Crash Course On Per Diem

Good day to everyone! So I heard a lot of this while I was in school. Few of my teachers brought it up but we never got into it in detail. I believe I have a vague understanding of what it is. I know I can get a better understanding from everyone here at TT. Also does a company ask the employee how they would like to accept this on a daily,weekly, monthly or yearly bases. Is it best to take it upfront or to take it in a lump sum at end of year. If you don't say anything about does the company just do how they feel with it? Thanks to anyone who replies in advance. ✌🏼️

I have "heatd" that some companies require it? But honestly unsure. My company will do either way and to do perdiem you simply fill out a form and turn it into payroll.

That said, my company calculates it by the load assignment on our pay settlement sheets. I did not initially choose perdiem however looking at my ytd tax withholding, i changed to perdiem a couple months ago because my withholding was already well above my income tax that would be required by years end. I opted to keep that excess in my pocket. I will switch back to "regular" withholding at the first of the year, rinse and repeat lol.

Perdiem is basically untaxed income to cover expenses (as allowed by the irs) when you work away from home. I will be unable to itemize my road expenses when i file my 2016 fedaral return, which wasnt a big deal to me but may be to some.

To calculate perdiem, my company figures my gross pay at 6 cpm LESS THAN what i actually earn (only 6 cpm less because i team and our normal perdiem of 13 cpm is split between my codriver) They then deduct any tax exempt insurance premiums, tax exempt 401k contributions, then calculates the tax withholding, deducts that amount as well as any non exempt insurance premiums and cash advances. Then they ADD back in any reimbursement receipts (like tolls, etc. that i spent any advance on, and last but not least, the 6 cpm that was exempt from tax withholding.

Perdiem WILL REDUCE your taxable income. Things to consider is it will also negatively affect your reportable income should you apply for a mortgage or vehicle loan as well as social security or unemployment benefits.

At this point in my life, with my children being grown and no longer eligible for a child tax crefit, as well as having no plans to apply for a mortgage or vehicle loans, I use perdiem and 401k to completrly eliminate my tax liability. Honestly, with this type of planning, i have not paid federal income taxes in over 10 years lol. I literally am refunded every penny plus other tax "credits" i qualify for each year when i file. I do incur state taxes and pay a small amount there. If you are unsure what would be best for your personal situation, speak to a tax professional who is preferably a CPA as well as a Certified Financial Planner.

I hope this helps you at least undetstand how it works. To utilize perdiem, you MUST MAINTAIN A RESIDENCE.

This is a recent per diem discussion we had here: Recent Per Diem Discussion

To answer your questions directly: does a company ask the employee how they would like to accept this on a daily,weekly, monthly or yearly bases. Per diem is paid however the company does it's pay periods - weekly/bi-monthly. It is a certain CPM of your mileage pay. Is it best to take it upfront or to take it in a lump sum at end of year. See above answer - there's no "lump sum" - it's a portion of your CPM pay. If you don't say anything about does the company just do how they feel with it? Some companies make it mandatory - some give you the option. Read the responses on some of the other threads, and decide if you want to do so (if the company gives you the choice).

Rick

Thanks Sue! Really appreciate the info. ✌🏼️

I have "heatd" that some companies require it? But honestly unsure. My company will do either way and to do perdiem you simply fill out a form and turn it into payroll.

That said, my company calculates it by the load assignment on our pay settlement sheets. I did not initially choose perdiem however looking at my ytd tax withholding, i changed to perdiem a couple months ago because my withholding was already well above my income tax that would be required by years end. I opted to keep that excess in my pocket. I will switch back to "regular" withholding at the first of the year, rinse and repeat lol.

Perdiem is basically untaxed income to cover expenses (as allowed by the irs) when you work away from home. I will be unable to itemize my road expenses when i file my 2016 fedaral return, which wasnt a big deal to me but may be to some.

To calculate perdiem, my company figures my gross pay at 6 cpm LESS THAN what i actually earn (only 6 cpm less because i team and our normal perdiem of 13 cpm is split between my codriver) They then deduct any tax exempt insurance premiums, tax exempt 401k contributions, then calculates the tax withholding, deducts that amount as well as any non exempt insurance premiums and cash advances. Then they ADD back in any reimbursement receipts (like tolls, etc. that i spent any advance on, and last but not least, the 6 cpm that was exempt from tax withholding.

Perdiem WILL REDUCE your taxable income. Things to consider is it will also negatively affect your reportable income should you apply for a mortgage or vehicle loan as well as social security or unemployment benefits.

At this point in my life, with my children being grown and no longer eligible for a child tax crefit, as well as having no plans to apply for a mortgage or vehicle loans, I use perdiem and 401k to completrly eliminate my tax liability. Honestly, with this type of planning, i have not paid federal income taxes in over 10 years lol. I literally am refunded every penny plus other tax "credits" i qualify for each year when i file. I do incur state taxes and pay a small amount there. If you are unsure what would be best for your personal situation, speak to a tax professional who is preferably a CPA as well as a Certified Financial Planner.

I hope this helps you at least undetstand how it works. To utilize perdiem, you MUST MAINTAIN A RESIDENCE.

Rick good looking out u always come thru when I need an answer. ✌🏼️

This is a recent per diem discussion we had here: Recent Per Diem Discussion

To answer your questions directly: does a company ask the employee how they would like to accept this on a daily,weekly, monthly or yearly bases. Per diem is paid however the company does it's pay periods - weekly/bi-monthly. It is a certain CPM of your mileage pay. Is it best to take it upfront or to take it in a lump sum at end of year. See above answer - there's no "lump sum" - it's a portion of your CPM pay. If you don't say anything about does the company just do how they feel with it? Some companies make it mandatory - some give you the option. Read the responses on some of the other threads, and decide if you want to do so (if the company gives you the choice).

Rick