Per Diem question.

Ugh really..

http://journalofaccountancy.com/news/2014/sep/201410978.html
Transportation industry

The special meals and incidental expenses rates for taxpayers in the transportation industry are $59 for any locality of travel in the continental United States and $65 for any locality of travel outside the continental United States, unchanged from the last two years.

 

I always claimed the per firm on my income 1040 or whatever form you file...I got back 80% of the allowance. per diem rate x every day away from home. In my case it was about 265 days per year. BDog is correct he will save on his taxes. By not paying his normal Social Security taxes into your account.

Pirate when I was your age and much older I never thought social security would be around. Now that I am retired and on disability I think differently. I retired when I was 62. Make use of every investment opportunity you can. Even a little can pay off. My SS is $1900 per month. No debts, not much overhead except pharmacy expenses.

It's never to early to start planning. Everyone should go to the website Ssa.gov. Register and sign in . Tons of info,calculators, and you can see every dime that's been payed into your account. Those who are self employed,work for cash may be surprised...life is good.

 

Yes but the employee themselves have SS/ medicare / federal withholding taken out of their pay as well but not out of per diem. By law a employer pays 6.2 percent to your SS and you pay 6.2 percent taken out of your paycheck. So to make the math easy every $100 your are paid in per diem and not wages you lose out of $6.20 from your employer to your SS account but you get $100 free and clear. However if that $100 is paid as wages, 6.2% from your portion goes to SS, 1.45% to medicare, probably around 15% federal withholding so you only get around $77 but granted $12.40 goes to your SS account.

Personally I would rather take the $100 tax free now and if you are planning for your future put $23 in a mutual fund and keep the same $77 and I am pretty sure you will be money ahead of $12 going to SS.

SS sucks. The returns are horrible. I have been paying in to SS for 25 years. Over half of those I made over 100k a year so I have paid a lot in. I would waive all my rights to any benefits if they would agree to not make me put another cent in. I would invest my money on my own and I guarantee it would be better.

I don't consider myself rich but I have been steadily investing into mutual funds for over 20 years. Nothing huge but I put something in every month. I have enough invested that I really don't have to work ever again if I didn't want to. Investing $100 a month in the stock market from 25 to 65 will make you a millionaire.

 

Usually it's one of the first things mentioned when this question comes up but with them paying per diem you show the IRS less income which will affect you if/when you go to apply for a mortgage. Mortgage lending is based off of w2 income so you will qualify for less of a loan.

 

You should never get a mortgage based on the max they will qualify you for. First hiccup in your pay and you are screwed. My house was less than half what we were approved for. It is now paid off. Not a mansion but 3000 sq feet on 25 acres with about 5000sq feet of shop space for the trucks and equipment. Instead of buying the most expensive thing I could afford I went comservative and now life is stress free.

 

What you earn has no direct effect on your credit other than your ability to pay bills. You could make 10,000 a year or ten million a year and your credit score would be identical except to the extent you borrow money and pay it back. More money as per diem vs as wages lowers your taxes because your income is lower. Per diem is not counted as income thus it is not taxed. What do you drive a day - 500 miles +/- ? $0.01 is only $5 a day. I wouldn't be losing sleep over it.

 

That's sound advice but with them taking per diem out you can afford significantly more than what they will approve you for. The biggest issue isn't the mortgage alone but if a person has a vehicle loan or two or other lines of credit they may already be considered over extended yet they're comfortably within their means

 

A guy showing gross earnings of 100k will be capable of obtaining a larger loan than a guy showing gross earnings of 10k. The higher the income, the higher the available credit.

 

Sheeple