Per Diem vs not getting it.
 

ok I have a quick question for you guys that have been around awhile... while I enjoy the higher paychecks, are people like myself that get Per Diem by the company (Knight) ... are we screwing ourselves? what is the best way to go? With Knight Transportation they automatically put you in the per diem payroll and you have to opt out of it.... would appreciate some input if you guys can shed some light on what actually benefits the driver.

Re: Per Diem vs not getting it.
 

Apparently, per diem is a hot subject this week.

Per diem benefits the company first. That is why they offer it. They get a non-wage writeoff against you, and they get to pay you less taxable salary to do it.

While you get a higher paycheck, it MAY be smoke and mirrors come tax time. That extra untaxed income is still considered income by the IRS, and must be included as such. Your meal deduction of 75% of $52 per day (or $39 per day to make it easier) will offset some of what you receive as per diem pay, depending upon how the company pays it. Anything above that $39 per day that you receive is taxable income that has had no taxes taken out of it.

Furthermore, it will hurt your social security, as a sizeable chunk of your income is no longer reported as wages, and has had no Social Security taxes taken out of it. This can also be a problem when it comes to applying for a loan, as they look at your gross wages, which doesn't include the per diem pay.

In most cases, you are better off not taking the per diem pay, and simply using your standard meal deduction at the end of the year to offset your taxes.

thanks Rev
 

thank you for the reply rev....very insightful response by you.... Definatley appreciate the time that you put into it to respond to me. :)

It all depends on your individual situation. It is a great benefit to some and not to others.

Any time a company tells you how this "good for you", be suspicious.

:P

Just got off the phone with the IRS over the per diem pay and whether we pay taxes on any of our 52.00 that we receive.

The Federal limit is 52.00 that new total took effect in December of 2005. As long as you are at or below that limit no taxes need to be paid. If a company pays you outright over the 52.00 then it is taxed If 52.00 or lower it will not show as a income on your W-2 or a 1099 form

Hope this helps

75% of $52. How many times do I have to type this?

I guess the IRS is wrong too...

I guess the Rev doesnt want to admit that he could be wrong

I guess if you want to give 25% back to the irs go ahead

I guess you could call the irs and tell them that they are wrong :roll: