Per diem, yes or no?

The reason I didn't go into it any further, is because it has been gone over 'ad nauseum' on these boards....and I looked up in the left hand corner of my screen and noticed that the search feature still exists on this web site.

 

Hard to argue with that statement. For 90%, per-diem will cost them money in the end. Also, it will be more to the employer's benefit at cost to the employee. (it's like a company lease program in a lot of ways, why do you think so many try and push this? You think they are really looking out for you, the employee? LOL) Not to mention the other potential negatives. If you're working to "make more money with a bigger tax refund next spring" you're doing it all wrong. The standard daily meal allowance deduction is HUGE. Itemize, do a 1040, and reap the benefits. They wrote the tax laws, make them pay for it and don't give your employer your money.

But do what you want. Tell me I don't know what I'm talking about. Just do your research, know current tax deductions and rules, and don't just listen to the HR person's spiel because there is always another side to every story.

 

As said above, the perdiem is offered because it saves the company money. They dont do it for your benefit.

 

You can still keep track of what the Company pays you for MI&E and what you would rate per day for the year. Subtract what you would have taken if the Company did not take it out minus what the company took out. You can claim the difference.

Out 300 days. $59 x 3300 = $17,700 (taking full days only for example)

Company has $10,000 - you can claim the difference of $7,700.

http://www.irs.gov/pub/irs-pdf/p463.pdf

Days away from your Domicile - 80%, days to/from your Domicile - 75%.

You fall under the Transportation part of the MI&E.

The Company can never never go above what you would have gotten, if they do they are dropped out of the IRS program.

The Company pays less in taxes and other items, they charge you 2-3 cents for admin fees.

You should see in your paystubs the regular amount of pay and what is your MI&E. My company did it by load and it was broken down on my weekly pay stub.

It will effect your Gross income for loans and if close to SS age, it will factor in also.

Do a search on it, as many many many threads have been asked about this.

You can claim City/State rates or just take the flat rate.

http://www.gsa.gov/portal/content/104877

 

Here's the answer:

Figure out your yearly income without per diem pay. Figure out what your tax return would be on that income if you didn't get per diem pay and did an itemized deduction. Add these two numbers together.

Then take that same yearly income and figure out what your return would be with the standard deduction.

Then figure out your annual income with per diem pay. Figure out what your tax return would be on your taxable income now that you have per diem pay, again itemized deduction. Add your income, your tax return, and your per diem pay together.

Once again, recalculate your tax return based on the standard deduction, and add that to the annual pay with per diem pay and your per diem pay.


Which number is higher? That's the choice you want. Sometimes it's getting paid per diem, sometimes it's putting it all into a deduction at the end of the year.

It's 1:30AM, I'm NOT getting into how to figure estimate your tax return. Google how to do your income tax return, and call payroll and find out what % is coming out for every deduction. Or call an accountant, once you file once, usually they'll give you that advice free for the next year if you file with them again.

 

The outcome of per diem has been thoroughly covered I will just say count me as another in the camp that it makes no difference in auto loans because they look at pay stubs but when buying a house, well there the per diem screws you because they look at w2s. Big picture there are other things more important about a job than per diem so I would pick the one that fit best but two identical jobs if one paid per diem and one didn't I would take the job that didn't. You get the same money back anyway, difference is now or later, the child support post makes an incredibly good point as to why opt for now though.

 

"The company saves in taxes" but then they want to ding the drivers for "admin fees" too? That seems pretty sleazy to me. They should be glad for the tax savings and leave it at that without hitting up drivers for more.

 

Talk to a tax pro to about your situation for a true answer

 

NO, I stay away from it.