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<p>[QUOTE=&quot;Emulsified, post: 5258435, member: 42759&quot;]Golfnut is right. Per diem is for taxes only. It works like this: no matter what rate you&#039;re paid, they deduct .10 per mile, tax the base amount, then add the .10 back in. This means you&#039;re not paying taxes on the .10/m. This keeps your withholdings lower and with your deductions for being on the road, you shouldn&#039;t have to pay anything come April. However the down side is it shows your earnings lower if you need to borrow money. As well it pays less into your social security account. So it all looks like this:</p><p>2500 miles @ .30= 750.00</p><p>minus .10&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; = 500.00</p><p>You are taxed on the $500, then the 250 per diem is added&nbsp; back in.[/QUOTE]</p><p><br /></p>

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