@doninwooster ... that's one of the conundrums
If you're young.. and think social security may be available later in life.. you want your taxable income as high as possible during your prime earning years. A 33% discpunt on reportwd earnings really hurts that annual average.
Also, if you want to buy a home, or vehicles and need loans, your reported income is much lower and you won't qualify for as much of a loan.
Some say, "take the extra money each week and save it for a down payment".
But how many have the will power for that?
Pros and Cons of Roehl's Tax Free plan?
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- Some carriers actually "charge" the driver to run the per diem "plan" (As noted by Roehl here)
- Carriers use this as a huge payroll tax reduction vehicle
- Carriers also use this vehicle to lessen unemployment and Workers comp insurance rates at the expense of drivers
If the carrier also offers a 401k match that exceeds a certain threshold [that I'm not exactly sure what it is] then one could make the argument that participating in the per diem plan and adding in a 401k contribution will provide more money in retirement phase of life. But if they don't match at least what they're ultimately saving in payroll tax expenses, then the driver is getting shafted in the long-term and potentially in the short term if there is a serious illness or injury where they need to rely on supplemental income insurance or worker's comp.jammer910Z Thanks this.
Around this time next year? There is going to be a serious call to arms of the OTR trucker community once they figure out what has happened and how they are forced to choose between two bad options
- pay more in taxes then last year because they can't itemize meals and other expenses,
- or take the per diem option to get at least some (and only some) of the lost tax savings back
But I'm launching my own personal crusade to get congress to relook at this bill's intent. I just don't think they expected or intended blue collar OTR truck drivers to effectively end up paying more in income taxes as is the case for those who spend the vast majority of their time on the road. But it's not just truckers. Lots of industry workers are going to be negatively impacted by this and forced into company per diem plans.
A single OTR driver. Okay, his standard deduction went up $5,700 with the new tax bill. So what? For this, they gave up the ability to deduct Example: 250 days out @ $63 (x 80%) which equates to $12,000. Where I went to school, reducing my taxable wages by $12,000 is better then reducing them by $5,700. And never mind all the other things we used to rightfully be able to itemize like hotels and paid showers, and other specific job-related costs incurred. And for those like me, the penalty is much worse because we stay out much more than 250 days/yr.
"Okay, so take the per diem plan and save taxes that way?" Really, that's your response? Save the carrier more money then the collective per diem drivers save in "tax savings"? The government and states will find a way to make up for that tax loss from carrier payroll tax roles, and I got news for you, the average blue collar worker will be the first source of blood they attach to when the time comes .... and the time is now. ala the loss of form 2106 for employee workers.
The tax rate stayed the same. The standard deduction went up. The ability to itemize [and reduce taxable income] was thrown out. Can anybody see how this is a "tax cut"? It's only more smoke and mirrors out of Washington. If they are going to overhaul the tax system then go all the way ... stop screwing around out on the margins and playing games with the American taxpayer like you always do.
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