PER DIEM?

[homealone3]

Rookie question:

How does the per diem pay work?
Do most companies add per diem pay on to the pay they advertise?
(did that make sense?)

Any info would be great.

Thanx

[Uturn2001]

At most companies per diem pay is where a portion of your pay is not taxed. Since most companies pay on a cent per mile basis it works like this on that type of pay.

For example if you make 30 cpm with a 5 cpm per diem 25 cpm is taxed normally and 5 cpm is not taxed.

[headborg]

Per Diem is generally a rip off.

Yes, it puts more money in your pocket at the end of the week because less taxes are paid in.

But, what they don't want to tell you is the following;

this lowers your REPORTED EARNINGS at the end of the year on you W-2.

which means--if you're looking at getting a loan or applying for credit card---you don't qualify( you don't make that much money)

2- THEY pay in less- worker's comp, unemployment insurance, they/you
pay in less money to social security.

3.--YOU legally can't "double" claim any MEAL EXPENSE- at the end of year-.
4.- They WRITE-OFF all that per diem expense they pay out--as a business expense. Not as employee payroll----so, they get a double credit by paying it to you---less payroll tax, and a expense(write off)
5. If they figure vacation pay--based on weekly Gross earnings--
companies like Westside Transport. Only figures the taxed weekly wage-less the per diem. And they don't adjust it---so, for that vacation pay week......it's like 3000milesX .20 instead of x .34==
They save a lot of money.......

Now, if you've got a Judgment against yourself, or "court ordered" support payments-----I guess, if you want to keep more of you money---(at the expense of your children) then it might be good deal for you.

I've heard that in addition to all the above advantages--Knight Transport actually holds out an additional .01 of YOUR PER DIEM--they claim as a "tax offset" or "handling fee"? what a rip off!

[Copperhead]

Per Diem is generally a rip off.


3.--YOU legally can't "double" claim any MEAL EXPENSE- at the end of year-.

Most of the comments are correct. One minor correction though......

Regarding #3, Figuring tax return per diem. The present per diem is $52 per day. You total ALL days out and multply by $52 and that is your perdiem for the year. Then take 75% of that and that is the actual dollar amount you can deduct. (80% for 2008)

NOW...... If your company is paying "per diem", generally, they will not pay enough to cover the $52 a day allowance. Therefore, you can figure up what per diem would be at the standard daily rate and then subtract what your company paid and you can deduct the rest off your tax return.

Just a minor, but could mean something to someone's tax return.

[Rev.Vassago]

Per Diem is generally a rip off.


3.--YOU legally can't "double" claim any MEAL EXPENSE- at the end of year-.

Most of the comments are correct. One minor correction though......

Regarding #3, Figuring tax return per diem. The present per diem is $52 per day. You total ALL days out and multply by $52 and that is your perdiem for the year. Then take 75% of that and that is the actual dollar amount you can deduct. (80% for 2008)

NOW...... If your company is paying "per diem", generally, they will not pay enough to cover the $52 a day allowance. Therefore, you can figure up what per diem would be at the standard daily rate and then subtract what your company paid and you can deduct the rest off your tax return.

Just a minor, but could mean something to someone's tax return.

Actually, the opposite is usually true. Most companies will give the full $52 per day as untaxed per diem. Where you run into a problem is at the end of the year, only 75% of that is allowed to be deducted on your taxes, which means you underpaid 25% of your taxes on that $52 per day.

[homealone3]

O.k. so I'm going to throw out some numbers and tell me if it makes any sense.

365 (days a year)
- 55 (approx days not worked-4 dys. mnth+1 wk. off)
-------
310 (days out)

310
x 52 (allowable per day)
------
16,120

16,120 divided by
51 (weeks per year worked)
-------
316 (allowable per week)

I know my hubby isn't getting $316 a week per diem.
I grabbed 20 of his last check stubs and added the per diem pay and it only averaged to $205 a week.

316
-25%
------
237
-205
---------
32

So I figure we're coming up short $32 a week that we should be able to deduct.

[headborg]

I know some drivers who were trying to do both to screw the IRS.

They would take the per diem--count on the IRS not catching it--and then do the "standard meal allowance"-- a couple of them got flagged for an audit.

