A Year Of Per Diem Pay - The Results

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Errol V.'s Comment
member avatar

I started a Per Diem deduction with Swift in January last year, with the plans of publishing the results on Trucking Truth.

Well, here's the results. The gross pay was taken from my 2016 W2s, the miles are from my paychecks – I keep a spreadsheet of them all. (Yes, it's part of my OCD)

The bottom line, with Per Diem, over the year, I ended up with about $1,700 extra cash in my pocket. This is not part of a tax refund, this is the result of taking the Per Diem offer from Swift.

I used TurboTax to do my taxes. I ended up with itemized deductions, but there is nothing in the “Job Expenses” section at all. I did a search for “Per Diem” in Turbo Tax, and got almost no results. My taxes have been sent in and accepted by the IRS.

Here's my information. The tax rate is a national average, everybody's is different. Yes, there is a $0.08 difference between Per Diem and non-Per Diem CPM pay, but I still come out ahead.

2016 With Per Diem

2016 No Per Diem

W2 Gross Pay less Per Diem

Per Diem Pay

W2 Gross Pay

Per Diem

31,951.74

8,407.66

39,717.05

0.00

Tax Rate 14.3%

-4,569.10

0.00

-5,679.54

0.00

27,382.64

8,407.66

34,037.51

0.00

Net + Per Diem paid

35,790.30

34,037.51

Extra cash in pocket

$1,752.79

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

Per Diem:

Getting paid per diem means getting a portion of your salary paid to you without taxes taken out. It's technically classified as a meal and expense reimbursement.

Truck drivers and others who travel for a living get large tax deductions for meal expenses. The Government set up per diem pay as a way to reimburse some of the taxes you pay with each paycheck instead of making you wait until tax filing season.

Getting per diem pay means a driver will get a larger paycheck each week but a smaller tax return at tax time.

We have a ton of information on our wiki page on per diem pay

Roadpilot's Comment
member avatar

Thanks for posting this. I was gonna ask about whether the whole per diem deal was worth it and the tax implications of it.

Overall this looks like a win for the drivers that choose this option

Per Diem:

Getting paid per diem means getting a portion of your salary paid to you without taxes taken out. It's technically classified as a meal and expense reimbursement.

Truck drivers and others who travel for a living get large tax deductions for meal expenses. The Government set up per diem pay as a way to reimburse some of the taxes you pay with each paycheck instead of making you wait until tax filing season.

Getting per diem pay means a driver will get a larger paycheck each week but a smaller tax return at tax time.

We have a ton of information on our wiki page on per diem pay

OOS:

When a violation by either a driver or company is confirmed, an out-of-service order removes either the driver or the vehicle from the roadway until the violation is corrected.

Errol V.'s Comment
member avatar

I forgot to add this: your official gross income will be less.

1. A smaller contribution to your Social Security account.

2. For some that have legal obligations based on your income, the Per Diem part is not included in your income. Depending on your situation, you may smile, you may frown.

Per Diem:

Getting paid per diem means getting a portion of your salary paid to you without taxes taken out. It's technically classified as a meal and expense reimbursement.

Truck drivers and others who travel for a living get large tax deductions for meal expenses. The Government set up per diem pay as a way to reimburse some of the taxes you pay with each paycheck instead of making you wait until tax filing season.

Getting per diem pay means a driver will get a larger paycheck each week but a smaller tax return at tax time.

We have a ton of information on our wiki page on per diem pay

Ryan R.'s Comment
member avatar

Are you accounting for the standard deduction you can take off without per diem?

Per Diem:

Getting paid per diem means getting a portion of your salary paid to you without taxes taken out. It's technically classified as a meal and expense reimbursement.

Truck drivers and others who travel for a living get large tax deductions for meal expenses. The Government set up per diem pay as a way to reimburse some of the taxes you pay with each paycheck instead of making you wait until tax filing season.

Getting per diem pay means a driver will get a larger paycheck each week but a smaller tax return at tax time.

We have a ton of information on our wiki page on per diem pay

Errol V.'s Comment
member avatar

Are you accounting for the standard deduction you can take off without per diem?

