Perplexed by forced per diem option?

Standard deduction is the worst scenario for the driver without company paid per diem. Why? Because he can't deduct ANYTHING for his meals and incidentals.

A driver on company paid per diem would still receive the same $35,000, but would be taxed on much less, as a portion of the total is non-taxable per diem.

 

Scott, I think we have both made valid points, but some would rather argue a point for the sake of argument than to really investigate it on their own.

I would pull out one of my drivers year file and put up the numbers figuring it both ways, but I have a strong feeling that I would be accused of just throwing numbers out there, so why waste my time?

For all of those that think we are dead wrong, IN THE INFO ON HOW OUR COMPANIES FIGURE PD, (not on some backwoods operation, or mega carrier screw job that you were involved with) I would simply suggest that you call up your "trucking" accountant and ask them go over the examples that we both provided, maybe you will believe an outside source, if not then simply go about your business as I will.

I can't see how some of you feel either Scott nor I stand ANYTHING TO GAIN, by not telling people that don't work for us anything but the truth!

Wishing you all a nice weekend.


Stan

 

Regardless of what anyone else would say, I would really like to see a side by side comparison of an actual driver's payroll. I think that would definitely be worth a view for my eyes. If you do it, please let me know. Thank you!

 

Some time ago, I talked with a retired employee from a trucking company. He was retired from management. I asked him about per diem.

His answer was this:

1) If he had his way, ALL drivers would get their $59.00 a day per diem. If the driver is out for 7 days, that would be $413.00, ($59.00 x 7 days = $413.00).

2) If a drivers earns $1000.00 that particular week, taxable income would be $587.00 for that week, ($1000.00 - $413.00 = $587.00).

3) The drivers taxes, (federal & state income taxes, social security, FICA, medicare, company 401 contributions, unemployment taxes, and workman's compensation) would all be based the drivers initial taxable gross of $587.00 for that week.

The retired manager said that the drivers are receiving a "FREE" $413.00 that week while the company is reducing its tax load as far as social security, FICA, medicare, 401K contributions, unemployment taxes, and workman's compensation taxes are concerned.

Personally, if I were the employee earning that $1000.00 a week, I would rather be taxed the full amount in order to be credited for FULL benefits: social security, FICA, medicare, 491K contributions, unemployment taxes, and workman's compensation.

If the driver had no choice in the matter, then I would say this: use only what you need and save the rest for the future.

$413.00 out of $1000.00 is a 41.3% decrease or cut in pay.

God bless every American and their families! God bless the U.S.A.!

 

It isn't a "cut in pay." You get all of your money. It is simply a reduction in what is reported for Social Security, unemployment, etc.

 

@TaxPhd So you never really answered this question properly, you just took the standard line. The real question (which I really didn't state for a reason) is whether the tax savings from taking the per diem payment makes up for the loss of income from the 2-cpm kickback. That question to you is still open...

 

I did answer the question properly. And I will reiterate. . . If a driver takes the standard deduction, rather than itemizing (the scenario that you proposed), the driver is not allowed to deduct ANYTHING for meals.

To address your issue about tax savings versus the cpm "kickback," we would need to know the total number of miles driven, as well as the total number of days away from the tax home. I didn't address it because your scenario lacks sufficient information.

For the record, I think the cpm kickback is complete BS. I don't do that in my company, and if I drove, I wouldn't work for a company that did that.

 

My mistake

 

Which makes it a cut in what you get from Social Security when you retire . . .

 

Do you really want to give up money in your paycheck now, based on what you think might happen with Social Security in the future? Seriously?