Taxes will hurt next year?

What is meant by the "standard deduction" in terms of how the new tax law is structured?

Employee related expense(s) deductibility on his/her 1040 Schedule A are essentially gone now in lieu of a higher standard deduction for single & married filers, or at the very least, limited to like a 2% threshold, from what I had read.

The decision to accept per diem as part of one's pay structure is a no-brainer to me.

That, along with the newly established higher standard deduction, should benefit most company drivers, or at least be a wash to what is was previously, when one could write off on Schedule A, a daily per diem (minus 20%).

 

True with the caveat "many company drivers". Not all. Those who "live in the truck"(like me) lost far more in deductions then we gained with a higher standard deduction along with the loss of the personal exemption.

As far as taking the carrier Per Diem payroll plan? I refuse to play that game, even at the expense of paying more taxes in payroll Fed Tax withholding. If my company eventually forces ALL drivers to take the Per Diem plan, then I'll probably take that as a sign to get out and find something local that pays half as much and requires living expenses such as apartment.

 

I never thought I could keep enough receipts to beat the standard deduction (which was like $10k for a married couple) although if I'd been shrewd about it I probably could have bought myself a new cellphone every year and got a top level data plan and written it all off.

My company has a per diem system but only on trips (mileage pay) not local (which is hourly and at least 70% of my income) so at the end of the year (W2) I have maybe $2-5k disparity (btw, both numbers are shown on the W2 but the Feds let you report the lower number so I don't know what all that "less reported income" these guys are talking about)

So maybe my reported income is slightly lower and keeps me in a lower tax bracket. Once you take all the deductions and adjustments.

 

The "less reported income" is what your W2's show and what lenders use to base your earning and loan repayment potential. If a carrier pays $12,000 as "Per Diem" and another $40,000 as regular wages ... then as far as anybody is concerned, you earn $40,000/yr, not $52,000. Granted, you're taxes (Fed and FICA) were only withheld on $40k, and as far as the IRS is concerned, you only had $40k of taxable income. So, taxes are withheld on a smaller number and gross earning are smaller at tax time.

It's a tax reduction path for the employee, but when/if something happens and now we're talking about determining wages to justify workers comp, or accident supplemental income benefits ... then they will look at the lower number and disregard what was earned as "per diem pay". Same for determination of social security benefits when it comes time.

But your employer will love to get you onto the per diem plan. Their cost-savings benefits are enormous in comparison to yours.

 

Well, I guess you should keep paying higher taxes then. More power to you

One of my goals as an LLC filing as an S Corp paying myself as an employee is to pay little or no confiscatory taxes whatsoever.

This new tax law is going to really benefit me personally. So whatever you do, don't call my congressman and complain LOL

 

This post should come with Zoloft and a warning.

 

Since we no longer can use the per diem or itemize in 2018 should I go ahead and use my company's per diem plan. And if I do will this count as income.

 

Yes, I suppose go with the company CPM per diem plan. Just understand the potential downsides of this, too. This has been discussed widely here and elsewhere throughout the forum.

It will provide you with a bit more take home pay each week but if you get hurt on the job, or have a serious illness keeping you away from work for a long time, and filing on supplemental insurance you may be buying ... your supplemental income insurance benefit will be based on the non per-diem wages which will be significantly lower then what you might be expecting. And yes. Lenders will see a much smaller income amount and this may or may not be a problem.

A lot depends on how the carrier employer has their per diem plan set up for drivers

 

I hear you and agree mostly. In my life when I was applying for a loan most of the time I wrote down on the application or told the loan officer what my income was. I don't ever remember showing a W2 I always showed a check stub. Lenders don't just go by a W2 when they determine terms. However I am with you 100% on what you said after. When I was an active driver I had so many dang deductions my taxable income was always low. I never really needed that per diem reduction and for me it was a load of crap.

 

Moose I understand what you are saying. However if the per diem was taken away and replaced with a higher standard deduction it seems I should go ahead and take my company per diem as long as it does not count toward reportable income. However as Texas pointed out it may have drawbacks in other areas. I guess I will talk with our HR this week.