Perplexed by forced per diem option?

The employer pays the unemployment taxes, not the employee. Been there, done that in the past by having had employees (different industry).

Unemployment being unavailable is a non-issue for those that are self-employed that actually know what they are doing.

 

(they, as in the company they worked for)

 

You need to understand how unemployment works from the employer end first. It's a bit too long, drawn out and complicated to go into here, but the short version is that an employer has a total percentage that gets paid in, but it's not as big of a percentage as social security or other taxes. No where near as big of a percentage.

 

Lilbit, I understand all of that, I was simply trying to compare "benefits" lost. I have been here over twenty years, I know how it works.

 

You might be surprised. I have seen some of the states that are close to the same percent.

 

It's probably already been noted here, but when you itemize the per diem deduction you are only allowed to reduce your taxable basis by 80%, so, in reality it's really not $59 per diem, it is $47.20.

 

A former employer from NY started with 8cpm per diem, then moved it to 12cpm, and finally settled at 20cpm. The guys forced onto the 20cpm per diem were on the new lower mileage rate of 40 cpm. Half of their pay goes unreported. As has been mentioned in numerous areas of this topic the drivers benefits will be greatly reduced because of this. However in the case of a runner he or she will likely have to pay additional taxes for exceeding the $59 threshold allowed by the IRS. Tax Phd what are you thoughts on this? I haven't see anyone comment oh this aspect of per diem.

 

I'm not real clear about this. What would cause one to exceed the $59 threshold?

 

If the company paid a flat cpm rate for per diem, but the driver drove more miles than the company expected.

Example: company pays 12cpm of their wage as per diem. Driver has 310 days away from home, driving 125,000 miles. He is elligible for 14,632 in per diem deductions, but was paid 15,000 tax free...

I would suspect it wouldn't be a big issue for the driver as long as you paid the difference promptly. I bet the company would face problems though...

 

OK, got it.

In this case, the driver would owe taxes on the 368 excess untaxed compensation.