Question about per diem

That isn't per diem. Per diem is not added to gross income it's an allotment given by the government for money you spent out on the road that you don't have to pay taxes on. Not sure how you can say you receive 5k extra a month added to your gross income. If you take per diem on a check it shows up seperate and non taxed.

 

You are allow to deduct a 80 percent of sixty three dollars a day for Per Diem. This is your tax deduction. It is to pay for expenses that you have incurred while living on the road. If your company uses this as part of your pay the company is not required to pay the 7.5% match on your Social Security. Therefore when you retire you get less Social Security. Also it effects you ability to get a loan as it is not considered income. You therefore report to your lender a smaller income then you really have. Making you a higher credit risk.

One rule they tell you in Las Vegas that applies here is the House never comes up with a rule change to make it easier for the players to win. Always be weary if the company comes up with a new way to pay you.

 

No Sir. It is per diem. What you speak of is a unethical practice trucking companies do that may get hit hard by the feds one day. Been getting paid per diem for 7 years now on 41 different jobs outside trucking. My trucking job does what you give an example of. Check out DOL website for rules. @Diggler

 

It accomplishes the same or similar thing... You are allowed to write off your truck related expenses... Instead of keeping receipts for every Big Mac or Sub Sandwich, the IRS allows you to take a standard deduction, per diem, in leu of keeping receipts in a shoe box... So it makes tracking, and reporting, your expenses much easier.

Now, if a company pays so much to you as per diem within your paycheck it's just a portion of the total you are likely to claim at the end of the year... One just deducts that portion already claimed as tax exempt when paid and you still get the balance of the deduction to claim at the end of the year... It still equals the same total... Uncle Sam doesn't like it when people double dip... LOL

The advantage for the company to do it as a part of payroll is that it lowers their "payroll" related expenses... If it didn't, they would not miss with it and just let you claim it at the end of the year on your taxes, like interest on your home mortgage.

The downside to having it deducted out of payroll is that while it lowers the company's expenses, it also lowers your earnings which will impact your SS calculations in the future.

Same pie... Different ways to cut it.

 

Many companies effectively "charge" the employee a 1/2 cent/mile [or more] as an "administrative fee" and hide it in the per-diem scheme. The employee will have to be very careful to examine the pay [stub] to find it, but one way or another the carrier (many) is holding back money from the employee and this essentially pays for the very extravagant office employee Christmas party every year, and several nice homes.

2,000 drivers on per diem scheme, each at 100k miles/yr X .005 mile? Do the math.

 

Depends... In a previous non trucking job, I was paid for a number of things as a personal expense like lunches... And they gave me a car to use too... All those expenses were for things I would have normally had to pay for... So it was "in addition" to my normal salary...

But that was not in trucking.

 

With so much competition, trucking companies will do what ever they can do to haul cheap freight and still make a buck. Drivers are so used to being cheated they don't even recognize it anymore. It breaks my heart cause drivers give so much but ask for so little.

 

Interesting... I might need to look at this aspect.

 

The thing is, I didn't claim company per diem last year so at the end of the year I used turbo tax deluxe and put in my 300 days OTR and came to over 18,000. My taxes went up a grand so I didn't even bother claiming it because that 18,000 was taken off of my earned income making it look like I made 18,000 less than I did.

 

Correct, per diem is nontaxable. If you decided to view per diem as normal salary, that is up to you. Local hires on jobs I have done get a certain wage. If one has to overnight. They get the same wage plus per diem added to their original pay. That is how it works before trucking industry raped per diem. Think of a pie. You get a whole pie then one extra slice. That slice is per diem. Now trucking companies- You get a pie and they take one slice of that pie and call it per diem.