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Trucker Forum - Trucking & Driving Forums - Class A Drivers (https://www.classadrivers.com/forum/)
-   Anything and Everything (https://www.classadrivers.com/forum/anything-everything-106/)
-   -   I like my Per Diem pay (https://www.classadrivers.com/forum/anything-everything/24450-i-like-my-per-diem-pay.html)

Malaki86 02-01-2007 11:46 AM
I like my Per Diem pay
 
When I did my orientation ride-along, the trainer told me that we had Per Diem pay. I thought to myself, great, now I have to go tell the payroll lady that I don't want Per Diem pay (I'd rather be taxed at the higher rate).

Well, I picked up my 1st paycheck here last Friday, and to say the least, I was surprised by it, and very happy.

I make 24.5% of the load, plus $0.16cpm empty. We also get a 1% safety bonus monthly. I expected the Per Diem pay to be based on that. It's not.

My pay stub had the loads in that week paid @ the above rates, PLUS there was extra pay of $52 per day that I was away from home. They actually pay the $52 in quarter-days, so there was a couple of days that was $13, $26, etc. This is untaxed pay in addition to the regular percentage pay. Now THAT Per Diem I like. Basically, on a 2 week pay period, we get an additional $520 if we're out a total of 10 days, which we normally are.

Ya - I can handle that.

traveler15301 02-01-2007 02:52 PM
Watch that per diem...you can only claim a portion of it on your taxes..I forget the % but its not 100%. Also, you must be able to justify that you are "away" for the time that you claim. You might be well advised to have you tax guy (or gal....have to stay PC here) check it out for you and tell you how much to hold back soes you doesn't get bit at tax time!

BTW...you have a PM.

Rev.Vassago 02-01-2007 11:51 PM
Quote:
Originally Posted by traveler15301
Watch that per diem...you can only claim a portion of it on your taxes..I forget the % but its not 100%. Also, you must be able to justify that you are "away" for the time that you claim. You might be well advised to have you tax guy (or gal....have to stay PC here) check it out for you and tell you how much to hold back soes you doesn't get bit at tax time!

BTW...you have a PM.
Only 75% of that $52 is deductible, which means that you have to pay all the tax on $13 of it (that means ALL the tax, not just the income tax).

Add it up over the course of a year, and you are looking at about $4000 or so that you have to pay all the withholding on. Enjoy that tax bill. :wink:

madii'swife 02-02-2007 12:18 AM
Quote:
Originally Posted by Rev.Vassago

Only 75% of that $52 is deductible, which means that you have to pay all the tax on $13 of it (that means ALL the tax, not just the income tax).

Add it up over the course of a year, and you are looking at about $4000 or so that you have to pay all the withholding on. Enjoy that tax bill. :wink:
Ok, so help me out a little bit. Do you only deduct it if you itemize? We've never had enough to itemize but I'm trying to figure out what the per diem is going to do to next years taxes (no mileage pay checks for 2006). Or do you owe the taxes on that other 25% whether you itemize or not?

Rev.Vassago 02-02-2007 12:48 AM
Quote:
Originally Posted by madii'swife
Quote:
Originally Posted by Rev.Vassago

Only 75% of that $52 is deductible, which means that you have to pay all the tax on $13 of it (that means ALL the tax, not just the income tax).

Add it up over the course of a year, and you are looking at about $4000 or so that you have to pay all the withholding on. Enjoy that tax bill. :wink:
Ok, so help me out a little bit. Do you only deduct it if you itemize?
You owe the tax no matter what - it will show up as income on your W-2, but it was not taxed.

Quote:
We've never had enough to itemize but I'm trying to figure out what the per diem is going to do to next years taxes (no mileage pay checks for 2006). Or do you owe the taxes on that other 25% whether you itemize or not?
If you aren't itemizing, then you will owe tax on the ENTIRE $52 a day. If you are itemizing, then you will offset the per-diem pay with your per-diem deduction, which comes to $39 a day.

If you are receiving per-diem pay, and don't have enough deductions to itemize, then you will have to pay tax on that entire amount. I would hate to have to pay the full taxes on what could potentially be about $16,000 a year.

Per diem pay benefits the employer - that is why they offer it. They are able to deduct the entire amount as a business expense, and therefore don't have to pay any taxes on it that they would if it were income (SS, FICA, etc.). They also usually deduct some of your wages for giving you this option, so they pay less taxes on your wages on that end as well.

The only way a driver should be accepting per-diem pay is if they have enough deductions to itemize. If you aren't itemizing, then you will get nailed with a major tax bill, as the entire amount is considered income, even though it isn't taxed.

Malaki86 02-02-2007 12:48 AM
The per diem pay comes with a form filled out by the payroll lady that shows the number of hours we was away from the house each day on that pay period. That info comes from our logbooks, which is a supporting federal document.

