Per Diem CPM tax implications and other questions.

Discussion in 'Questions From New Drivers' started by Turtlelegs, May 29, 2022.

  1. Turtlelegs

    Turtlelegs Bobtail Member

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    I know there have been a lot of threads on the pros & cons of per diem pay. I was wondering about the tax implications if you get paid it in CPM and go over the daily limit.

    If the daily per diem is $69 and the company is paying 16 CPM for per diem what happens if you earn more than $69 (430 or so miles)? I imagine the driver is responsible for income taxes on it but are they responsible for SSI & Medicare as well? What about the company's portion of those?

    Do companies cut you off at $69 and switch the pay back to what you would make without perdiem for any miles over 430 in this example?
     
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  3. Bean Jr.

    Bean Jr. Road Train Member

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    First, your per diem will not be broken down on your settlement day by day. You would need to drive more than 3,000 a week to get your per diem above $69 per day. Second, per diem is what is known as "a reimbursed employee business expense. This is not your problem. You were reimbursed. But really think about it. Will you drive 156,000 miles in a year?
     
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  4. Six9GS

    Six9GS Road Train Member

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    Different companies run their per diem programs differently. In example, (specific amounts mentioned are for example, not the current actual figures) at Swift you get paid the same CPM rate. But, you only get paid $65, as per diem, for your first $80 earned on CPM. So, technically you lose $15 a day being on per diem. But, that $65 is classified as unearned income and is not taxed and isn't classified as earned income. For some that offers significant tax advantages and worth the loss of $15 per day in income. Also, per diem is worked out on a weekly basis, not a daily basis, so for a week, your first $560 ($80 × 7) of milage pay is replaced with $455 ($65 × 7) per diem pay.
    You'd need to get ahold of your pay folks to find the details of how it runs its per diem program.
     
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  5. tscottme

    tscottme Road Train Member

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    Most companies don't pay per diem. The tax advantage to the driver/company went away in 2017.
     
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  6. Dave_in_AZ

    Dave_in_AZ Road Train Member

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    Per diem scues your taxable income for the year.

    It enabled the megas to cheat the government out of billions in social security taxes.

    Specifically cheating you that took it.
     
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  7. Dave_in_AZ

    Dave_in_AZ Road Train Member

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    I don't know how the deduction works for W2 earners, but at a certain amount it goes to 80% of $72.

    I know my deduction was like $15K. So that's $15K off your taxable income that you're not going to pay taxes on.

    You need no receipts. It's verifiable by your log.
     
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  8. Redtwin

    Redtwin Road Train Member

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    W2 drivers can no longer claim per diem. Only way to get the tax break is through company "reimbursement ".

    16 cpm per diem seems on the high side, it's usually 10-11 cpm. As mentioned earlier, you would have to drive an unrealistic amount of miles to exceed the daily limit and even if you did, it would be the company's problem as they are the ones managing the reimbursement.

    I wouldn't give it another thought.
     
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  9. Lennythedriver

    Lennythedriver Road Train Member

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    The only downside that I’ve found to per diem is when you’re applying for like things like a home mortgage and they want your tax returns for verifiable income. That income doesn’t go on your W-2 form. It’s like it doesn’t exist. So let’s say your W-2 at the end of the year shows you made 52,000, you might’ve made 68,000 realistically. So therefore you’re gonna qualify for less of a loan amount.
     
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  10. sevenmph

    sevenmph Road Train Member

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    Exactly. It also doesn't count towards earnings for Social Security. SS looks at 35 years of reported earnings. None of that per diem pay will be a part of it.
     
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  11. sevenmph

    sevenmph Road Train Member

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    If you are getting paid per diem by a company I encourage you to check out the IRS website. They have rules but companies only wanted to save themselves money so they paid per diem. For instance, you must have a residence that you pay a certain portion of to be eligible for per diem.
     
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