Straight Pay vs. Per Diem

Im already there on disability. I might just stay on it until 68 or so it will really boost the payout close to 2 grand a month if not over. But it will be inflated dollars like always. Prices and costs go up and you need more and more and more. It's not something you can do well on if you take it at 62.

I do not expect to live that long, however the recent work done by teams of doctors solved three major problems last month and I am more than satisfied that we fended off a untimely death from at least one of them pending within a year or 18 months at most. Pure happenstance.

 

I’m looking at retirement, not real soon. But it doesn’t look promising if I take it at 62.

But I’ll probably still be driving when I’m 70, if I live that long. I’ve become fond of seeing new places when I take time off. And you can’t do that on a SS check.

 

When you take per diem, invest the 7.65% you saved on SS/Medicare taxes to offset the loss. It cost carriers more to have a per diem program as they can only deduct 80%. If they paid it as a wage they could deduct 100%.

 

I think you are mistaken. Every lousy outfit you can think of will have forced per diem. They do it because it saves them money on matching contributions. You end up with less in the long run when you retire and collect SS. Unless you really need to show less income or barely scrape by per diem pay is not a wise move in my opinion.

 

The carrier saves 7.65% on FICA taxes for the per diem dollars paid, BUT the IRS only allows 80% of per diem expense as a deduction for the carrier on their taxes. If they paid the same money as a wage, they could deduct 100% of the wage and FICA expense.

The driver saves $7.65% on FICA taxes AND income tax (at your personal rate) on the per diem dollars. You can take those savings and put them in an IRA for retirement.

Depends on your personal situation, you will show less W2 income but could be much better off with per diem pay.

 

Why do we have to make everything so complicated? Am I right in understanding that WE as company drivers can no longer deduct per diem on our taxes? Meaning straight pay would be taxed all of it and no per diem.

 

Yes, in the new tax law employees can no longer deduct unreimbursed expenses, BUT your personal deduction went from $6350 to $12000, $24000 for couples.

The idea was to simply taxes by giving everyone a higher personal deduction. Depending on how many nights you are on the road, you may be better off with the personal deduction. Employers can set up a per diem program and deduct 80%, so some have done this to give drivers the option. Companies are not going to pay it on top of your current wage so they reduce your wages to pay the per diem and you need to figure out what's the best option for your situation.

 

So in reality not getting reimbursed because that would be on top of regular wages not lower and the reimburse. Oh well, be curious to see what everyone thinks after doing taxes this year.

Doesn't really matter too much, since I never thought about per diem pay or deductions ever before when considering pay.