W2 Per Diem? Mega vs Small

I had that squirrely problem. Because I got paid by the load.

 

Hmmmm....are you sure the smaller company does per diem? If you made more money, there's always a chance you gotta pay back. Some companies don't do per diem. Your checks that you get week to week won't matter, what's gonna tell the story is your W-2. It'll look like you made less if your company does per diem. Tax write off for them. If they don't do per diem, your gross is gonna appear much higher.

 

Per diem wasn't eliminated, per se. Non-reimbursed employee business expenses were. The standard deduction went way up, so most people didn't mind losing it. Truck drivers, when we could be looking at thousands of dollars in deductions cried foul. If your carrier pays per diem, they deduct it from your gross income, take taxes, then add it back in after taxes were taken. Their share of FICA taxes are reduced, so it's a "win" for them. You get the deduction, so it's a "win" for you. If they don't, you can't claim it, so that's a loss.

 

How do you get the deduction?

From what I saw of it. You owed taxes because enough money wasn't taken out.

There's no more per diem deduction when it comes to taxes. That went bye bye just a few years ago.

 

Gotta have alot of deductions this year.

 

Maybe it's just me but I never understood why anyone would lower their weekly take home so they could get a FAKE "bonus" at the end of the year? I like my W2 taxes set up to where I don't get a refund or at worst have to pay a minimum amount back to the IRS. Having been on the 1099 side for several years and now back to W2 again I can tell you I wish that ALL W2 employees were forced to pay their taxes quarterly, or annually, and we'd see just how long it would take for a Boston Tea Party to boil over in this country and make some real change.

 

Are you talking about the size of your tax refund? If so, it's a bad way to look at pretty much anything.

Let's say you're making $50,000 annually, with only the standard deduction. If you're paid weekly, you'll have $9,620 deducted over the course of the year and get an estimated return of $5,500. Paid every two weeks $10,400 is deducted and you'll get $6,280 back.

Gross Pay______$50,000 ________ $50,000
Withholding____ -$9,620 ________ -$10,400
Tax Refund ____+$5,500 ________ +$6,280
Net Pay ______=$45, 880 ______ =$45,800

Being paid every two weeks, at the end of the year you'll have a bigger refund, but you'll end up paying the same overall. Now increase it to $75,000

Gross Pay______$75,000 ________ $75,000
Withholding___ -$17,732 ________ -$19,214
Tax Refund ____+$8,972 _______ +$10,454
Net Pay ______=$65,240 ______ =$66,240

Again, when all is said and done, you end up paying the same in taxes regardless of the size of the refund. The difference is the smaller the refund, the more you had in your pocket through the year. I try to make sure I'm cutting the IRS a check in March, not the other way around. The refund is nice, but if you took that money and put it in a simple savings account you'd have at least $100 more at the end of the year.

You need to look at gross income minus health insurance and then compare that job to job, not the net and certainly not the tax refund. When looking at total tax paid, when you made $50k you paid $4,120 in taxes while at $75K you paid $9,760. Instinctively the reaction is "MY TAXES DOUBLED, OH THE HUMANITY". Yeah, they did, but you also took home almost 40% more. Too many people think that making more money results in paying more in taxes than they earned.