PER DIEM?
 

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

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.

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!

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.

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.

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.

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

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.

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.