Per diem yes or no

what you would normally get - company M&IE = what you still claim.

If you owe depends on your own tax situation...

 

It's my understanding that per diem is separate from your mileage pay but goes towards your federal thus reducing your owed taxes and increasing your net for the same gross.

 

Per diem is considered a "reimbursed expense", so the company likes it because it saves them money. Your paychecks are SLIGHTLY higher, because they are pre-figuring your M&IE deduction and paying that as the reimbursed expense. You STILL need to calculate that, though, and make up the difference (pay taxes on the over-payments or deduct the under-payments). If you plan on getting a loan or retiring or even if you are hurt and go on disability, it is definitely NOT in your best interest to accept per diem because your gross wages the loan or your SS benefits will be based off of is that lower amount of your "wages". Even your paid vacation will be lower because most places take your 52 week average to pay you for your time off, and that won't include the per diem.

The ONLY time per diem benefits you as a driver is if you're needing to hide some income, such as alimony, child support, or a judgement against you that has someone withholding a chunk of your paycheck. Otherwise, you're getting screwed.

If you want the higher paychecks, add a deduction or two to your W2 so that your employer withholds less each check...basically anticipating the M&IE deduction for yourself. If your refund is more than a couple hundred bucks, you've been giving the government a sizeable interest free loan...and I'm sure you could've put that money to better use yourself. That refund was your money that they wrongfully held all year. It isn't a "bonus" that you're getting...it's YOUR money. Give them less through the year and put it to work for YOU.

 

I understand the standard daily meal allowance (me&i) is going away for employee drivers. So this changes things considerably. I.e. Many of us who stay out for long durations get screwed, either way now but taking the per diem may be the only way to reduce your tax burden then take the hit on your SS draw later.

 

My main question is how to log paid per diem. Do you add per diem payments to your gross income? Do you log it on line 24 when it's already paid? These are thing I can't seem to find the answer to.

 

You don't log it. It is considered a reimbursed expense, no different than if you paid out of pocket for a light bulb and submitted the receipt and the company paid you back for the cost of the light bulb. You don't owe income taxes on that reimbursement because it isn't income. The difference is that rather than submitting receipts, you hang onto your log books to prove eligibility to claim that deduction.

 

Pub 463,

M&IE = Meals and Incidental Expenses

$63 x 80% for full days
($63x80%)x75% for partial days

 

I haven't seen anything officially that states that to be the case, but IF that is true, you'll lose the ability to be paid the per diem. The company can only "reimburse" the amount you're eligible to claim as a deduction, and you have to pay the taxes for any amount exceeding that limit. In other words, IF you lose that deduction, the per diem pay throughout the year is only going to dig you a hole for tax time.