Perplexed by forced per diem option?

Thank you for the answers all.

 

If you get paid a percentage of your mileage pay you don't get squat when you are doing a 34 on the road. Also you do less than $47.20 a day worth of driving as far as your company paid perdium? You can still deduct the difference on your taxes.

$47.20 is 80% of the $59. We may be losing this deduction in the not so near future. This will make OTR even less appealing.

It was great for me as I owed back taxes to the feds for when I was self employed. Helped me get caught up quick!

My tax guy is a BCO owner op at Landstar.

 

Actually - all other issues aside -unless you are itemizing, you will generally come out ahead by taking the per diem. Even if you're itemizing, as a minmum you will probably still save on you SSN taxes.

 

what???? Why wouldn't you itemize?? Otr is itemize deluxe! You get hosed on worker comp, and they screw you on unemployment. Or is this like the "mystic" mom and pop fuel discounts i asked you about elsewhere?

 

Sure you save until you retire and then get a reduced benefit on your SSI.
401K match reduced
Get hurt and your workers comp benefit is reduced
Lose your job and unemployment benefits are reduced.
Get sick and your short term and long term disability is reduced.

All so you can save a few bucks on your paycheck versus getting them bucks tax return time. It's the same money just a lost of benefits.

And with trucking they don't give you anything. All they do is play a game and say you make 11 cpm or so less. Example: you hire in at 36 cpm. then when you elect per diem all of a sudden they say you make 25 cpm and 11 cpm per diem. When someone gives you per diem in the real world it is added to what you were hired in at and not taken away and given back to you. They just play with numbers to save millions on their end paying and matching taxes, insurance and 401K. That's why it has spread like wildfire over the past ten years. One company done it and the rest followed. It went from optional to many are making it mandatory because they know the smart truckers are catching on to the game.

Just like the lease deals they found profitable to companies. One company started it and when the other companies caught on they started doing it. Truckers aren't the only monkey see, monkey do. So are the companies.

 

First .. you are subsituting the itemized per diem deduction for your standard deduction ... so no you are not getting that money back at tax time, you've given it up.

As for the other issues, that is question of personal choice as far as money management. Do you prefer to put your money, financial security etc, in the hands of the government. Or would prefer to have control of your own destiny and secure your future for yourself ... if you don't have faith in you own abilty or know how to manage your own money ... then by all means you should give it to the government, pay the additional taxes and let them do it for you.

Uh ... actually no. Per deim is used as per individual company policies and is varied as there are companies. But the over all guiding force is IRS regulation.

For one off reimbursement of expenses, per diem maybe used in lieu for providing receipts, depending on an individual company policy. For temporary assignments per diem can be salary plus. But the IRS only allows this for a defined period of time, after that the employee must move to the new location and sacrifice per diem. For certain contract, temporary employees - who meet the IRS guidelines - part of the salary may very well be provided as per diem.

The key here, is in the "real world" per diem is temporary, not a permanent fixture. However for HOS individuals the per diem allocation from the IRS is permanent. So companies can provide or not as they see fit. It's up to the individual, based on their own tax situation, thier personal financial philosophy and how the company is providing per diem as to whether or not they should take per diem or not.

 

So many are not tax savvy. I was talking with a kid yesterday that ran team for a year. Didn't know he could take meal and other deductions. He will be filing an amended return for last year.

 

More and more companies are going from optional election of per diem to forced per diem. Why? Because it's beneficial to them because wages have been reduced lowering the matches and percentages they have to pay out. If you get per diem look at your itemized pay statement. When you were hired in and told let's say 35cpm, all of a sudden your pay stub will say you earned 25cpm. Actually it should be close to a 8cpm reduction to be close to the transportation rate. Then under reimbursements you will see an amount equal to the rest of the pay. As in this example 10 cpm. Still the same earning as 35 cpm, just 10cpm is not taxed. Difference = the tax savings.

A trucker can accumulate around $15,000 in per diem. Then when you schedule A with medical and mortgage the amount is a lot higher than the $5950 standard deduction.



Just a quick example with a simple tax return so some can see what I'm saying.

Per diem

Wages $32,400, not taxed wages $9600= $42,000
Federal withheld $3564
Standard Deduction $5950
Taxes $2914
Refund $650
Per diem tax money saved over course of year $924

Total $1574
--------------------------------------

Opt out Per Diem

Wages $42,000
Fed Taxes Withheld $4620
Itemizing $15,152
Taxes $3019
Refund $1601

Total $1601


As you can see the amounts are almost the same. Perdiem you get part of your refund over a course of the year. Opt out and you get the money tax return time.
So the bottom line the difference is the reduction in Social Security when you retire, The amount your company matches 401K, workers comp, unemployment, short term and long term benefits are all based on wages reported on line 7.

It's not a matter how you handle your financial matters but maximizing what is already available to you.

I'm a perfect example. I'm 51 and disabled now. Because of forced perdiem I had a reduction in my short and long term disability benefits by $143 a month. My SSDI was reduced about $80 a month.

 

Just like I have always said.

Only do it because of their benefit. Not the driver.

 

What is the per diem rate I can deduct for this year 2012 (tax year)?