What's Per Diem All About?

Hey guys, brand new to the forum.

I just got my Class A 2 months ago, and i'm trying to decide which company to go with.

In my research, i'm thinking about Dart, but I found a review on Glassdoor.com where a former employee said they say they'll pay you .34 cpm , but then after taking out per diem for the taxes, you end up making .28 cpm??

Can anyone shed any light on what per diem is all about?

Keep in mind - the TRUCKING COMPANY'S like per diem , because they are not responsible for "matching tax payments" for SSI/FICA. So it costs them less "out of pocket" to give you a portion of your pay this way.

But it is NOT TAX FREE MONEY (like you thought ANY MONEY was going to be TAX FREE nowadays).

It is UNTAXED INCOME (not UN-TAXABLE INCOME) - meaning the WITHHOLDING TAXES were not deducted from those amounts. For people that don't claim a lot of exemptions - this means less $$ coming back on your tax return (because you paid in less). For those with a lot of exemptions

They will STILL SHOW UP on a W-2 - as "wages and salary". Basically - the per diem you get paid (and not had taxes withheld on) "should be" offset by your deduction (and they zero out - tax-liability-wise at least).

Where you "get it back" - is either by deducting expenses or taking the "standard daily rate deduction" - which is currently $53 per day - for every day you are ON THE ROAD. http://www.irs.gov/Businesses/Trucking-Industry-Overview---Significant-Law-and-Important-Issues

Basically - the per diem you get paid (and not had taxes withheld on) "should be" offset by your deduction (and they zero out - tax-liability-wise at least).

For those of us that DO NOT MAINTAIN A HOMESTEAD - you (legally) cannot take the "per diem" or "road expenses" deductions - because they are only allowable for "away from home" days. Kinda hard to be "away from home" - if you DO NOT HAVE ONE.

Most people will never get caught by the IRS (not maintaining a homestead, but taking the deduction) - but if you get AUDITED - you will have to PROVE that you maintain one somewhere.

Taking the "standard daily deduction" is usually easier than keeping receipts for every meal and expense. But you will also have to PROVE (if audited) every day you weren't home, got paid per diem and claimed the deduction. This can likely be done with PAY STUBS - since the rucking company will match "days out" with "days paid per diem".

It's not all that complicated - but to reiterate - it's not FREE MONEY. It's $$ the company doesn't have to pay taxes on. Does it help with expenses - since it comes as an "advance" (in most cases), rather than on your weekly/bi-weekly/whatever paycheck. You are still getting the SAME PAY.

Rick

Per Diem (or "per day") is an "allowance" taken PRE-TAX from your paycheck that is meant to reimburse your daily expenses brought on by not being at home . . . food, shelter, other expenses . . . the company subtracts about $54 (somewhere in that range) per day ("Per Diem") and tacks it on your paycheck without paying taxes - you or the company - and this lowers your overall tax liability at years' end . . . it's an accounting thing . . . some people prefer paying taxes and getting more of a refund - a pseudo-savings account . . . others like the lower tax payments to the money grubbers - the IRS . . .

Jopa

Per Diem (or "per day") is an "allowance" taken PRE-TAX from your paycheck that is meant to reimburse your daily expenses brought on by not being at home . . . food, shelter, other expenses . . . the company subtracts about $54 (somewhere in that range) per day ("Per Diem") and tacks it on your paycheck without paying taxes - you or the company - and this lowers your overall tax liability at years' end . . . it's an accounting thing . . . some people prefer paying taxes and getting more of a refund - a pseudo-savings account . . . others like the lower tax payments to the money grubbers - the IRS . . .

Jopa

Can anyone shed any light that has worked for Dart about what that guy was saying on Glassdoor.com??

Keep in mind - the TRUCKING COMPANY'S like per diem , because they are not responsible for "matching tax payments" for SSI/FICA. So it costs them less "out of pocket" to give you a portion of your pay this way.

