A Year Of Per Diem Pay - The Results

Anyway, if you're out 5 days a week with that standard deduction, I calculate after taxes as being $36,199.6 not using per diem pay, using your tax rate. (I think tax rate will be lower than that actually, but I'm not going to chase that down.) I might just be tremendously confused here. Someone certainly is.

Income from PER DIEM - MUST BE REPORTED AS INCOME.

This part is correct. It shows on either line 12 or 14 of your W-2 (I don't remember which) as "other income."

Per Diem is not UNTAXABLE INCOME - it is income for which TAXES HAVE NOT BEEN WITHHELD.

This part is incorrect. Per diem is considered non-taxable income. It's the alternative to saving all your receipts, itemizing every French fry and fruit cup you buy, and claiming the daily living expenses deduction. As long as it's reported when you file, you won't have any problems from the Infernal Revenue Service.

My issue with per diem is, each week my pay statement says, "you have brought home $x.xx more this week for being on per diem".

Now, this amount may be just $10 or it could be as high as $80-$100. The thing I'm not understanding is, sure, I may bring home and extra $40 per week average, but I'm giving up $59 per day deduction at the end if the year.

I understand that the per diem part of my pay will lower my taxable income, but will it lower it as much as the normal daily deduction. I thought I heard somewhere before that the per diem pay rate was calculated based on something like 14%, meaning they expect that 14% of your pay would go toward work expenses, and thus that's the amount they will allow you in the form of per diem pay.

Now, I'm wondering, it feels like I spend more than 14% of my income in work expenses.

I'm just wondering if taking the per diem is worth it for everyone, or does it only work for certain people in certain situations, and in certain tax circumstances.

In other words, is there any reason for a single person with no kids and really no bills and doesn't own property, and generally takes the standard deduction, to take per diem pay. Also, would a married person with a house and kids work better on per diem or not?

This site has a useful article on the subject of per diem pay.

I think Errol, in calculating his "no per-diem" taxes, forgot to factor in the standard meal allowance of $63/day. That would have reduced his "no per-diem" tax liability significantly. I think the "$1700 the better" claim is way off. Not to mention the fact that taking the per diem cost him about a 20% reduction in his (company paid) social security contributions.

I started a Per Diem deduction with Swift in January last year, with the plans of publishing the results on Trucking Truth.

Well, here's the results. The gross pay was taken from my 2016 W2s, the miles are from my paychecks – I keep a spreadsheet of them all. (Yes, it's part of my OCD)

The bottom line, with Per Diem, over the year, I ended up with about $1,700 extra cash in my pocket. This is not part of a tax refund, this is the result of taking the Per Diem offer from Swift.

I used TurboTax to do my taxes. I ended up with itemized deductions, but there is nothing in the “Job Expenses” section at all. I did a search for “Per Diem” in Turbo Tax, and got almost no results. My taxes have been sent in and accepted by the IRS.

Here's my information. The tax rate is a national average, everybody's is different. Yes, there is a $0.08 difference between Per Diem and non-Per Diem CPM pay, but I still come out ahead.

	2016 With Per Diem			2016 No Per Diem
	W2 Gross Pay less Per Diem	Per Diem Pay		W2 Gross Pay	Per Diem
	31,951.74	8,407.66		39,717.05	0.00
Tax Rate 14.3%	-4,569.10	0.00		-5,679.54	0.00
	27,382.64	8,407.66		34,037.51	0.00
Net + Per Diem paid	35,790.30			34,037.51
Extra cash in pocket		$1,752.79

Dan suggests

I think Errol, in calculating his "no per-diem" taxes, forgot to factor in the standard meal allowance of $63/day.

I did not include any adjustment for per diem in any way with the "no per diem" side. Be honest, just how many drivers keep track for per diem purposes? My number represent the company's effect on a driver's payroll, and the driver can do whatever after he/she gets their check.

@Sambo, I Googled "average income tax rate" and found an authoritative 14% for middle class incomes. That means for middle class income, 14% of your "next dollar earned" goes to taxes. But the basic idea is to compare straight CPM pay with "CPM less per diem" pay.

I did not include any adjustment for per diem in any way with the "no per diem" side. Be honest, just how many drivers keep track for per diem purposes? My number represent the company's effect on a driver's payroll, and the driver can do whatever after he/she gets their check.

Well, what's the point of this exercise then?

People want to know, when it's all said an done, if it's better to take the per diem.

You make it look like taking the per diem was a huge ($1700) bonus. That's not the case, all things considered.

Dan considers:

Well, what's the point of this exercise then?

People want to know, when it's all said an done, if it's better to take the per diem.

You make it look like taking the per diem was a huge ($1700) bonus. That's not the case, all things considered.

You haven't been on this forum long enough, and have not searched back on all the per diem talk.

I used​ my earnings numbers to a certain extent, and added a generic tax rate. I am not a tax professional, so I can't talk about anyone else's situation. But with all the talk that's been posted here on Trucking Truth, I made a point to put out some realistic experience here. You're welcome.

Your mileage will certainly vary.

Dan considers:

Well, what's the point of this exercise then?

People want to know, when it's all said an done, if it's better to take the per diem.

You make it look like taking the per diem was a huge ($1700) bonus. That's not the case, all things considered.

You haven't been on this forum long enough, and have not searched back on all the per diem talk.

I used​ my earnings numbers to a certain extent, and added a generic tax rate. I am not a tax professional, so I can't talk about anyone else's situation. But with all the talk that's been posted here on Trucking Truth, I made a point to put out some realistic experience here. You're welcome.

Your mileage will certainly vary.

Okay then.

I knew this would get confusing and everyone would be an expert (just like my Navy days), which is why I took company offered per diem pay the first year and then asked my accountant at the end of the year. She said keep taking the company per diem pay because business expenses are reduced by a certain percentage anyway.

Bottom line; consult a tax accountant.

I agree, I'm just going to hire a tax consultant to explain it to me.

I've been trying to figure out, this last year, if I should be on per diem or not. I've asked this question to several different people and I've found for as many people I ask, I'll get pretty much an equally divided answer.

As far as income related to getting loans and such, when you go to finance something, you can get a per diem letter from your company that shows your true income, however, the one thing I am concerned about is the reduction in social security.

Granted, many say social security may not be around much longer, so that may be a mute point...