Per Diem Pay For Truck Drivers?

I'm curious as to how this works in Trucking & is it a good idea to get it or to leave it. Anyone have any experience with it or know how it works?

Mr. T, We've got a lot of information about Per Diem pay in our WIKI section. Check it out - it is confusing but I'm going to try and break it down for you and make it real simple in "street terms."

"Per Diem" - That's a fancy Latin phrase that just means "per day." Some jobs, and trucking is one of them, the IRS allows your employer to consider part of your pay to be for your expenses (per day) on the road. Those monies to cover those expenses are not supposed to be taxed. Now the way the trucking companies do this is sort of convoluted in my opinion, but I take the Per Diem pay on my paychecks. What's going to happen in most people's case is that they will see a little bit larger amount of take home pay, and less taxes taken from their check. The problem with that, for some, is that they may be needing to write a check to the IRS come April 15th. It is a personal choice which needs to be based on your personal tax liability issues. If you prefer to get a refund at tax time, then I would just not go for the per diem pay, but if you are a person who has things going on so that you can itemize your deductions then you might come out ahead by taking the per diem pay. It's just the sort of thing that my grandma would say was six in one hand and a half dozen in the other. For most folks it doesn't make a whole lot of difference, but where it really benefits someone is the folks who are writing the payroll checks. It saves them a bundle in matching social security dollars with their employees, this is part of why I think it is convoluted the way the trucking companies handle it - they do it on a percentage basis, and then some of them will charge you a few cents a mile for allowing them to save some money!

Sorry, I just thought I was going to break it down nice and simple - I'm quite confident now that someone much smarter than myself will jump in here and correct everything I just said!

For what it's worth......

I was chatting up a driver the other day for advise and he suggested that if a company offers per diem pay then take it! But for a odd reason that I did not expect.

He said it is really annoying to be out on the road somewhere and suddenly get a phone call telling you that the trucking company that you work for has just gone out of business!

Then, apparently, sometimes you won't get paid for those last days that you drove since your last paycheck.

It seems to happen more often than you would think.

He said if you're getting per diem pay, at least you'll have a little something in your pocket to help you get thru that last week when you might not get a check.

He said it is really annoying to be out on the road somewhere and suddenly get a phone call telling you that the trucking company that you work for has just gone out of business!

Well Mac, that would be annoying, but don't put much stock in that scenario happening more often than you think. Most of these large carriers are well funded with lots of money behind them. It's not likely that the companies that are hiring rookies will be folding up unexpectedly like that since they are usually publicly traded companies whose finances are open to the world's eyes.

What you heard was some truck stop rumors - they have a life all their own that is usually devoid of reality.

Has it happened before? Yes, but not often at all.

Thanks Old school, maybe indeed "his statement was devoid of reality", I'll be careful of trusting what I hear from working drivers from now on. I've just taken to heart some of the comments I've read on this sight about the value of speaking with real life, working drivers for advise on entering the profession.

But he claimed it has happened twice to him in his 13 years of driving, so now he always takes per diem when it offered.

An average of once every six years is more often than I would have thought, as I was under the impression that the industry was a solid place to work. Maybe he's just been unlucky.

I get the message that it is rare, and a lot more of a possibility when working for a small company, and probably non-existant when working for a major carrier.

That's why I love this forum, I can get my misimpressions of the job cleared up.

I started per diem at the beginning of this year. You are at Swift, so these numbers should relate to you:

Swift reduces my CPM by 10¢ then pays per diem at 8.5¢. Sounds like a rip off? But the 8.5¢ is tax free. (You're supposed to be using that per diem for travel expenses like meals, etc.)

Since it's tax free up front, there's no hassle with itemized or employee expense deductions at tax time. Old School talked about a smaller refund, but that's because you got a bit of it every paycheck. Also your "Adjusted Gross Income" will be that much smaller.

I won't know how it all works out myself till next April.

Thanks for the Breakdown Errol & Old School. I'm thinking about doing Per Diem pay. I know none of us are accountants or anything but just use me as an example. I'm the type of person that as soon as I pay for ANYTHING as soon as I walk out of the door of the place I bought it from I ball up the receipt & throw it away instantly. I know this isn't the smartest thing to do in most case but it's just me. I never keep receipts. So in my situation do you think it would matter if I took the per Diem or not?

This isn't a "receipt" thing. P.D. or no P.D. will show on your W-2. You always have your current and year-to-date totals on your paycheck stubs which are emailed to you.

Don't let other people make every big decision for you. You are the only expert on "Mr T".

Hint: in my thinking, if you do not plan/ expect to itemize deductions, P.D. does this part for you.

This isn't a "receipt" thing. P.D. or no P.D. will show on your W-2. You always have your current and year-to-date totals on your paycheck stubs which are emailed to you.

Don't let other people make every big decision for you. You are the only expert on "Mr T".

Hint: in my thinking, if you do not plan/ expect to itemize deductions, P.D. does this part for you.

I'm not sure if this was Mr. T's question exactly, but is it better to itemize or do per diem? It seems like you might be better off itemizing if you really itemized everything, but you'd have to itemize every single thing if you wanted it to be worth it, am I right? I've been thinking about per diem too and will probably sign up for it.

but you'd have to itemize every single thing if you wanted it to be worth it, am I right?

The best thing to do is take the standard deduction for meals which (oddly enough) tends to change a little each year. It's normally like $56 per day or something like that. But the standard deduction for meals will far exceed what you would have really spent on meals, thus preventing the need to itemize for that.

Things like tools and clothing and electronics you need to do the job would all be itemized.

I'm not sure what you would have to do as far as itemizing things if you've taken per diem. I'm not sure what you'd have to do in that case.