None of the $52 is taxed. The pay stub, along with the form, states clearly 'non-taxable income'.

I remember when I was younger and doing construction work, we'd often get paid per diem + salary when we did out of town work. We'd show up for work on Sunday night and check into the hotel/motel. Monday morning when we arrived at the job site, the foreman would hand out envelopes with the weeks per diem pay in cash for us to use as living money while we were at work that week. Just never saw or heard of that done in any OTR driving jobs.

Karnajj 02-02-2007 12:57 AM
Quote:
Originally Posted by Malaki86
The per diem pay comes with a form filled out by the payroll lady that shows the number of hours we was away from the house each day on that pay period. That info comes from our logbooks, which is a supporting federal document.

None of the $52 is taxed. The pay stub, along with the form, states clearly 'non-taxable income'.

I remember when I was younger and doing construction work, we'd often get paid per diem + salary when we did out of town work. We'd show up for work on Sunday night and check into the hotel/motel. Monday morning when we arrived at the job site, the foreman would hand out envelopes with the weeks per diem pay in cash for us to use as living money while we were at work that week. Just never saw or heard of that done in any OTR driving jobs.
Man, did you even read what the Rev said???? This topic has been gone over a thousand times. Per Diem pay is a ripoff to the driver. You may be happy with the big checks now but come tax time you will have a headache the likes of which you have never seen. Think about it. If it was such a good deal why doesn't everybody take advantage of it?

Rev.Vassago 02-02-2007 02:16 AM
Quote:
Originally Posted by Malaki86
The per diem pay comes with a form filled out by the payroll lady that shows the number of hours we was away from the house each day on that pay period. That info comes from our logbooks, which is a supporting federal document.
Your point?

Quote:
None of the $52 is taxed. The pay stub, along with the form, states clearly 'non-taxable income'.
Just because your employer doesn't tax it, doesn't mean that it isn't taxable income. You better read up on the per-diem rules with the IRS, or contact an accountant who deals with truck drivers. You'll be in for a shock.

Quote:
I remember when I was younger and doing construction work, we'd often get paid per diem + salary when we did out of town work. We'd show up for work on Sunday night and check into the hotel/motel. Monday morning when we arrived at the job site, the foreman would hand out envelopes with the weeks per diem pay in cash for us to use as living money while we were at work that week. Just never saw or heard of that done in any OTR driving jobs.
What you are talking about is called CASH UNDER THE TABLE. :roll:

madii'swife 02-02-2007 03:33 AM
Quote:
Originally Posted by Rev.Vassago

You owe the tax no matter what - it will show up as income on your W-2, but it was not taxed.

Quote:
We've never had enough to itemize but I'm trying to figure out what the per diem is going to do to next years taxes (no mileage pay checks for 2006). Or do you owe the taxes on that other 25% whether you itemize or not?
If you aren't itemizing, then you will owe tax on the ENTIRE $52 a day. If you are itemizing, then you will offset the per-diem pay with your per-diem deduction, which comes to $39 a day.

If you are receiving per-diem pay, and don't have enough deductions to itemize, then you will have to pay tax on that entire amount. I would hate to have to pay the full taxes on what could potentially be about $16,000 a year.

Per diem pay benefits the employer - that is why they offer it. They are able to deduct the entire amount as a business expense, and therefore don't have to pay any taxes on it that they would if it were income (SS, FICA, etc.). They also usually deduct some of your wages for giving you this option, so they pay less taxes on your wages on that end as well.

The only way a driver should be accepting per-diem pay is if they have enough deductions to itemize. If you aren't itemizing, then you will get nailed with a major tax bill, as the entire amount is considered income, even though it isn't taxed.
Oh now why doesn't it surprise me there has to be some sort of catch. Per diem wasn't an option with TransAm, its just in with his pay. It sure is nice in the checks right now, but I'll keep it in mind for next years taxes, although we're still only likely to owe SS and FICA on it, as we never owe anything else on anything :lol: Thanks for the info...yet again :)

Twilight Flyer 02-02-2007 01:02 PM
Quote:
Per diem pay benefits the employer - that is why they offer it. They are able to deduct the entire amount as a business expense, and therefore don't have to pay any taxes on it that they would if it were income (SS, FICA, etc.). They also usually deduct some of your wages for giving you this option, so they pay less taxes on your wages on that end as well.
Rev hit it right on. Per Diem benefits the employer only and is quite literally a screw-job to the employee. You'll find that out in spades when you start putting your taxes together next year.

Also, in addition to the major tax issues that you'll end up having, are you aware that since your social security is based on taxable income, you are torpedoing your future social security income? If you're one of those people that doesn't have any faith in social security, then that's not a big deal I suppose. It's your gamble, either way. If you gamble and lose, though, you'll be handing out little yellow smiley stickers at Wal Mart and eating Alpo for dinner after you turn 65.


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