Per diem pay: how much do you actually take home?

In short, per diem doesn't do much to help drivers. It is more to help companies lower their matching fica taxes. Here are a few things to keep in mind regarding per diem:

1. Lowers your gross and therefore will lower your ssi, workers comp, and short term disability benefits. Also can hurt on income for loans because per diem is considered a "reimbursement"

2. Per diem deduction lowers your tax resposibility on all taxes (fica included) that you are responsible for. FICA is a percentage based on taxable wages so if you lower your taxable, you lower the resposibility. Anything paid over that is refunded. It just doesn't seem like it because the government doesn't itemize your refund.

3. Best way to offset getting a huge refund is to increase your exemptions to increase your weekly take home. No point in giving the government a free loan (that is all a tax refund is). At $60/day times 5 days a week that's a $300 deduction. For someone in the 15% tax bracket that's another $45 a week in take home if you adjust your exemptions correctly. I figured this trick out because my previous jobs allowed for business mileage deductions (which has been over 55 cents a mile for several years now). When you drive 60k-80k business miles a year, that is a big deduction.

One thing I've discovered over the years is that if something is optional and a company forces you to take one option or the other, it is to benefit them and them alone. Hope this helps.

 

Don't bother ducking ... it apparently went way over your head.

 

If I misread your first post I apologise, but I didn't read any sarcasm in there at all. It doesn't always translate well when written and inflection is missing.

 

Per Diem has been gone over to death on this form, do some searches.

Overall, with very very few exceptions, company paid per-diem is a rip off. The company can only pay in per-diem reimbursement less then what the IRS allows. Since that repayment is based on your piece work pay, you better believe it is far less. And subtracting that difference is not only not allowed by the IRS, but will inevitably add up to less then your standard deduction.

They are buying your deduction from you for cheaper then the government is giving it to you. It lowers your, Social Security contribution, workers' comp. insurance, unemployment benefits, and 401k/pension or company match. Your ability to get a loan, housing, or car, is less.

Then on top of everything, almost all companies charge you some BS accounting fee for the privilege of ripping you off. Why you may ask?- Because they can. If if you don't think your getting docked that charge, read the small print in your contract or employee's manual and you will find you are.