Per Diem

I wouldn't call it "the way". It may be the only way to reduce the beating from the IRS, but for most, per diem is effectively a beating from the employer the way they jigger the CPM numbers and play the game of taking 5 cents out of this pocket and putting 4 cents back in your other pocket. It's disgusting when you think about what most carriers are doing with the CPM model to make it appear "the driver's best interest is being taken care of by the carrier", and juxtapose this with how per diem pay was intended to work.

Per diem was intended to be ADDITIONAL [tax-free] pay on top of normal pay to offset cost of eating and living on the road, but it's been bastardized today by most carriers to "supplement a reduced wage"

 

This is the typical way this occurs, which benefits both the carrier and the driver. But the way it's supposed to work?

Imagine before per diem plan was offered, all drivers made 40 CPM. A "good and honest" carrier might come in and offer a per diem benefit (non taxed pay) of maybe $25/day, but maintain the same 40 CPM

Yes. your tax liability is not "improved" because the same 40 CPM is all taxed as it was, but you're not shorting yourself on stated and reported income for future SS and loan applications, and you're getting supplemental income that's not taxed. Key word is "supplement", not a cut in income along with an add-back in income.

 

I'm sure they tax it. If it's not specifically tagged "per diem pay" then it's taxed.

 

There is no such thing as "per diem pay". And it's not intended to be anything other than what it is ... a cost of business tax deduction.

Simply put, the entity that pay/compensates the expense, deducts the expense. How the deduction get passed on to an employee is as varied as there are industries and companies.

 

BINGO!! regardless of how they are structuring/paying it out,at the end of the year it is a tax deduction for THEM. That's why I have never been able to wrap my head around all of these different PD programs and thieving admin fees for money that you already earned?!?............I NEVER opted for the per diem, I just let my tax guy figure it out. Don't sleep in a truck any longer,so the new tax laws in that regard thankfully will not impact me.

 

As far as I know, there is no per diem option.