Per diem

This has been dissected and talked about in many ways already here in the forum. Do a search.

 

The only benefit, under current tax regs, goes to the employer. Company drivers can't really benefit from per diem anymore. To people that lend money it makes it appear as if your income is slightly lower than it is. It also slightly reduces your Social Security entitlement or unemployment check because of the slightly lower taxable income. Some of the companies still paying per diem also charge YOU a fee to pay it to you.

For me, it's about number 97 of the 100 questions I need answered before working somewhere. I would accept it if everything else about the company was really good. I would say it is a very slight negative. I'd prefer to just get straight pay rather than per diem, less complications and room for dishonesty.

 

Don't take it.

There is NO benefit TO YOU.

Uncle Sam removed per diem benefit from company drivers a couple years ago.

In 2001 wife and I did 306 logged days away from home that tax year out of 365 total days. thats a flat rate Per diem deduction we took against 67000 in income. Came out to 13700 to our favor. Essentially erasing any tax liability.

Since we practice extreme withholding above and beyond standard W2 figures to Fed and State the resulting refunds became a foundation savings for the coming 2002 year. They talked about zero interest with that we have been at zero for years now. So thats irrevelant.

 

Well, now I have to chime in, since I'm an advocate of taking the per diem, even company. Especially if your not having an added expense in doing so, otherwise it becomes a numbers game.
Anytime you can get a part of your income, tax free, take it. Your return on investment would far exceed any return on social security lost on that income. It's not even close.

 

He's right.

The day SSA hands you a stack of papers showing you lifetime earnings.... you will see how it benefits.

Darn, I hate changing a chosen position in life some times.

 

I did tax prep for a couple years and a few were truckers. For the ones that grossed closer to 70 grand per diem was great. For those slugging away at 30 grand it did not matter. With the higher salaries getting some money nontaxed helps with the road expenses. I cannot say for sure yet as I am still waiting for the new hire. On the tax prep side alone it is a great savings. Itemizing on taxes is almost worthless now for most unless they are 1099 workers. For those few I think the companies are already taking too much of an advantage by hiring an employee as a contractor.

My vote is 5-15 cents a mile per diem. Based on 30-45 cents a mile straight pay.

 

Who doesn't want tax FREE money ? It's not added to your pay. It's some of your money tax free. So if you like paying more taxes then go ahead. If you want less taxes then take Per Diem.

It pretty simple if you drive OTR. You get per diem for each day your away from home to help pay for food and stuff. It not free or extra money like some think. You just don't have to pay taxes on that money. So at the end of the year you could have $15,000 or $17,000 of you pay tax free. It all depends on how may days you are not home. Say you made $50,000 most people have to pay taxes on $50,000. You might have $15,000 in Per Diem. So $50,000-$15,000 you only pay taxes on $35,000. Say you pay 22% tax rate you will pay $7,700 if you had to pay 22% on $50,000 you would pay $11,000 in taxes. So your $15,000 Per Diem saved you $2,300 in taxes.

My company does not charge anything to pay me Per Diem. I guess some do. If you buy anything like a car or house or need credit they will only see your yearly pay as report to the IRS. So you made $50,000 buy only paid taxes on $35,000 so it will look like you make $35,000 a year. If you want to beat the system you should invest that $2,300 in Roth IRA and you should beat the Social security system. You should have more money to retire on. Most people just spend the money instead. That's the claim people like to say, if you take Per Diem you pay less taxes. So you get less social security when you retire.

 

A couple years ago, when company drivers were allowed to claim per diem at the end of the year, I would have said no. Now, company drivers are no longer allowed to claim it on taxes, so get your tax break any way you can. The company still makes out better than you, but you lower your tax burden in April.

 

I might be a stranger with this concept. But if the company wants to bill uncle sam 65 dollars daily or flat rate for feeding me on paper they can put a mastercard into my hand and 40 dollars add on every 24 hours and keep the difference. Thats more valuable as food costs retail is flat BS.

The way we withhold our wages against state 7% tax rate and against uncle sam above 18000 AGI, makes our tax bill zero or in our favor anyway. I have for 15 plus years assigned 100 a week to uncle sam and 80 to state withholding over and beyond normal withholding. Company has to pay that.