Pay: Tax-Advantage or Premium

Here is another thread which talks about the per Diem rules...

http://www.thetruckersreport.com/truckingindustryforum/trucker-taxes/167397-2011-per-diem.html

There is a lot of good information here with links to reference websites. This quote seems to sum it up well. These rates would still be in effect until 10/1/2012 (the rate is reviewed each year and updated, if needed, on 10/1).

 

Keep in mind that per diem is different for trucking than for other industries. We get a flat $59 per day of which 80% is deducted from taxes. The per diem is for food only, showers and other expenses are still deductible as misc. or in their normal category.

As for who should use the Tax Advantage plan it depends on where you live and your personal circumstances. When I was company I didn't use it because I didn't want the cut in pay.

 

I would skip the 'tax advantage' plan due to the fact that they charge you 1.5cpm to do it.

If it were the same pay for both, it might be something to consider.

 

and the difference in pay is a good part of why I skipped the per diem...I don't like the "missing" penny or two per mile, regardless of the rest. It mucks things up, to me.

 

I did them both for several years each. In the end it probably a horse a piece but the tax advantage helps the company more. My checks were bigger on the tax advantage because of less taxes coming out. But my tax return was also smaller, and I was contributing less to my 401k and SS. If you get hurt away from work like I did the short term disability is based on last years income. Of course I got hurt at the beginning of 2010 and 2009 was a really crappy year. I guess in the short term or if trying to pay down debt the Tax advantage is the way to go. In the long term the Premium is the way to go.

 

My two cents....
Tax advantage, mostly benefits the company. They pay you less and if I am not mistaken reimbursing you the per diem is better for them than paying you for the work. Can't remember exactly why, I'm not a corporate accountant.

Premium, mostly benefits YOU. Need a loan, need more pay. Need SS benefits, need more pay. As bucks said, get hurt, need more pay. Basically, everything that could affect you is based on your take home PAY. The per diem is not PAY and you can't claim it as such.

Now, if you only goal in life is to not pay taxes, then be my guest and take the tax advantage plan.

 

The Tax Advantage plan saves the company by lowering unemployment insurance, workman's comp., Social Security just as a start. Then figure they are cutting driver pay by $.015 a mile. In short the company comes out ahead on both ends.

 

Talk to your tax man. If you itemize, you get the benefit of the per diem deduction anyway. The 'tax advantage' plan is only an advantage to the company. Adjust your W-4 allowances so that you end up paying a few bucks when you file your return - don't let Uncle Sam hold your money for free.