No, the way I look at it is if I take it and then invest it myself rather than putting all my eggs in one basket like SS, I won't be one of those people passing out yellow stickers at Wal-Mart. Unless, of course, I get bored with all the free time on my hands and I choose to go pass out the stickers.

Personally, I believe that anyone who allows SS to influence their decision as to which job to take or not to take, should have their head examined... If SS is still around when I turn 65, that will simply be a bonus check I get each month. If it's not, then my guess is I'll still be OK. :wink:

 

Those of us that operate on that thought process are in the minority, though.

 

Unfortunately, I would have to agree with you there. The sad part is that this is becoming more obvious each and every day. We are quickly becoming a country of blubbering idiots. Asking the majority to operate on any thought process is just way too much.

 

If someone doesn't itemize (no mortgage most likely), wouldn't they benefit by taking the per diem and claiming the standard deduction?

 

If the company doesn't cut your pay rate in anyway then I'd take the per diem each and everytime. For example, if the are paying you .40cpm and they give you the option of taxing the whole .40 cpm or paying you .32cpm and .08cpm as per diem then I'd take the per diem.

As a matter of fact, if they could pay me my entire wage in per diem then I'd take that too. No taxes, no SS, no medicare...I'd retire very rich. :shock:

 

True, but then you're not in the majority that think "Hey, I've got an extra $30 in my pocket...now where's that Cherry Master at?"

Most drivers that take the time to ask or wander the forums looking for information on Per Diem are smart enough to take that extra money and invest it, creating their own little nest egg for retirement. Unfortunately, the majority of Americans (not just truck drivers) are of the instant gratification type and anything extra they get just means they have more to blow that week.

Of course, the whole pay cut thing is a huge deterrent, too, or should be. A company that pay $.40 should pay $.32 and $.08 per diem, if they are going to pay per diem. Unfortunately, they end up paying $.28 and $.08 per diem, thereby proving that per diem ONLY benefits the company. Not only are they paying the driver less, but they are also cutting their payroll taxes by a large sum. 99.9% of the time, that is the case.

 

Why even mess with per diem?
The standard meal allowance offers a larger tax deduction. Also, your employer contributions to SS, 401k type benefits, unemployment insurance, and workman's comp. are larger, resulting in higher benefits if you ever need them.

 

Lets say you decide to take the per diem. For the sake of keeping it easy I will try to use a simple set up of numbers.

to start lets say you currently get paid .41 cpm and avg 3000 mile a week. Now lets say the co. you drive for offers per diem at .10 cpm and a service fee of .01 cpm. This now brings you cpm down to .30
We will also keep the taxes simple and use a 25% tax.

@ .41x3000 = 1230 Take taxes out @25% = 922.50 as take home

now with per diem @ .10x3000=300.00 no taxes removed.

Company take .01x3000=30.00 cost of running program

your new rate @ .30x3000= 900 take taxes on this and you end up with 675.00 take home

So before per diem you would bring home 922.50 a week.

After per diem you bring home 675.00 + 300.00 = 975.00 an increase of 52.50

here is were it gets interesting , say you take 50.00 a week or 2730.00 for the year and invest it and can earn 8% on it for 35 years you would end up with a total investment of 95,550.00 but the interest accrued over the years would have a total of 510,788.00 .

Now if you feel that the government can give you a return better then this in form of SS then go for it.

Sorry this was such a long post but thought it would be good to see #s to go along with the debate.

 

But the assumptions are all individual. You may for instance have a tax liability of 25% a year. Myself, my tax liability hovers at less than 5% and as low as 1%. I would not want the per diem. It would make more sense to take the deduction on my itemized tax return.

 

Round and round we go. There are a hundred different ways to say "It depends on the individual's circumstances."

The standard meal allowance does not, however, offer a larger deduction. It increased to be 75% deductible in 2006, and I believe goes to 80% in 2008. Per diem pay is 100% tax free and subject to the same $52 limit (in 2006). If you are 'reimbursed' less than $52 a day, you can still take a deduction for the difference. Regardless of one's tax bracket, the taxes on 20 cents are always more than the taxes on nothing. You can't bend the math to change this fact. Even if you are exempt from federal income tax, your SS payroll tax is calculated from dollar one.

The other factors involved are the ones that determine whether or not an individual is better served by taking per diem pay.