Federal Taxes And Per Diem 2019

My first year ever living in a state w/ State Income Tax, and hopefully my last.

Don't get too hung up on this. There's a lot to consider. If all other factors were equal then certainly you would prefer a state with no state income tax, but all other things are not equal.

Take my home state of New York, for instance. People complain incessantly about the real estate and income taxes being high in New York. When you compare them to other states, that's true. We're high on the list.

However, our real estate prices in Upstate New York (basically anyplace that isn't New York City) are some of the cheapest in the country. The house I recently sold went for $107,000. It was a 1260 sq ft house with cathedral ceilings, wood stove, stone chimney, two pole barns, and a shed on 3 acres of land about 45 minutes from Buffalo.

As a comparison, a friend of a friend bought a house in Florida that was similar. Florida has no state income tax. His house was almost the exact same size, had one pole barn instead of two, was 45 minutes from Tampa, and had 5 acres of land instead of 3. He paid $700,000 for his house!!!!!

So who do you think made out better, the guy in the high income tax state or the guy in the state with no state income tax?

When evaluating finances, people famously focus on a specific set of numbers while ignoring the rest, giving them a poor view of the big picture, and poor results. If you really want to optimize your finances you have to consider every penny going in or out of your life.

For 2018 I owe $1800 in Federal and $2k in State, and I claimed 2 for each Federal & State all year long, always have. My first year ever living in a state w/ State Income Tax, and hopefully my last.

I look forward to filing next year since I'll have all of 2019 as a Driver (Prior to, I was a corp employee), and getting 7 days/week per diem since the truck is my home, and seeing how this per diem + claiming 2 (single) + no more state income tax (now a resident of South Dakota)

The per-diem thing works a little different, now that it's not an itemized deduction. "Technically", under the prior tax code, you had to have a home (and take home time) - as per-diem was compensation to cover expenses when AWAY FROM HOME on business (meaning you were required to have a home to be AWAY FROM). Under the previous tax code - folks that tried to take 365 days per-diem GOT CAUGHT, as too high a number threw a "red flag" on your itemized deductions.

Companies pay per-diem based on MILEAGE PAY - so you're not getting a "day rate" (which is what per-diem is calculated at, tax-wise). They may yet switch to a day rate, as it gives them the opportunity to save more in "matching taxes". Which also means with a mileage-rate per-diem, you don't get $$ when you're on a reset, or not moving for whatever reason (weather/days off/etc.).

All balances out in the end either way.

Personally - I'd rather get a couple of $$ back come tax time - than be pressed to come up with $2-4K on April 15th. The withholding rates changed last year - so folks that were taking 2 or more (and breaking even in previous years) ended up coming out of pocket this year.

Rick

Of all the threads that I've read thus far on the forum, this one, with its lively discussion, realizations, and documentation examples, has probably taught me the most. Over my lifetime, I have received per diem throughout both my military and management careers. You would think that I would have looked into it and understood it better. During my military career, I really cared about one line on the LES form and that was Net Pay.

Currently, all of my business related travel, I have the option of per diem or submitting receipts for reimbursement. Truthfully, I take the per diem on most trips, just because it is easier. As I read the two pages of threads going back 6+ years, the debate and conversation was very insightful. The recent changes from the Jobs & Tax Act seem to have made this a no brainer for me.