Help with Per Diem????

[cclarke1268]

Can someone explain how the 52.00 a day is calculated on yor paycheck?

Is it:

You gross for your trips(miles)
Then any advances you may have taken
All your taxes taken out, fica etc.
Then your per diem added once your net is figured?

Or is it:

Your gross for your trips
Then your per diem taken from that
Then any advances
Then all your taxes taken out, fica etc.
Then per diem added back in?
Then that is your net.

I was under the imperssion that you were entitled to all of your per diem money, non taxed on your check, and that you taxed for 25% of the perdiem if you receive 52.00 a day, at the end of the year. Just trying to figure out how this works when your check is calculated.

Any help would be appreciated?????

Thanks

[Uturn2001]

Most companies that pay "per diem" do so on a cpm basis, and the only place you will see mention of $52 per day is on your taxes when you file them.

On a pay settlement, at least the companies I worked for that paid per diem, it went something like this: Say you drove 2500 miles that week at 30 cpm with a 7 cpm per diem.

2500 miles at 23 cpm= $575
2500 miles at 7 cpm=$175.

Any pretax deductions are made based on the $575. (401K, etc)

Taxes are then figured on what is left of the $575.

The per diem amount is the added in.

Advances and any other post tax deductions are made.
Reimbursement are added in
You have your net check.

At the end of the year you can then figure how much you can claim on your meal allowance (75% of $52 for each 24 hour period you are away from home). If the amount you can deduct is greater than your non taxable earnings then you can claim the difference, if it is less you owe.

[Rev.Vassago]

Most companies that pay "per diem" do so on a cpm basis, and the only place you will see mention of $52 per day is on your taxes when you file them.

This is untrue. More and more companies are paying a flat $52 per day in per diem pay instead of mileage. The reason they do this is because it gives them more of your wages that they don't have to pay taxes on.

I was under the imperssion that you were entitled to all of your per diem money, non taxed on your check, and that you taxed for 25% of the perdiem if you receive 52.00 a day, at the end of the year. Just trying to figure out how this works when your check is calculated.

If you are getting $52 per day in per diem pay, and the per diem program is optional, it would be in your best interest to opt out of it. If you are out 300 days (that you are paid per diem on), you would owe ALL the taxes on $3900 of that money, plus your W2 income would appear to be almost $16,000 lower than you really earned, which could make it very difficult to get credit. Plus, if the company gives $52 for days when you either leave home, or arrive home, you cannot claim the full deduction for those days.

Please check your PM - I replied to it.

[cclarke1268]

All my questions are based on the flate 52.00 a day per diem.

Thanks

[Rev.Vassago]

All my questions are based on the flate 52.00 a day per diem.

Thanks

It's a shame that there are companies out there that pull this kind of scam on their employees. They can write off the entire $52 that they give you, but you can only write off $39 of it (at best).

When you start a new job, unfortunately you'll have a few weeks where it seems as if you are doing more work than you are getting paid for. You'll find that this will fix itself after a few weeks.

One thing you want to make sure of is that advances are kept to a minimum. Remember - the advances that you take haven't had any taxes taken out yet. For every $100 in advance that you take, you'll see about $123 or so taken off your check (the $100 advance plus the taxes). When you take too many of these, they can add up quickly.

But, to answer your initial question:

Take the gross per mile rate for your trips
Take the taxes out
Subtract all advances
Add in per diem


So let's say you earned $0.25 per mile, and ran 2500 miles for the pay period, were out 5 days, and took $200 in advances.

Wage = $625 (2500 X $0.25)
- Taxes = $206.25
- Advances = $200
+ Per Diem = $260
________________________

Net wage = $478.75

[cclarke1268]

Just wanted to say, thanks for all your help. We appreciate it very much!

Rev, thanks for the call, you were very helpful in your explanations.

Hope to talk again!

Kim and CJ

[Rev.Vassago]

Just wanted to say, thanks for all your help. We appreciate it very much!

Rev, thanks for the call, you were very helpful in your explanations.

