Should I have canceled my Per Diem?

I find some of these responses rather interesting. My mother who is a CPA and has been doing books and taxes for 7 truckers for the last 30+ years has a different opinion.

When I asked her for advice, she responded this way: "Why wouldn't you want to reduce your tax liability and bring more money home throughout the year?

Per diem lowers your tax liability and saves you money. But I guess if you'd rather give more money to Uncle Sam for them to waste, then more power to you.

 

The employer also reduces the amount paid into social security/medicare. Any workers comp claim or unemployment benefit will be based on the "taxable" earnings.

If you want to get cheated out of the money that your employer is SUPPOSED to pay in taxes then be my guest.

Besides, the per diem is tax deductible by the driver when he files his taxes. Why should he forfeit part of his pay for the "privelage" of letting the company do it for him? simply ludicrous.

I propose your "relative" needs some more training in truckers tax returns.

 

First of all, if you think that I'm expecting there to be Social Security and Medicare when I retire, you'd be wrong. You're also wrong about the unemployment and workers comp claim amounts. Those benefits are figured on your total Gross Income, not your taxable income.

Also, you can still take additional deductions at the end of the year as well that equal it all out.

But as I said before, if you want to keep giving the government an INTEREST FREE LOAN all year, money that they'll just waste, then more power to you.

I think some of you need to ask an accountant or tax preparer to do the math for you on paper. You'll see that you end up taking home more money at the end of the year after taxes with the per diem.

 

Okay, notezbngrn71 let me try one more time to educate you on this subject. Pay attention please.


Carriers that offer a per diem program routinely deduct 1 to 2 cpm as an administrative "fee" for offering this "benefit."

Now lets do a little math and you can verify this with your "relative."

a .01 cpm deduction over the course of 1 year (52 weeks at 2500 miles avg) will mean they LOST $1300.00 gross pay.

a .02 cpm deduction over the course of 1 year (52 weeks at 2500 miles avg) will mean they LOST $2600.00 gross pay.

Now lets say that same driver was on the road for 300 days. 300 x 59.00=$17,700 (80% is all we are legally able to claim so that figure drops to 14,160). Of course there is a 2% gross income thresh hold the per diem must exceed first.

For more info on this topic please refer to the following thread as it may clear up any further discussion on this matter (specifically the posts from Jakescia and Roadmedic);

http://www.thetruckersreport.com/tr...xes/48822-tax-question-from-new-driver-4.html



Now lets take a look at the assumption SS/medicare will not be there by the time you retire. It is a good idea to prepare for the possibility of it not being there meaning personal investments and wealth building on your part. The fact is the American people have gotten used to the SS/medicare programs and I believe would storm the halls of Congress if those politicians even tried to mess with their entitlements. The system is designed to support the elderly in their declining years based upon the tax revenue of the current workers. The fact that companies are skirting the ss/medicare taxes has the current administration looking for ways to drag those tax payers back into the system. It is going to get ugly but in the end it is necessary. Too many scofflaws out there circumventing the sysyem.

As long as we have fly by night outfits that hire company drivers yet declare them as independent contractors the system loses. That means small companies and owner ops are doing this as well as these huge mega companies with their "fleece deals."

I agree with your statement about not giving Uncle Sam a tax free loan for a year. How about you adjust your with holding at the beginning of the year so this does not happen? Ideally you will not owe the government any taxes nor would you receive a refund.

 

On what form does a driver take the per diem deduction at the end of the year? If it is on the itemized deduction form and a driver doesn't have enough other deductions (motrgage, charity, health, personal and state taxes) to exceed the standard deductions then he wouldn't gain anything by waiting until the end of the year. If this is the case, then it would be beneficial to have it taken out all year long.

However, I think the real wrong here is that a company would charge the driver to change the accounting methold. That just shows bad intent. It is an advantage for the company to offer the per diem (less taxes on their part) and the accounting change would be no more work than is currently being done. A reputable company should offer a driver a penny or two bonsus for taking the per diem since it helps them financially. This is a real opportunity for a company to create a win-win scenario for themselves and their drivers.

 

Your math is on a simplistic form. Yes, the .02 is lost in the beginning, but you end up gaining it back by taking more of your money home each week instead of losing it in taxes.

I understand why some would want to decline per diem for reasons such as retirement, etc. However, if you plan correctly for retirement then you don't have to worry about that.

Personally, I'm 39 and my retirement is already fully funded and vested. Everything I make now beyond what covers my expenses is just fun money in retirement.

Part of the problem is many don't plan for their retirement until its way to late! The majority of Americans don't teach their children out to manage and invest money for a rainy day and retirement. I thankfully, was introduced to financial management at a very early age.

For those who weren't I guess declining the per diem will work for them, that is if they make sure they get all the deductions they're entitled. But we all know that the majority of people do not and end up giving the government a hand out every year!

 

I honestly hope everyone does some research before they buy any of this bull !!!

 

You are correct because everyone's situation is different. Everyone should consult and accountant to discuss their own circumstances before making any decision based on opinions on a message board.