Per Diem , Dont fall for the scam

Discussion in 'Experienced Truckers' Advice' started by smokey12, Jul 4, 2019.

  1. madmoneymike5

    madmoneymike5 Medium Load Member

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    This is misleading and lacks sufficient information for the reader to be able to draw a reasonable and educated conclusion.

    Your point appears to be to lead the reader to the same conclusion as the video, that per diem is bad in the long run.

    First, are you an owner operator or company driver?

    If you are an owner operator, what business entity type are you? C Corp? S Corp? LLC? LLC S Corp elected? Or Sole proprietor? This matters!

    Also, what was the company's reduction in your pay for having been on the program? There is a point at which too great a reduction in your pay to participate would potentially exceed the benefits of having a portion of your pay be non-taxable.

    Also, your individual tax scenario might be different enough from the majority that you would indeed benefit from not being on the program. (The following are rhetorical questions...) Are you married now? Were you married before? Changes in marital status significantly affect your taxes, especially after the new tax law. What was your household income the prior year versus the year you reference paying less in taxes? What other deductions did you claim? Do you have investments or receive taxable inheritance in either year? Do you have kids in college that you were supporting but aren't now? Or vice-versa? Or perhaps you were attending college yourself? If you're an owner operator, did you have a net loss or net profit in one or both years, and did that change from one to the next?

    Sooooo many variables that apply only to your specific set of circumstances.

    All these questions and more come into play and it is folly to assume that the change in how your company pays you was the only change between the two tax years. Because tax law changes every year, for this reason alone, no two tax years are exactly alike, even if your income stays the same.
     
    Last edited: Jul 6, 2019
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  3. kylefitzy

    kylefitzy Road Train Member

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    Company driver. Company gives 10 cents a mile in perdiem. Same amount of miles per year (95k) and 300 or so days on the road.

    9500 in per diem in 2018 and no deductions other then the standard deduction, 5k more income. 1k less in taxes.

    9500 perdiem given by the company in 2017 plus the remainder i claimed (around 10k), plus 1500 in business expenses. 5k less earnings then in 2018. I paid 1k more in taxes.

    The only scam having to do with per diem is company’s charging an admin fee.

    I guess it depends on the lender but my lender had no problem once I explained why my income on my w2 was less then what I reported.
     
    Last edited: Jul 6, 2019
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  4. Hotplate

    Hotplate Medium Load Member

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    These outfits are actually charging an "admin fee" for per diem now? Say it ain't so! I remember when Jerry Moyes took out all the free washers and dryers and installed coin-operated machines at Swift/MS Carrier terminals back in the day. Some things never change I guess.
     
  5. madmoneymike5

    madmoneymike5 Medium Load Member

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    This is still not enough to explain the difference. The only way for us to fully understand why your numbers changed would be for you to share your tax returns, which of course, isn't something I'd ask you to do.

    Overall, my point is that no tax year is identical--even with everything about you and your household being identical, which is so highly unlikely, you'd have better odds of winning the jackpot at a slots machine--because one thing changes every year, and that is tax law. So much changes from one year to the next, stuff that never makes the blog articles or news headlines. And so it is virtually impossible to know for sure if one particular change in your pay made a difference UNLESS it is substantial enough, and $5,000 isn't enough to be reasonably point a finger at per diem. And even if you did share your tax returns, and even if we could pinpoint the change in your income and tax payment to be the result of the loss of per diem, that still doesn't mean anyone else reading this should automatically conclude that per diem is bad. Don't misunderstand--this isn't directed at you, personally. I just want people who come by to read this later to not draw incorrect assumptions about whether or not to participate in per diem based on your set of circumstances. Everyone's circumstances are different and they need to decide for themselves, with the help of a trusted and knowledgeable tax advisor. Finding one of them...well, that's another story.
     
    Last edited: Jul 6, 2019
  6. Muskie

    Muskie Medium Load Member

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    Actually, you got short changed compared to the old pre tax cuts, whereby you can take your own deduction on your personal taxes. @$66 per night (your quoted 300 nights), you would have gotten $19,800 deduction, plus any other itemized deductions without the standard deduction ($6,350 in 2017) (which now you can't separate from personal exemption, it's all in one after 2017).

    So by taking the old itemized deduction for per diem (not including all other expense you also could add) minus the standard deduction of $6350. You get $13,450 (plus any additional itemized deductions). Therefore you lose, regardless of tax bracket rates, from the Republican tax changes whereby you must rely on company per diem. Comparing the same year with or without the new per diem rules.

    So as to not seem political I will edit out this part.
     
    Last edited: Jul 6, 2019
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  7. kylefitzy

    kylefitzy Road Train Member

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    I’m not sure how you figure that. I did exactly what you said and paid less taxes on more income in 2018 vs 2017. And paid less to have my taxes done because it was a simpler process.
     
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  8. Scooter Jones

    Scooter Jones Road Train Member

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    Because his intention (ultimately) is to turn this into a political discussion.
     
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  9. 88 Alpha

    88 Alpha Trucker Forum STAFF Staff Member

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    He can try, but failure is assured.
     
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  10. madmoneymike5

    madmoneymike5 Medium Load Member

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    IIRC, you could not combine the standard deduction with the per diem. If you wanted to do the per diem, you had to itemize, meaning no standard deduction.

    But it was 2013 when I last drove with the old per diem via IRS. I left the industry for several years and only came back to it a couple months ago to this new tax law.
     
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  11. Scooter Jones

    Scooter Jones Road Train Member

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    You win the prize.

    In order to take the per diem deduction, you had to (at least I did) file schedule A.
     
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