Per Diem..worth It In Today's Trucking World?

Everyone's situation is different and I do not feel anyone should make a recommendation to someone else. It's fine to point out the pros and cons, but unless you know whether the person made a lot of money the previous 35 years of emloyment ( for social security purposes), whether they take the standard deduction or itemize, etc... you are doing folks a disservice by making a recomendation.

I will not use per diem. My company lowers cpm by .01, but that is not the reason I choose not to do it. I own property and itemize my taxes. I also have other pre tax deductions that I take. My tax bracket is not going to change by taking per diem.

I have no idea whether someone else should do it or not.

Your tax bracket doesn't change by taking per diem pay (or not taking it). You are still GROSSING the same amount of income. Actually grossing LESS - if the company steals 2cpm admin fee.

Your tax bracket WILL CHANGE, by the additional deduction of taking the per diem DEDUCTION (which you are certainly entitled to take). Who WOULDN'T want to reduce their taxable income by $10-15K a year?

I simply point out for MYSELF - why I wouldn't take it. Anyone else is free to do as they please. Everyone else's financial situation is bound to be different.

In the short & long run - the only advantage to taking per diem pay - is more net income in your paycheck. At the potential disadvantage of a greater tax lability.

Rick

One thing to consider if your company pays you per diem how much are they charging you to administrate your per diem?

Never honestly understood why, when the driver is DOING THE COMPANY A FAVOR by taking per diem - that the company CHARGES THEM FOR IT.

The COMPANY is the one that makes out here - by not having the contribute their 7.5% share (in the form of ss/med taxes). Why they would charge the driver for that privilege is really questionable.

Personally - for the few extra $$'s would net by taking per diem - I'd much rather get the $$ back at the end oath letting the IRS hold my money for me).

Rick

I think the company want you to believe you are making more money then you actually are on your paychecks. They hope most drivers will not delve too deep in how much they actually make per check. And most of us like to see more dollars on each check. I would think that they might get a better tax break paying it out to drivers then if drivers declared their full per diem each year.

Despite having a college degree in finance I have spent the last 40 years as a painting contractor. Keep the money in your pocket for your use til the last minute. I didn't even send in quarterlies. Despite the penalties I still did better having the money in my pocket to use / invest.. Bad idea if you can't handle money and will not have the lump sum that you will owe. To a finance guy, nobody sounds dumber than somebody who brags about a large tax refund. You gave your money to the govt to use interest free all year!

To a finance guy, nobody sounds dumber than somebody who brags about a large tax refund

....except someone who managed to put nothing in their savings account at all for an entire year.

I think allowing more taxes to be taken out functions as an excellent savings account for people who aren't good at managing their money and don't have a lot of discipline when it comes to savings. If you don't have access to it, you can't spend it.

When you're talking on the scale of the average household, the idea that you're giving the Government an interest free loan is nonsense. WIth today's record low interest rates are you really losing out on interest? No, you're not. You'd be lucky to accrue $10 per year in interest in a small savings account at today's rates for the average family. I think allowing more taxes to be taken out so you'll save that money for next year is a solid plan for most people.

Like everything, there's the ideal theory about how things should work and then there's the practicality of it. Like you go to the doctor because you have high blood pressure and they give you pills instead of telling you to exercise and eat healthy because they know 95% of the people out there will take a pill but simply won't exercise or eat healthy. Same goes with the idea of not giving the government an interest free loan. The reality is that most people are going to spend whatever they have access to. If you want people to have an effective savings account the best bet is to let the Government take a little bit more out in taxes and give it back next year.