But it is NOT TAX FREE MONEY (like you thought ANY MONEY was going to be TAX FREE nowadays).

It is UNTAXED INCOME (not UN-TAXABLE INCOME) - meaning the WITHHOLDING TAXES were not deducted from those amounts. For people that don't claim a lot of exemptions - this means less $$ coming back on your tax return (because you paid in less). For those with a lot of exemptions

They will STILL SHOW UP on a W-2 - as "wages and salary". Basically - the per diem you get paid (and not had taxes withheld on) "should be" offset by your deduction (and they zero out - tax-liability-wise at least).

Where you "get it back" - is either by deducting expenses or taking the "standard daily rate deduction" - which is currently $53 per day - for every day you are ON THE ROAD. http://www.irs.gov/Businesses/Trucking-Industry-Overview---Significant-Law-and-Important-Issues

Basically - the per diem you get paid (and not had taxes withheld on) "should be" offset by your deduction (and they zero out - tax-liability-wise at least).

For those of us that DO NOT MAINTAIN A HOMESTEAD - you (legally) cannot take the "per diem" or "road expenses" deductions - because they are only allowable for "away from home" days. Kinda hard to be "away from home" - if you DO NOT HAVE ONE.

Most people will never get caught by the IRS (not maintaining a homestead, but taking the deduction) - but if you get AUDITED - you will have to PROVE that you maintain one somewhere.

Taking the "standard daily deduction" is usually easier than keeping receipts for every meal and expense. But you will also have to PROVE (if audited) every day you weren't home, got paid per diem and claimed the deduction. This can likely be done with PAY STUBS - since the rucking company will match "days out" with "days paid per diem".

It's not all that complicated - but to reiterate - it's not FREE MONEY. It's $$ the company doesn't have to pay taxes on. Does it help with expenses - since it comes as an "advance" (in most cases), rather than on your weekly/bi-weekly/whatever paycheck. You are still getting the SAME PAY.

Rick

Ahh, I get it now.

So what that guy was saying about Dart probably is the truth then? The amount of money they take out, equals out to be about .28 cpm?

Since I have never been employed as a driver I cant say much about the way the companies do it...

but in the construction field I have been paid per diem for almost every job I go to.

I dont know about other states but where I live per diem is untaxable income and has never shown up on my w2.

If I had per diem added as wages to my w2 I would actually have been put into a new tax bracket getting $84 a day for 6 days a week adds up to roughly 25,000 if you take a vacation and include thanksgiving and christmas and 4th of july weeks... If its closer to the hall its $56 a day instead of $84. with that said I am very thankful it is un-taxed.

Ahh, I get it now.

So what that guy was saying about Dart probably is the truth then? The amount of money they take out, equals out to be about .28 cpm?

You're not getting it.

The money is not "taken out", meaning it doesn't affect your CPM-pay-rate. Your rate stays the same - they just pay part of it as "Per Diem" to avoid the tax liability on the $$...

Rick

Keep in mind - the TRUCKING COMPANY'S like per diem , because they are not responsible for "matching tax payments" for SSI/FICA. So it costs them less "out of pocket" to give you a portion of your pay this way.

Rick

That is not the only reason the companies like per diem. Some companies, probably most, keep 1 to 3 cpm for doing the per diem. In my humble opinion it is a racket that sucks people in because the checks are higher. I in fact tried to NOT be paid per diem at one company and it was next to impossible to get them to take me off of a program that I said from the start I did not want to use.

To me its a numbers game. I do not remember the exact numbers from my previous employer but here is the basic run down. Lets say I was being paid 30 cpm. On the per diem schedule they would deduct 14cpm to be figured as non taxed (at that time) income. Of that 14 cents I actually was paid 12. So they kept 2 cpm for doing the program. When I questioned them on it I was told it was for fees they had to pay to the government.

There is a reason some companies push and sell their drivers so hard on per diem pay and it is NOT because it benefits the driver.

Woody