Taxes Vs Mileage?

So at my previous job CRST, I was on per diem and never really noticed this but has anyone noticed a certain mileage that once you pass taxes really beat you down?

I get my settlement statements every Wednesday so today I noticed I really got taxed pretty hard and made less than I had when I ran less miles.. Just wanted to know if it's like that for others.

So at my previous job CRST, I was on per diem and never really noticed this but has anyone noticed a certain mileage that once you pass taxes really beat you down?

I get my settlement statements every Wednesday so today I noticed I really got taxed pretty hard and made less than I had when I ran less miles.. Just wanted to know if it's like that for others.

Not enough info to be sure what's going on, but I'll toss out two things that seem possible.

Sounds like you might have jumped into a new tax bracket.

OR

If you aren't having per diem expenses removed pre-tax from your income total, that will definitely make a big difference in taxes paid.

New tax bracket sounds like the cause.

I'm not receiving per diem with this job and only noticed it this check with a lot of miles.

When I've worked other jobs I would figure out at what amount of overtime would it be less beneficial for me to work and stay below that number so.. learning curve again I suppose.

Now - keep in mind - at the END OF YEAR, when you do your taxes and TAKE THE PER DIEM DEDUCTION (as discussed numerous times here, you don't have to get PAY on a per diem basis, to take the deduction), you will be in a much lower bracket.

The issue is (and where taking per diem pay might help out with your WEEKLY NET) that payroll tax deductions are based on what your tax bracket will look like at the GROSS PAY ANNUALLY that you are getting. It doesn't take into account, that you are a trucker and you will be taking the deduction off on your 1040 (actually, itemized deductions).

So running good miles, is going to get more taxes withheld from your check - because it "looks like" you are making more than you did when you were getting a portion of your pay as per diem.

The flipside of this, is that you will be getting A LOT MORE BACK in your refund, because of the INCREASED WITHHOLDING.

One way around this - and I would talk to an accountant who can do the "what if calculation" for you - is to take MORE EXEMPTIONS on your IRS Form W-4 (Withholding Allowance Certificate) so LESS TAXES are deducted from your check.

There's a "break even point" to be found here - where the number of exemptions you take - will "even the score" of what your gross/net pay looked like with per diem. You WANT TO BE CAREFUL not to claim TOO MANY EXEMPTIONS - otherwise, you may end up OWING TAX at the end of the year.

Personally - despite hating the notion of giving Uncle Sam an "interest free loan", until I get my return back - I LIKE THE IDEA of getting a chunk of cha-ching back come tax time.

YMMV - and whether or not you have kids and other obligations that require you to get more take home in your check can be a large deciding factor.

Rick

Am I to understand that you are saying you can take the per diem deduction even if you are on per diem pay? I'm confused, that doesn't sound right to me.

I thought if you are on per diem that you cannot take the deduction because you are getting your per diem on a weekly basis.

Or did I just totally misunderstand what you wrote?

Am I to understand that you are saying you can take the per diem deduction even if you are on per diem pay? I'm confused, that doesn't sound right to me.

I thought if you are on per diem that you cannot take the deduction because you are getting your per diem on a weekly basis.

Or did I just totally misunderstand what you wrote?

Totally.

Per Diem PAY - is a portion of your pay, that is UNTAXED (that is - taxes are NOT WITHHELD).

The Per Diem DEDUCTION - is the deduction you take ON YOUR TAX RETURN, that you are ENTITLED TO TAKE - to cover your meal/lodging expenses when you are away from home. Every day you are away for a full day - is 80% of $63 per day ($50.40). So if you are out OTR for 300 days a year (KEEP YOUR LOGS TO PROVE THIS IN CASE OF AUDIT) - you can DEDUCT $15,120.00 from your TAXABLE INCOME to further reduce your TAX LIABILITY. There's A LOT MORE THINGS that are deductible. But deducting 50% of your TAXABLE INCOME LIABILITY just through the PER DIEM DEDUCTION is a pretty penny (using the $35K a year you anticipate as a new driver).

YOU CAN TAKE THIS DEDUCTION (and SHOULD) EVEN IF YOU ARE NOT PAID ON A PER DIEM BASIS.

You MUST take this deduction if you ARE PAID ON A PER DIEM BASIS - because the portion of your check that is PER DIEM - IS UNTAXED - BUT NOT NON-TAXABLE.

Again - the portion of your pay that is on your check, that is "Per Diem" - is not NON-TAXABLE INCOME - it is UNTAXED INCOME. It must be DECLARED ON YOUR 1040 AS INCOME - and then is DEDUCTED FROM YOUR TAXABLE INCOME by taking the PER DIEM DEDUCTION.

Rick

I'm really glad this thread got opened up because I did not know that the deduction /has/ to be claimed for per diem. Thanks for the input, Rick

I'm really glad this thread got opened up because I did not know that the deduction /has/ to be claimed for per diem. Thanks for the input, Rick

Rick, I think he is saying his prior company provided per diem pay above and beyond wages, not automatically deducting per diem from taxable wages like I think most major carriers do.

That would make a big difference in how his taxes were handled. Especially if his current company completely ignores per diem and makes it the responsibility of the driver to calculate it.

Per Diem made completely the responsibility of the driver to calculate would make a very large difference in tax deducted from pay, but at the end of the year it might mean a very fat paycheck from Uncle Sam, if he didn't overclaim deductions to compensate.

One thing to remember is that you must have a domicile in order to claim per diem. You must have someplace where you pay rent, etc. If you don't (like me) you cannot claim it. My company has no provision for this so it will cost me at the end of the year. Or it would if the alimony I pay didn't offset it. 😐