Is the following correct? Am trying to get it squared in my head, before I get to Schneider. They enroll you in the Per Diem payroll system automatically, but you can opt out. Also, some companies charge you for this?
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Note -- Using rounded, numbers for simplification

Two drivers each gross $1000. per week.
Both are in the 25% tax bracket.
Use $40. as per diem rate.
Both drivers are out 5 nights
Both work 50 solid weeks.
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Driver A is paid via the per diem system

5 x $40. = $200. per diem allowance
$1000. - $200. = $800. taxable income.
25% x $800. = $200. taxes deducted.
$800 - $200 = $600 net pay, then add back
in the non taxable $200 pd pay, total net is
$800. take home.
Pays $10000. taxes for the year, has only
standard deductions.
Gross income, for any loan purposes and
for Social Security credit is $40,000.
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Driver B takes per diem at end of year.

No per diem out of his weekly check
25% x $1000 = $250. taxes deducted
$1000. - $250. = $750. net pay
Pays $12500. taxes for year.
Gross income for loan purposes and SS credit
is $50000.
At tax time, will have a deduction of
$10000. (50 weeks x 5 nights out x $40.
per diem allowance).

 

For a very simplified version, yes.

While being paid on a per diem basis should not be the deciding factor to go to work for a company or not, if given a choice you are always better in the long run not to be on that pay structure.

 

If you want the illusion of bringing home more money - go for it.

The examples they give hardly ever seem to meat reality. I did try it for a while but I then decided to get out of it.

 

Simple advice!! Opt out! It will cost you loads in the long run! The topic has been covered many times in these forums!

Taking the per diem will also reduce any unemployment, social security or workmans comp benefits! Be very very careful!


RUN! :wink:

The end of the year, add up the nights away from home, multiply by $52.00, then you get to claim 70% under expenses on your tax return. Cannot remember the line #, read the previous threads!