Generally 'Per Diem' As A Paid Benefit. ?

Couldn't find a relevant topic of this aspect of Per Diem.

In my traveling sales career Per Diem was on top of and didn't affect your paid income in any way. Normally, an expense allowance per meal while away overnight. Submit expenses and be reimbursed (tax free) up to the per meal allowance.

Reading this site: all major carriers define Per Diem as optional and will reduce paid cpm and subtract a few more cpm as an administrative charge. I read this as more of a tax convenience for the driver to accept Per Diem and driver is charged extra for this convenience. Having a hard time rationalizing opting into a Per Diem which, at year-end, is less of a benefit and more of an expense.

Confirm, or deny? am I reading this right? tia

Having a hard time rationalizing opting into a Per Diem which, at year-end, is less of a benefit and more of an expense.

You are on the right track in my opinion. The only benefit today's truck driver's are getting from per diem pay is a slightly larger amount of take home pay on their weekly paycheck. It's not worth it in my opinion. You don't get to write off your daily meal expenses, and in my experience it only netted maybe an extra 12 or 15 dollars on a paycheck. I've opted out of per diem for years now. You can put a lot more money on your take home pay by learning to be productive. That's the key to making money out here. The whole per diem scheme saves the company big money in their payroll. There are less taxes for them to match. It really does little or nothing for the driver.

Now, you are going to have some folks jump in here and disagree with me, but I think you already have it figured out if I'm understanding you. When it comes to personal finances there will always be differing opinions on the details, but from what I read from you, it appears you've got a handle on this topic already.

I removed myself from it when I started. CRST automaticly put you into it. I wasnt giving up 2 cents for every mile I drove for their admin fee lol

Besides it benefits them again in soc sec matching your tax in that !! Saves them $1 for every $1 you pay. Of course there has to be some benefit to the company, so they push it to get you to join.

Only savings I see is if you're making big bucks to benefit more by using per diem

I'm completely opposite. After company drivers lost the ability to claim any itemized business expenses on the taxes two years ago, per diem is the only way to go IMO. The less the government can tax, the better from my viewpoint.

As far as I know, you can not claim any type of per diem as a w2 employee company driver. You can as a 1099.

Im not sure what kind of gimmick some of the trucking companies have come up with to tell you, but personally it's a big red flag if they're using that to get you to drive for them.

After company drivers lost the ability to claim any itemized business expenses on the taxes two years ago

Why cant you claim out of pocket purchases for work use??

As far as I know, you can not claim any type of per diem as a w2 employee company driver. You can as a 1099.

Im not sure what kind of gimmick some of the trucking companies have come up with to tell you, but personally it's a big red flag if they're using that to get you to drive for them.

I am a company driver and on W2, I get per diem and I don't pay for it. I have however been thinking about changing it since my Social Security check size when I retire is determined by what I make.

Im not an expert on per diem. All I know is as a 1099, I get like $96/ day and I can write off a percentage of that and it takes off my gross so I get taxed at a lower income. That makes sense to me.

Im not sure what the companies offering what they call per diem actually means. Is it considered a gift or bonus? Im assuming it's broken out on your paycheck somehow if they're not going to tax it on that pay period, But im pretty sure you're going to get taxed at the end of the year on it anyways.

If you know, let me know. Thx.

As far as I know, you can not claim any type of per diem as a w2 employee company driver. You can as a 1099.

Im not sure what kind of gimmick some of the trucking companies have come up with to tell you, but personally it's a big red flag if they're using that to get you to drive for them.

I am a company driver and on W2, I get per diem and I don't pay for it. I have however been thinking about changing it since my Social Security check size when I retire is determined by what I make.

I won’t pretend to be a tax expert or accountant.

What I do is get paid at the per diem rate and, because I’m 55+, I am allowed to put more into an IRA under a “catch up” provision. I do that and it should net me more at retirement than any additional social security will. But hey, the country could go belly up tomorrow too. 😆😳🤔

I'm completely opposite. After company drivers lost the ability to claim any itemized business expenses on the taxes two years ago, per diem is the only way to go IMO. The less the government can tax, the better from my viewpoint.

As far as I know, you can not claim any type of per diem as a w2 employee company driver. You can as a 1099.

Im not sure what kind of gimmick some of the trucking companies have come up with to tell you, but personally it's a big red flag if they're using that to get you to drive for them.

This is a double-edged sword - and became much more so with the tax code changes a few years ago.

Per Diem IS PART OF your CPM rate - some is paid WITHOUT HAVING WITHHOLDING TAKEN OUT. Which does result in "somewhat incrementally larger" take-home on your check.

The entity that BENEFITS THE MOST - IS THE COMPANY (bet you didn't see that one coming - LOL). Company has to MATCH THE FICA WITHHOLDING on W-2 Wage Employees. The less taxed income - the less THEY HAVE TO COME OUT OF POCKET. The "matching funds" do not come out of YOUR PAY - but THEIR $$. So for every $$ they don't pay you as "taxable income", that's 7.5% they don't have to lay out.

Back before the tax code changed - doing per diem and itemizing deductions assuming you were doing decent miles could save you a LOT OF $$ on the back-end in taxes.

The "other side" of the equation is - you have LESS SOCIAL SECURITY WAGES - and therefor qualify for LESS SOCIAL SECURITY - if it's even going to be there by the time you're old enough to get it (and if COVID, or the vaccine doesn't kill you first).

You will also get a SMALLER REFUND than under the old system (where you could itemize your per diem and other expenses)if you take per diem (less withholding IN, less refund OUT). Some folks don't like "lending" Uncle Sam $$ (in the form of withheld taxes they get back) - others would rather see a fatter refund check (or less taxes if your financial situation ends up making you PAY instead of get a refund).

This article explains the changes pretty well.

So - anything you get for per diem that is OVER the "daily rate", ends up as taxable income (for which both you and the company pay on your withholding). Company payroll system calculates this automatically.

Under the new tax code (which will probably get repealed by the new admin/congress) - it was pretty much a "break even" on the per diem issue (with the company still getting the most $$ benefit from not having to match funds on withholding).

It works different for 1099 (lease ops and owner ops) - who can still do the deductions - but they are done a little differently. SMART LEASE/OWNER OPS - will form a SUB-S CORPORATION (or LLC), and take advantage of every write-off they can.

But again - it comes down to PERSONAL PREFERENCE. I personally, wouldn't take it.

I'd rather have more SS income, especially since I worked "off the books" for 1/2 of my adult life - and my accountant makes my taxable income somewhere near the poverty level (keeping in mind I don't dive, I run my own IT business) - which is good from a "legally minimizing my taxes paid", but not good from a "I'll retire at 67, with only $1,200 a month in social security" (so I might have to go back to SELLING DOPE).

The "simplified standard deduction" of $12K under the current code, is 2X the previous standard deduction of $6.3K - where it would have been of greater advantage to itemize (and be able to include additional job-related expenses). Under the previous code, you (almost) HAD TO ITEMIZE - because your per diem was still "tax liable" on your return (as a reimbursed expense), you just didn't get taxes WITHHELD. But your deduction(s) would have greatly exceeded the "standard deduction", greatly decreased your "adjusted gross income", and greatly increased your refund.

I know - sounds complicated. It's really not that complicated.

Take Per Diem - slightly larger net check - less refund - less social security. Don't - slightly smaller check - more refund - more social security.

Not trying to make the company sound like "the evil empire" - but THEY GET THE BIGGER ADVANTAGE by paying you a portion of your CPM as per diem - they are IN NO WAY DOING THE DRIVER SOME HUGE FAVOR...

Rick