I'll post an update on where I'm at on my solo lease after the turn of the year. Got 29 months of my 36 month lease behind me now, and I'm doing very well.

 

50 cpm or so average. There's quite a bit of up and down in that, but that's my long term average right now - and it's down slightly this year since I've been taking more time off. That's net profit before taxes, running solo reefer division.

I have a BSEE from the University of Colorado. I worked as a professional electrical and electronics engineer for about 20 years after I separated from the military. I ran a retail outlet for a couple of years, and received quite a bit of business education from that endeavor.

Thanks!

 

62 on the pedal, and 65 on cruise. We are subject to dispatch to Canada, and their stinkin' speed limiter law.

 

Can't help ya... I'm a reefer guy.