Per Diem?

Unless I completely misunderstand, for single taxpayers 83 full days away from home would meet the threshold. In the OTR world I imagine most drivers are doing double that easily.

 

My company automatically adds the per diem every week, but....I opted out of it before coming back to work here. I can do that on my own at the end of the year and my CPA can work with what I give him. Doing it on my own, I know I won't get shorted any days...

 

A previous poster nailed it: it basically depends on whether you already itemize deductions at tax time or take the standard deduction. If you already itemize because your deductions exceed the standard deduction, opt out and do it yourself at tax time. If you have a simple tax situation (no mortgage interest deduction, for example), do it with the carrier so that you can benefit from both the reduction in taxable income AND the standard deduction on your taxes.

But that should all be weighed against a possible paycut situation for having the company do it for you. I still can't believe companies can legally get away with that. Somebody should challenge that practice.

 

You are right. They are IRS approved plans. That doesn't make them, in most cases anyway, good for the driver. My cynical nature makes me wonder what the IRS gets out of this to approve of it.

 

Your nature is not too far off. The IRS gets nothing out of this. Just remember that BUSINESS has worked for these things through lobbyist and congress to get this done. They reap many benefits from the plans. In addition, in many cases, it really does benefit a truck driver who has very little to itemize. The floors on the deductions can be beat by reduced income to begin with.

 

In my case when i do the math the company i just to work they pay me 56 dollars a day per diem is this legal ?

 

If you have a simple tax situation and the carrier doesn't take anything back as an administrative fee, then in a purely dollars and cents sense one would be ahead because of the reduction in the tax you pay. One still has to decide whether the corresponding decrease in taxable income is worth any loss in government benefits and borrowing power at the bank.

 

it's NOT as simple as just seeing which is bigger, your per diem deduction OR your standard deduction. The guys that say to take the per diem as tex deduction only if you ALREADY itemize have it right.

Example, married driver with $12,600 standard deduction and $15,000 in per diem (80%) deductions and $5,000 in mortgage deductions. So, total of $20,000 in deductions, so it seems logical he should itemize, right?.

Nope. He should take the per diem as pay, and the standard deduction of $12,600. Total deductions of $27,600, rather than just the $20,000 when you itemize.

Don't forget, also, that taking the per diem as pay reduces your FICA and state tax obligation, as well, and reduces your AGI for purposes of Obama care subsidies, Federal Student Loan thresholds, etc. It can make the difference between paying for tuition for the kids or them getting Pell Grants or subsidized student loans.

The $ 0.02 CPM cost is because the company does not get to deduct the full 100% of the per diem, but only 80%. The 2 CPM off sets that increase in their cost.

 

I've got some bad news for y'all... no one gets paid more in a company per diem plan. Let's say you get 40-cpm for all miles, and the company has a 8-cpm per diem plan. You're not getting paid 48-cpm. You're getting that same 40-cpm... 32-cpm is taxed, 8-cpm isn't.

And that's total bull crap about the poor company needing anything to administer these plans. They get the advantage of not paying employment tax on every cent that is in that per-diem plan. That savings more than covers any costs they might incurr in "administering" the plan.

 

what is employment tax?