Why do companies charge drivers for per diem?

Discussion in 'Experienced Truckers' Advice' started by A Bug, Jan 29, 2018.

  1. A Bug

    A Bug Medium Load Member

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    I am not talking about the 60 something dollars per day you are away from home deduction on your taxes for folks that are not lazy enough to actually itemize.

    I am talking about where my company will reduce my cpm by 11 cents. 9 of those cents they will report as reimbursement so that I will not be income taxed and fica'd on that portion. The other 2 cents just seems to disappear. Either way the total seems to come out nearly the same in the end.

    I have been using it for a couple years now mainly to reduce my net income as much as possible in order to avoid the penalty thanks to the aca crap.

    This also would seem to save the company a bit of money because it would reduce their half of the fica tax.

    So why would they want to charge to use per diem when doing so discourages a lot of folks from taking part in it?
     
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  3. ZVar

    ZVar Road Train Member

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    They are allowed to by law, so why would they not?
     
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  4. mover man

    mover man Road Train Member

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    Having not been a company driver since 1987. I have personally never seen or heard of this. But if that .02 is disappearing. They are stealing plain and simple. However before you call to report a theft. Go over your statement LINE BY LINE. I have seen and heard of guys complain the comany is screwing them. Only to find the missing money buried with its own line item labeled as something stupid on the statement.
     
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  5. FLCRACKER

    FLCRACKER Medium Load Member

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    Companies cal it an administration fee or something to that affect. It a fee for processing you per diem. You should have been notified when you entered the program.
     
  6. STexan

    STexan Road Train Member

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    I've heard stories in the past that some carriers extract an "administrative fee" of 1-2 cpm. I understand the IRS allows them to do this, but that doesn't make it right. With computers and payroll software today, it's all done automatically and electronically and I doubt there's even any internal bookkeeping tasks associated with this process.

    1,000 drivers driving just 100,000 miles/year at just 1 cpm .... do the math.
     
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  7. Gunner75

    Gunner75 Road Train Member

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    If per diem is optional, don't take it, it only reduces your taxable income
     
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  8. A Bug

    A Bug Medium Load Member

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    I know they are charging the two cents, they made it clear when I signed up. I am just thinking that they would save far more money overall if they did it for free than what they are doing right now.I suppose it would not hurt to suggest if I can show it would be possibly profitable for them.
     
  9. mitmaks

    mitmaks Road Train Member

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    Its a scam, don't fall for it. Only big corporations benefit from it.
     
  10. Brian76

    Brian76 Light Load Member

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    Why would you want to pay more taxes?
     
  11. A Bug

    A Bug Medium Load Member

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    I ran some numbers here using rough estimates. Say you drive 100,000 miles in a year. Your marginal tax rate is 15%. Company charges 2 cents a mile, so they make $2,000. You get nine cents a mile tax free, so your savings are the following percentages of $9,000.

    15% income tax
    6.2% social security tax
    1.45% medicare tax

    Those three taxes add up to 22.65%.
    (9,000x.2265)= $2,038.50

    So I am ahead $38.50 at the end of the year. But like I said the reason I was doing per diem was to lower my taxable income in order to avoid getting a penalty from the irs for not having healthcare.

    And in case you were about to mention the fact I am paying less into my social security I say so what. By the time I am old enough social security is predicted to be done with.
     
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