The per diem amount is not part of your compensation. It's not on your W2. If you do not have this non-taxed deduction, you are allowed to do that yourself as a tax deduction.

I believe the payroll Per Diem is a legal end-run around taxes for your business related travel expenses. Sort of like the Health Savings Account deductions come out of your paycheck before they are taxed, and you spend them on medical related things.

Yeah, some legal mumbo jumbo: Tax Professional not me, just a simple truck driver be I.

Per Diem:

Getting paid per diem means getting a portion of your salary paid to you without taxes taken out. It's technically classified as a meal and expense reimbursement.

Truck drivers and others who travel for a living get large tax deductions for meal expenses. The Government set up per diem pay as a way to reimburse some of the taxes you pay with each paycheck instead of making you wait until tax filing season.

Getting per diem pay means a driver will get a larger paycheck each week but a smaller tax return at tax time.

We have a ton of information on our wiki page on per diem pay

Rick S.'s Comment
member avatar

TurboTax Per Diem Instructions

I'm gonna do this as briefly as possible. (yeah, right).

I believe the payroll Per Diem is a legal end-run around taxes for your business related travel expenses.

It's actually an "end run" for THE COMPANIES, to avoid matching SS/FICA on your wages.

Income from PER DIEM - MUST BE REPORTED AS INCOME.

(and if you didn't claim this income Errol, and you get audited, they WILL JAM YOU UP FOR IT).

Per Diem is not UNTAXABLE INCOME - it is income for which TAXES HAVE NOT BEEN WITHHELD.

If you've been getting it for the entire year - you take the PER DIEM DEDUCTION WHEN YOU ITEMIZE, and it will MORE (way more) than offset the additional income you have been paid that has not had taxes withheld.

You can also (and SHOULD) take the "per diem deduction", even IF YOU DON'T GET PAID PER DIEM WAGES as a portion of your income.

We do this discussion EVERY TIME THIS COMES UP.

It is NOT FREE MONEY, YOU MUST CLAIM IT AS INCOME. It will NOT APPEAR in Box 3 "Social Security Wages" - but it will typically appear in the total of Box 1 "Wages, Tips & Other Compensation", along with a note in one of the "other" boxes on the bottom of the W2 (typically 14).

Example: My business pays for my health insurance. This does not show up in Box 3 (I don't pay withholding taxes on it), but does show up in Box 1 (the total/gross income) - and I DEDUCT IT from my taxes, so that it is not TAXED INCOME. It is INCLUDED on Line 7 of my 1040, and deducted on line 29 - so it is not part of Line 37 (adjusted gross income).

Per Diem deductions would be part of SCHEDULE A - Itemized Deductions - which appears on Line 40 - and gets subtracted from Line 38 to arrive at TAXABLE INCOME (Line 43). Line 43 is what you look up in the tax tables and pay taxes on.

Rick

DOT:

Department Of Transportation

A department of the federal executive branch responsible for the national highways and for railroad and airline safety. It also manages Amtrak, the national railroad system, and the Coast Guard.

State and Federal DOT Officers are responsible for commercial vehicle enforcement. "The truck police" you could call them.

Per Diem:

Getting paid per diem means getting a portion of your salary paid to you without taxes taken out. It's technically classified as a meal and expense reimbursement.

Truck drivers and others who travel for a living get large tax deductions for meal expenses. The Government set up per diem pay as a way to reimburse some of the taxes you pay with each paycheck instead of making you wait until tax filing season.

Getting per diem pay means a driver will get a larger paycheck each week but a smaller tax return at tax time.

We have a ton of information on our wiki page on per diem pay

Errol V.'s Comment
member avatar

Rick adds the detail:

TurboTax Per Diem Instructions

I'm gonna do this as briefly as possible. (yeah, right).

double-quotes-start.png

I believe the payroll Per Diem is a legal end-run around taxes for your business related travel expenses.

double-quotes-end.png

It's actually an "end run" for THE COMPANIES, to avoid matching SS/FICA on your wages.

Income from PER DIEM - MUST BE REPORTED AS INCOME.

