Perplexed by forced per diem option?

Many companies are doing that as the per diem laws are taking advantage of. Instead of saying you make 35 cpm, they'll say you make 28 cpm and 7 cpm per diem. Had they not had forced per diem your W-2 would show roughly $8400 more. That amounts to about $336 yearly lost employer match on a 401K at 4% contribution. It amounts to about $700 less in yearly employer match on your social security. If you got sick or hurt it can reduce your monthly benefit as much as $150 a month.

Whether the per diem money is saved weekly through out the year or you get it all at one time tax return time is no different. The difference is the first paragraph that many don't think of them ramifications.

In that example above the employer saved $1036 on one driver. If the company has 400 drivers they just saved $414,400. It's not chump change and that's why they do it. They don't do it for the drivers benefit but they'll make you think it is. A company like Swift the savings would be $16,576,000 to force drivers on perdiem.

Per diem on the tax return has been around for years. One day about 10 years ago a smart trucking accountant figured out the way it is now. The other trucking companies caught wind of it and one by one they started doing the same.

 

I understand a bit more about per diem and sounds best to opt out, I was told it was there for days I was stuck because truck was down. Not true.
My question is along with this is any reimbursments to us, whether it is room, parts for the truck school anything like that they tax that too. We pay for it out of pocket first then get taxed? Is that suppose to be right?

 

Reimbursements paid out of pocket should be added after taxes on your paystub. Cash advances before. Ones that get comchecks or similar for parts/repairs will see the money going out and then back in which is nothing but accounting procedures. It still gets taxed as normal because it's your money earned. I think that's what you are asking?

 

No, I was asking if they were suppose to tax reimbursements we pay out of pocket up front for things like a part of a truck, motel room, a lumpers things like that. Thanks for replying.

 

The per diem deduction is a convenient way for the government and tax payers to deal with the receipts accumulated for living expenses while travelling - otherwise there's a receipt nightmare when trying to report your expenses. It doesn't include tolls, lumpers, parts, repairs or anything like that. YOU pay for your living expenses, then claim the per diem deduction on schedule A for the days you are on the road away from your tax home.

There are also per diem programs that carriers offer to their employees that provide a payment to the driver that is less than the maximum allowable tax deduction. Usually this is done by paying part of your total compensation as per diem that is non-taxible. Lets say you're paid 30 cpm, and your employer has a program that allows you to be paid 5 cpm in per diem. What that means is that you are paid 25 cpm in taxable wages, and 5 cpm in non-taxable per diem. It still adds up to your promised 30 cpm, but you get the advantage of not paying as much in taxes. Your employer gets a tax break as well. It's a win-win for someone who does not make enough to itemize their deductions - as long as the employer doesn't then say, well I have to hold back 1 or 2 cpm of your pay because its costing me to do this for you. If its a straight exchange, you're getting somewhere. If they "charge" you 1 cpm for the privilege of this program, its kind of a toss-up, and depends on your specific tax situation. At 2 cpm you're definitely loosing money.

There is a downside to it as well. You get a break in your taxes, but your adjusted gross income figure is lower. This means that you'll get less credit for social security, workman's comp, and in the case of a brain-dead banker, your income appears to be lower so your borrowing power for a car or home is lower in this idiot's eyes.

 

I don't think they are talking personal expenses IP but company expenses that aren't part of per diem.

I'll try wording it different. NO!

But not many pay straight out of pocket unless they are rich. Many don't want to front their company money. Usually one is advanced cash by different methods like Comdata advance or check. Then on your paystub you will see the advance and then the credit. But either way it shouldn't be taxed.

 

Regarless of which one you choose, it all comes down to how well you manage your personal finances on the road. If you are someone who really does a good job of being thrifty while on the road, look at the per diem amounts offered, you could build up some extra cash!

 

And don't get hurt on the job. You'll be living on peanuts.

 

Per Diem is supposed to be paid in addition to your regular pay, not as a percentage of your regular pay. The idea is that it is supposed to offset the increased expenses that you incur as a result of being away from home overnight. So, even if you don't work for a week while you're waiting for the truck to be repaired, the per diem would still be paid for every night you're away from home. Drivers should stand up to companies and demand that per diem be paid at a flat rate, not rolled in and taken out as a percentage of earnings.

 

Why do I need a company to do my perdium? When OTR I never took an advance, didn't take perdium. My tax man was all I needed. I took out everything I could at years end.

IT ONLY BENEFITS THE COMPANY, THEY ARE SCREWING YOU