Perplexed by forced per diem option?

If a company pays per diem based on mileage, and, for example, it comes up to $30 one day, that doesn't mean that the driver is limited to $30 per diem for that day. The driver is ALWAYS allowed the full $59. So, if $30 is paid by the company, the driver is also allowed to take the additional $29 as a deduction. The base amount of the deduction is THE SAME, as demonstrated in my example.

If you knew what per diem is and what it means, you would understand that. But based on your posts, you clearly DON'T understand that.

Take a look at my user name. That is what you would call a "clue." I really do understand this stuff. I'm not trying to be antagonistic, but when you make posts about how I don't know what I'm talking about, you may mislead others. I know exactly what I am talking about, and everything I have posted is 100% correct.

 

Okay, I stand corrected. I apologize for claiming your info was false. I do, however, know what "Per Diem Pay" is, and the fact that in this case it is calculated per mile and not per day. I also know what the Standard Daily Meal Allowance is, but I have not seen a clear explanation for how a driver might calculate and claim the difference between the two. Thank you for enlightening us.

While I can see that it might be slightly advantageous tax-wise to choose "Per Diem" Pay, I can also see that if your company charges even just 1¢ "Admin Fee", almost all the tax advantage is lost and you still have all the attendant deficits in terms of reduced contributions to Social Security, Unemployment, Workman's Comp., etc..., and you will show a less favorable Debt-to-Income Ratio which may not affect your Credit Score directly, but it will be closely considered when applying for mortgages or other large loans.

I'd like my wages paid in full, thank you.

 

Don't confuse what your company does with what the IRS allows.

For IRS purposes, they are exactly the same.

If a company pays, for example, $30 of mileage based per diem for a particular day, the driver takes the remaining $29 for that day as an unreimbursed employee business expense on Schedule A.

I agree that the "admin fee" is BS, but it doesn't negate the availability of the complete $59/day per diem deduction - the driver can still take all of it as a deduction.

 

None of it is BS.

The post of mine that you quoted explains exactly what the benefit is to the drivers. It isn't only for the benefit of the company.

The tax advantage to the company is simple - they pay reduced employment taxes. Nothing sinister about it.

 

This is where I disagree.

They get a reduced payroll tax, but the effect of this is a reduced benefit to the driver. Their social security wages are reduced. Their contribution to the SS program is reduced. If they are injured on the job, then their salary for the workmen's comp is also reduced. This is only a benefit to the company and never to a driver.

 

Isn't that what I said? Reduced employment taxes?

 

Not really.

You painted a picture that nothing sinister was being done by the companies except for a reduced payroll tax. This is misleading.

 

Not misleading at all. In my original post on the subject, I clearly admitted that reduced SS benefit, Unemployment, etc., were a downside to the per diem option.

 

Not sure what post you are referring to. It is hard to read on the phone, but if you say so, then okay.