If you accept (untaxed)$$$ from your company as a per diem------then the company writes this off their taxes---you be way of receiving that UNTAXED money are waiving any deduction of your own---can't legally claim partial
partial per diem . It's considered fraud by the IRS. Now if you change employers in the middle of a year and the second employer doesn't do per diem---then you could claim meal allowance for the time you weren't receiving (untaxed) money for meals while driving for said employer.

[homealone3]

All my estimates are just guesses.
I guess it's probably closer to being accurate.

I wouldn't want to get audited and the government say, "prove you were out x amount of days"

I don't think my hubby's employer gave him the option of being paid that way. I'm not sure but I think they just did it.

Honestly, I must say it would be much harder getting smaller paychecks weekly.

Thanx for all the 411

[Copperhead]

O.k. so I'm going to throw out some numbers and tell me if it makes any sense.

365 (days a year)
- 55 (approx days not worked-4 dys. mnth+1 wk. off)
-------
310 (days out)

310
x 52 (allowable per day)
------
16,120

16,120 divided by
51 (weeks per year worked)
-------
316 (allowable per week)

I know my hubby isn't getting $316 a week per diem.
I grabbed 20 of his last check stubs and added the per diem pay and it only averaged to $205 a week.

316
-25%
------
237
-205
---------
32

So I figure we're coming up short $32 a week that we should be able to deduct.

Correct. You can deduct what the company does not compensate for up to the IRS allowable deduction.

It doesn't matter if they pay $70 a day per diem..... you do not have to pay any taxes to make up anything!!!!! The IRS may come down on the carrier, but you are not obligated for ANY make up tax on per diem.

Taxes are only paid on salaries and earnings. Do not think I am right? Then pull yourself away from your computer and call a CPA, expecially one that caters to transportation industry. Been at this game for close to 2 decades and had a couple of audits in that time and walked away owing at most $5.

[Uturn2001]

I wouldn't want to get audited and the government say, "prove you were out x amount of days"

That is what log books are for when it comes to tax time and audits.

If a person claims the meal allowance either through a per diem basis at pay time or by doing so on their returns they need to save their log books for 7 years.

[homealone3]

Maybe my hubby takes a couple of extra days off to spend with his other family and I'm figuring he's driving. (just kidding)

I have a friend, (her husband drives also) that her husband always has to leave a full day early to get to work that's only 45 minutes away. (she often wonders why?)

Again thanx, lots of good info

[headborg]

Let's do a little figuring/ and look at it this way.

You're allowed 52.00 a day (per diem) x number of days you were away from home. ( or if you want to do it the hard way- there's a table with zip codes- and an actual different rate for different areas of the country)

YES- YOU NEED TO SAVE THE LOG BOOKS- in case of an audit.

52.00x number days on road= x
but then you can only claim 75% of that this year?

So, your company may be paying a .10cpm per diem--based on 400miles a day production= 2800miles a week. Sound about right?

So that's $40.00 a day per diem------which is about 75% of 52.00 a day.

Now, they are not going to pay YOU out more than THEY can write off themselves.


So, you take the $40.00 untaxed per diem---
-This is were we disagree---and if you can go ahead and "write off the extra" I might look back into per diem paying companies.

According to your plan--you take the $12.00 unpaid x (320days year average OTR)=$3840.00x 75%(again)=$2880 dollar write off?????????

I think the problem is when you turn in the Estimate Meal Expense form along with your W-2 from Company X---my fear would be that IRS knows
which companies are claiming that Tax deduction in your place.

Now, by all means if a company is going to pay you a .15cpm or .20cpm

per diem( Poly-Trucking for 1) then certainly Take the money and either eat steak every night; or PB&J sandwitches and bank the extra cash money--and like Copperhead said---let the company worry about not getting that extra money back from IRS.

Example: .20cmp X 400=$80 a day----that's twice what you could actually
write off yourself($52.00x.75=39.00)
I'm betting the only reason they are gonna pony up the extra untaxed cash --is they are being more fare to you considering this Per Diem is
really helping THEM out in so many other areas of accounting.

[VitoCorleone99]

Some accurate information, some inaccurate... must be a message board. Anyhow, here goes nothing...