Hope to talk again!

Kim and CJ

No problem. Glad I could help.

[NevadaJim]

I think I get the jist of this but would like to make sure.

For a driver, it boils down to "pay taxes now, or pay taxes later" as far as taxes are concerned?

Over a tax year period it wouldn't affect what I really made, but just shows a lower amount for tax purposes? Per diem is then calculated when figuring deductions?

For company, they make out an paying less tax on the per diem? They also don't pay as much into my SS account?

I have read so many say it's a bad deal for the driver but, other than the Social Security issue, I don't understand where it hurts the driver. I'm talking specifically from an income standpoint, and not credit, getting loans and all the other stuff. From an annual income standpoint how does this hurt the driver?

Thanks,

Jim

[Rev.Vassago]

I think I get the jist of this but would like to make sure.

For a driver, it boils down to "pay taxes now, or pay taxes later" as far as taxes are concerned?

Kind of.

Over a tax year period it wouldn't affect what I really made, but just shows a lower amount for tax purposes? Per diem is then calculated when figuring deductions?

It all depends. Some companies will dock a few cents per mile if you get on the per diem program.

For company, they make out an paying less tax on the per diem? They also don't pay as much into my SS account?

For the company, the amount they pay you as per diem is a 100% writeoff. They pay less SS and FICA on your income.

I have read so many say it's a bad deal for the driver but, other than the Social Security issue, I don't understand where it hurts the driver. I'm talking specifically from an income standpoint, and not credit, getting loans and all the other stuff. From an annual income standpoint how does this hurt the driver?

If they pay you too much in per diem, you will be responsible for the taxes on the rest. That money would be considered "untaxed income". It could really bite you in the butt at the end of the year if they pay too much. The original poster stated that her husband's company was paying him $52 per day in per diem. He can only deduct $39 of that money on the standard meal deduction. That means that $13 per day would be untaxed income. Multiply that times 300 days on the road, and you are looking at almost $4000 in untaxed income - that amount could leave him with a tax bill of over $1000 if he has no other deductions to offset it.

It is my personal opinion that the risks far outweigh the benefits of taking the per diem option. It isn't like you are getting a bigger paycheck because of it - you are only getting the tax break you would get anyway earlier. But, if it isn't done correctly (and in most cases, it isn't), then it can cause you more harm than good.

[NevadaJim]

It seems to still boil down to pay the taxes now or pay them at the end of the year. $20 more a month taken out eack week, or pay the $1000 at the end of the year. My only question is in reference to your statement of them paying too much in per diem. Can you elaborate on this please? I really don't see how any of this can bite someone. You make X amount over the year. You pay X amount of tax on what you make. Whether you pay that monthly or at the end of the year is irrelevant when it comes tax time. But, your statement of a company paying too much in per diem is not making sense to my thick skull. I'd much rather have the $20 a week, although peanuts, making interest in my savings account, rather than giving Uncle Sam an interest free loan for the entire tax year. Any more help would be great. I talked with a recruiter this morning and this comapny pays 8 cpm in per diem. So, if I'm missing something that will actually take money out of my pocket I'd like to know now, not later.

Jim

[Rev.Vassago]

It seems to still boil down to pay the taxes now or pay them at the end of the year. $20 more a month taken out eack week, or pay the $1000 at the end of the year.

Where are you getting $20 a month from? :?

My only question is in reference to your statement of them paying too much in per diem. Can you elaborate on this please? I really don't see how any of this can bite someone. You make X amount over the year. You pay X amount of tax on what you make. Whether you pay that monthly or at the end of the year is irrelevant when it comes tax time.

That isn't true. Income that is paid by the employer already has SS and FICA taxes paid on it, some of which is paid by the employer (out of their pocket). When they give you that "income" as per diem pay, then they aren't paying that part of the SS and FICA that they would have. You end up paying more in tax at the end of the year than you would have if they would have given it to you as straight income.