It is NOT FREE MONEY, YOU MUST CLAIM IT AS INCOME. It will NOT APPEAR in Box 3 "Social Security Wages" - but it will typically appear in the total of Box 1 "Wages, Tips & Other Compensation", along with a note in one of the "other" boxes on the bottom of the W2 (typically 14).

"end run for the companies": Glass-half-full-web.jpg

"Per Diem as Income": Yes, there are two ways to handle per diem. One way is on your own, via Schedule A itemized deductions.

The other way is for your company to either just give you a certain allowance for each day (that's the English translation of the Latin per diem) or pay you back for receipts you submit. These payments are not part of you income, and would be deducted anyway if they did show up in W2 box 3. My Swift W2 has the same number in all three boxes: Wages, SS income, and Medicare wages.

"Free Money" I wish! The idea of Per Diem is your company gives you travel expenses, since they are tax deductible anyway (IRS calculates at $59/day) and that is a refund of your expenses. Business travelers who get a flat rate per diem (no receipts needed) who know how to play the system can eat at Mickey D's and food trucks a lot and make some extra pocket money.

DOT:

Department Of Transportation

A department of the federal executive branch responsible for the national highways and for railroad and airline safety. It also manages Amtrak, the national railroad system, and the Coast Guard.

State and Federal DOT Officers are responsible for commercial vehicle enforcement. "The truck police" you could call them.

BMI:

Body mass index (BMI)

BMI is a formula that uses weight and height to estimate body fat. For most people, BMI provides a reasonable estimate of body fat. The BMI's biggest weakness is that it doesn't consider individual factors such as bone or muscle mass. BMI may:

  • Underestimate body fat for older adults or other people with low muscle mass
  • Overestimate body fat for people who are very muscular and physically fit

It's quite common, especially for men, to fall into the "overweight" category if you happen to be stronger than average. If you're pretty strong but in good shape then pay no attention.

Per Diem:

Getting paid per diem means getting a portion of your salary paid to you without taxes taken out. It's technically classified as a meal and expense reimbursement.

Truck drivers and others who travel for a living get large tax deductions for meal expenses. The Government set up per diem pay as a way to reimburse some of the taxes you pay with each paycheck instead of making you wait until tax filing season.

Getting per diem pay means a driver will get a larger paycheck each week but a smaller tax return at tax time.

We have a ton of information on our wiki page on per diem pay

ChosenOne's Comment
member avatar

The question is, after deductions your taxes should have been the same. Making trucking gets a pass, but my Tax Attorney tells me the IRS only allows me to take the standard deduction of $56 per day, unless I itemize and can provide receipts showing I exceeded $56 per. Of course if you are only out 1/2 a day, the $56 gets gets cut in half for that day. If you think about it, you should be able to adjust your withholding taxes to a lower rate if you take the $56, then you would get the $$$ up front, and the company would have to pay SS, Medicare, and disability at the higher rate. I am surprised the IRS allows a cpm deduction that exceeds the maximum amount without receipts.

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

OWI:

Operating While Intoxicated

Errol V.'s Comment
member avatar
The question is, after deductions your taxes should have been the same.

That's the theory. But if your company gets you a flat per diem for each day you are on the road, say $59, what if you spent $23 to eat that day. Are you going to return the extra cash? That's behind my comment about Mickey D's and food trucks above.

The idea of per diem flat rate is to simplify things for everyone involved.

Per Diem:

Getting paid per diem means getting a portion of your salary paid to you without taxes taken out. It's technically classified as a meal and expense reimbursement.

Truck drivers and others who travel for a living get large tax deductions for meal expenses. The Government set up per diem pay as a way to reimburse some of the taxes you pay with each paycheck instead of making you wait until tax filing season.

Getting per diem pay means a driver will get a larger paycheck each week but a smaller tax return at tax time.

We have a ton of information on our wiki page on per diem pay

Ryan R.'s Comment
member avatar

It appears to me that you can take $63 as a standard meal allowance IRS 2016 Publication 463

If this applies, you can claim a standard meal allowance of $63 a day ($68 for travel outside the continental United States) for travel in 2016.

I don't know. I've never had to do taxes as a truck driver yet, and while I thought I generally understood, this thread is confusing me.

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