Actually, the opposite is usually true. Most companies will give the full $52 per day as untaxed per diem. Where you run into a problem is at the end of the year, only 75% of that is allowed to be deducted on your taxes, which means you underpaid 25% of your taxes on that $52 per day.

False. According to the IRS: (50% is 75% for us, but the same rules apply)

Generally, business-related meal and entertainment expenses are subject to the 50% limit. Figure A can help you determine if the 50% limit applies to you.

Expenses not subject to 50% limit. Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions.

1 - Employee's reimbursed expenses. If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Accountable plans are discussed in chapter 6.

Regarding #3, Figuring tax return per diem. The present per diem is $52 per day. You total ALL days out and multply by $52 and that is your perdiem for the year. Then take 75% of that and that is the actual dollar amount you can deduct. (80% for 2008)

NOW...... If your company is paying "per diem", generally, they will not pay enough to cover the $52 a day allowance. Therefore, you can figure up what per diem would be at the standard daily rate and then subtract what your company paid and you can deduct the rest off your tax return.

True.

Allowance less than or equal to the federal rate. If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance.

However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount.

It doesn't matter if they pay $70 a day per diem..... you do not have to pay any taxes to make up anything!!!!! The IRS may come down on the carrier, but you are not obligated for ANY make up tax on per diem.

This part is a little dicier. In practice, I agree 100%. Their target would be the employer, rather than the employee. By the law though, the employee is on the hook for unpaid taxes. Whether or not anyone comes collecting, well you know how that goes.

I've linked a pdf from the IRS ruling below. It addresses this exact issue, going as far as using a trucking company in the example.

A little light reading for you guys tonight.

If you receive per diem payments (considered reimbursements which is why they are not taxable) in excess of the $52 daily limit, you are obligated to repay the excess to your employer. In the absence of a system by which you repay the excess, your employer is required to treat the excess as wages. If a pattern of abuse (explained in the linked pdf) is established, you are on the hook for the entire amount as wages, not just the excess.

As Copperhead suggests, they would likely come after the employer. That being said, I have a friend who drove a cab. While not under this exact rule, a similar issue came up regarding untaxed wages vs. expenses. The cab company got hit hard, but the drivers had to pay back taxes on all of the untaxed income. That's 'dollar one' taxes, as in SSI, income tax, the whole kit and kaboodle. Just something to keep in mind.

[Rev.Vassago]

This thread is becoming comical.

[headborg]

Way to go Vito---nice light reading--love it when people bring facts to the table...

So, now after reading all that......did we determine if you can take the CASH
and then deduct the balance unpaid....but on good days(like when we run 650milesx.10cmp) 'loose track of the excess paid'.

Because after reading all that---I still came to the conclusion that as long as the Carrier doesn't 'attract' the attention of IRS by "abuse"- the whole thing remains---in the 'non-accountable' ledger....the driver only gets screwed big time if the company is found 'abusing' the law....then all that untaxed allowance--ends up STUCK UP YOUR ASS at the end of the year as ----wages----wages that no tax had been withheld from all year----Leaving you with a big TAX DEBT and back to square one- filing the STANDARD MEAL Allowance yourself---and trying to scrape together ALL the receipts you can find for other expenses.

[Rev.Vassago]

Way to go Vito---nice light reading--love it when people bring facts to the table...

So, now after reading all that......did we determine if you can take the CASH
and then deduct the balance unpaid....but on good days(like when we run 650milesx.10cmp) 'loose track of the excess paid'.

Because after reading all that---I still came to the conclusion that as long as the Carrier doesn't 'attract' the attention of IRS by "abuse"- the whole thing remains---in the 'non-accountable' ledger....the driver only gets screwed big time if the company is found 'abusing' the law....then all that untaxed allowance--ends up STUCK UP YOUR ASS at the end of the year as ----wages----wages that no tax had been withheld from all year----Leaving you with a big TAX DEBT and back to square one- filing the STANDARD MEAL Allowance yourself---and trying to scrape together ALL the receipts you can find for other expenses.

With that mindset, why not just skip paying the IRS altogether? After all, as long as you don't 'attract' the attention of the IRS by "abuse", you should be okay.