But, your statement of a company paying too much in per diem is not making sense to my thick skull. I'd much rather have the $20 a week, although peanuts, making interest in my savings account, rather than giving Uncle Sam an interest free loan for the entire tax year. Any more help would be great. I talked with a recruiter this morning and this comapny pays 8 cpm in per diem. So, if I'm missing something that will actually take money out of my pocket I'd like to know now, not later.

CPM per diem is a different scenario than what was described by the original poster.

[NevadaJim]

It seems to still boil down to pay the taxes now or pay them at the end of the year. $20 more a month taken out eack week, or pay the $1000 at the end of the year.

Where are you getting $20 a month from? :?

My only question is in reference to your statement of them paying too much in per diem. Can you elaborate on this please? I really don't see how any of this can bite someone. You make X amount over the year. You pay X amount of tax on what you make. Whether you pay that monthly or at the end of the year is irrelevant when it comes tax time.

That isn't true. Income that is paid by the employer already has SS and FICA taxes paid on it, some of which is paid by the employer (out of their pocket). When they give you that "income" as per diem pay, then they aren't paying that part of the SS and FICA that they would have. You end up paying more in tax at the end of the year than you would have if they would have given it to you as straight income.

But, your statement of a company paying too much in per diem is not making sense to my thick skull. I'd much rather have the $20 a week, although peanuts, making interest in my savings account, rather than giving Uncle Sam an interest free loan for the entire tax year. Any more help would be great. I talked with a recruiter this morning and this comapny pays 8 cpm in per diem. So, if I'm missing something that will actually take money out of my pocket I'd like to know now, not later.

CPM per diem is a different scenario than what was described by the original poster.

Sorry, meant 20 a week.

Either way, the scenario still plays out the same. If I'm paid a straight $52 a day or I'm paid x cpm in per diem. Per diem in cpm may not come to exactly $52, but either way both amounts are still untaxed income. When I file the untaxed amount will be handled the same way regardless of whether it was a straight $52 a day or a different amount.

[NevadaJim]

It seems to still boil down to pay the taxes now or pay them at the end of the year. $20 more a month taken out eack week, or pay the $1000 at the end of the year.

Where are you getting $20 a month from? :?

My only question is in reference to your statement of them paying too much in per diem. Can you elaborate on this please? I really don't see how any of this can bite someone. You make X amount over the year. You pay X amount of tax on what you make. Whether you pay that monthly or at the end of the year is irrelevant when it comes tax time.

That isn't true. Income that is paid by the employer already has SS and FICA taxes paid on it, some of which is paid by the employer (out of their pocket). When they give you that "income" as per diem pay, then they aren't paying that part of the SS and FICA that they would have. You end up paying more in tax at the end of the year than you would have if they would have given it to you as straight income.

But, your statement of a company paying too much in per diem is not making sense to my thick skull. I'd much rather have the $20 a week, although peanuts, making interest in my savings account, rather than giving Uncle Sam an interest free loan for the entire tax year. Any more help would be great. I talked with a recruiter this morning and this comapny pays 8 cpm in per diem. So, if I'm missing something that will actually take money out of my pocket I'd like to know now, not later.

CPM per diem is a different scenario than what was described by the original poster.

Sorry, meant 20 a week.

Either way, the scenario still plays out the same. If I'm paid a straight $52 a day or I'm paid x cpm in per diem. Per diem in cpm may not come to exactly $52, but either way both amounts are still untaxed income. When I file the untaxed amount will be handled as per diem the same way regardless of whether it was a straight $52 a day or a different cpm amount.

[NevadaJim]

[quote="Rev.Vassago"]

Most companies that pay "per diem" do so on a cpm basis, and the only place you will see mention of $52 per day is on your taxes when you file them.

This is untrue. More and more companies are paying a flat $52 per day in per diem pay instead of mileage. The reason they do this is because it gives them more of your wages that they don't have to pay taxes on.

Which companies are doing this flat 52 a day?

[Rev.Vassago]

Which companies are doing this flat 52 a day?

Ask the original poster. Their company does it.