Per Diem For Company Drivers

In another thread, G-Town and Old School have stated in the past day that there is no benefit to a company driver to take per diem pay. I'd like to have them explain why they believe that to be the case.

Old School states he has 30 years of business experience, etc. I've only owned my own business for 28 years! But I did take a college income tax accounting course (many years ago) and have closely reviewed thousands (probably tens of thousands) very closely in a lending career that spanned 26 years with many of those years involved with auditing. I use a CPA for filing my income taxes as well as that of a few other family members and trusts that I administer/oversee and she has agreed that per diem pay for Michael is a useful benefit.

Schneider has a pretty good explanation of per diem here: Schenider Per Diem Information and that page includes a link to another page that also explains benefits to drivers.

Our son Michael has no income tax deductions other than the standard deduction so per diem is a valuable benefit for him. His slightly lower 401k matching, vacation pay, and Social Security benefits are more than offset by increased take-home pay which he is investing. He wants to save up enough to be able to buy a house and pay cash for it! :) He's actually doing very well in working towards his lofty goal. I have some doubts that he will ever collect any Social Security benefits. Old folks like G-Town, Old School, and myself will surely get some benefits, though I think there is some chance that our supposed representatives in Congress will find a way to reduce mine since I have other significant income sources. If someone was trying to maximize their top quarters for Social Security benefits, I think a driver would still be better off saving the income tax savings from receiving some of their compensation in the form of per diem pay.

Per diem pay also benefits the companies also, with less Social Security and Medicare taxes, slightly lower vacation pay, etc.

Hi Harvey,

Look. Per diem is for 1099 independent contractors. Period. It's a write off you get for each day you spend away from home.

These companies that offer this stuff call it per diem as a smoke and mirror tactic to recruit drivers. I wish the government would step in and make them call it something else.

I'm not a cpa, but to me if something isn't taxed on your paycheck it's going to be reflected at the end of the year and you're going to have to pay the taxes anyway.

Sid, the term per diem is appropriate for W-2 employees as well. When I worked as a traveling auditor, some of the members on my team had previously been paid a per diem for daily meal expenses. This term is used by the IRS, no smoke and mirrors involved. As a 1099 driver, you don't get a per diem advance necessarily but can take the per diem deduction as a business expense, that isn't something I'm discussing here.

https://www.irs.gov/pub/irs-regs/perdiemfaq%26a.prn.pdf

Hi Harvey,

Look. Per diem is for 1099 independent contractors. Period. It's a write off you get for each day you spend away from home.

These companies that offer this stuff call it per diem as a smoke and mirror tactic to recruit drivers. I wish the government would step in and make them call it something else.

I'm not a cpa, but to me if something isn't taxed on your paycheck it's going to be reflected at the end of the year and you're going to have to pay the taxes anyway.

Harvey here is what I’d like you to do:

What is your son’s CPM rate?

What is the per diem rate?

We’ll explain how he might be losing money on this deal. And that’s if it’s even fully disclosed on his stub. (And therein lies the issue)

Me personally?

I want full control over my finances. End of discussion. Difficult to reconcile pay with a per diem rate. Besides my accountant advised me not to take it. So I never did when I was running dedicated, sleeping 4-5 nights per week on the truck.

I trust him...didn’t request any more than a basic reason... which I’ve already provided.

And can we please NOT confuse this with being paid a per diem. I travelled extensively before I retired from technology consulting and was paid tax free money to cover food and other OOP expenses while on the road. That is not what this is... not even close.

Harvey,

The per diem was changed a few years ago so that if you're a w2 you can no longer take the deduction.

When I started in trucking as a company driver 7 years ago it was allowed.

And Schneider should be ashamed of themselves for saying they pay 40k for running 2250 miles per week.

G-Town, Michael gets paid a total of 64 CPM (as long as he gets his loads delivered on time and paperwork scanned, which is the case 95% of the time), and 17 CPM of that is paid as per diem.

You don't have total control over your finances, the IRS and stage taxing authorities tax your taxable wages and there is nothing you can do about that other than reduce your taxable wages. Per diem pay for a W-2 employee is not taxable. Our CPA agreed that this was a valuable benefit. In the Schneider link I included in my original post, Schneider gives two examples of pay, one without per diem and one with per diem. The benefits are significant. Schneider also state that they bear the full risk of any audit expense.

Sid, I am well aware that the IRS rules changes, that is exactly why non-taxable per diem pay is a valuable benefit to employees. It is not a deduction as a 1099 driver takes, it is non taxable pay. Schenider is a big company, do you think they would be misleading drivers and opening themselves up to lawsuits from employees by mispresenting this in writing on their web site? They are audited by large accounting firms and this would be stopped if not legal.

I don't know what rock you've been living under but mega carriers get sued ALL THE TIME for stuff like this and they do pay millions.

Unfortunately, they probably get away with 10s of millions doing it so why stop.

Take it, don't take it. Doesn't bother me. Have a good night.

CRST takes 12 cents of your CPM. gives you back 10 cents, keeps the 2 cents for "Admin services" So right off the bat when I started with them in Sept. 2019, I opted out of that crap....Started @ 31 cpm , then minus the 12 cents, left me at 19 per mile pfffft lol Told em then I want every dang penny I earn in MY pocket, starting out so low anyways. Yeah and plus give them the benefit of paying in less soc. sec. taxes matching mine? uh NO THNX lol

Harvey,

I'm looking at the Schneider link for per diem pay. Isn't Schneider being a bit misleading because you'll get more taxes back with standard pay, which it's not accounting for?

Also, they are taking 2 cents away.

Harvey,

I'm looking at the Schneider link for per diem pay. Isn't Schneider being a bit misleading because you'll get more taxes back with standard pay, which it's not accounting for?

Also, they are taking 2 cents away.

There is nothing misleading with Schneider's presentation. The only time you get more of a refund is if you have given uncle same an interest free loan by having too much withheld. In both examples, the same withholding level is used, the decrease in taxes is because of a decrease in taxable pay.

Even with Schneider charging 2 CPM , the net pay to the driver is 16% higher. I don't think it's right that they charge for this since they are also saving money on Social Security and Medicare taxes but this is disclosed in their example, so not misleading. My son Michael is not charged for the service at Marten as far as I can tell, he gets 17 CPM paid to him as per diem in addition to 47 CPM in taxable pay.