What Is The Difference In Per Diem And Straight Pay Truck Drivers?

Why take the per-diem? If it just about wanting money in your check and getting less refund at the end of the year, why not just increase the number of exemptions you take. That way you still get the money in your check and you don't have to pay the 1 or 2 CPM to the company.

An account friend of mine told me a very long time ago to max out my exemptions. I said I would get no refund. He said, "That is correct." He said when you raise the exemptions and see more money in your check, "Take the extra and put it in an IRA or 401K like it was not there." At the very least put it in a money market account. That way the money is making interest instead of sitting in the government coffers until you get a refund. You get no interest on that money while the government is holding it.

So, again, I ask why would it ever be smart to take per-diem if the company charges a fee to do it? Why not just increase your exemptions?

What am I missing?

You're not missing anything. Most people just don't realize they can put as many exemptions as they want on their W-4. If they underpay then they get penalized and if they overpay then they gave the Federal government an interest free loan.

I think you could hash and re-hash the positives and negatives of per-diem pay for weeks on end, but as far as I'm concerned it keeps the money you've earned in your pocket instead of having the government hold it for you until they decide if it really belongs to you or not. I was an employer for thirty years before I started this truck driving career, and I can tell you that I paid a fortune in payroll taxes over those years. To be fair, most of it wasn't even my money, it was money my employees had earned that was deducted from their pay, but even for a small business like mine the dollar amount added up to be an astronomical amount each year. If you can get it now and not have to wonder if you are going to get it later or not, I say take it now.

The benefit to these trucking companies when paying per diem is that they have less dollars to pay for their portion on matching the social security taxes. When you have a couple of thousand or more employees out there driving and getting a good paycheck each week this amounts to a tremendous savings in tax dollars spent by the company.

One company I know pays .05/mile less for per diem, than straight pay, however, they offer a very good vacation bonus to the per diem drivers.

So, again, I ask why would it ever be smart to take per-diem if the company charges a fee to do it? Why not just increase your exemptions?

What am I missing?

There are a lot of people who can't save a dime if it hits their hands or their bank account. Every penny that comes in goes out. So paying more in taxes and using your tax refund like a savings account is an excellent idea compared to not saving money at all. And I know - the financial people say, "Don't give the government a tax-free loan. Take the money and invest it during the year." Well that's baloney in the end. I mean, do the math. How much interest are you making on such a tiny amount of money each week? In the end - next to nothing. Now if you were talking about millions of dollars every year that would be a much different story. But if using the tax refund system as a savings account works well for you then by all means do it! It may not win an award for the most perfectly engineered plan on Earth but it will be very effective. You can't spend money the government is holding for you.

Yeah Brett nailed it. It's just a forced savings plan for people without self control when it comes to money. It's not a bad thing, some people are probably better off with the government holding their money. Only you can evaluate what is better for you.

For me it's a mental game. I don't need the extra money during the year and I really enjoy $3000 plus during tax time that comes back.

It is my understanding that if you drive a company truck and are considered a company employee, then any per diem claimed at tax time would have to calculated on your Schedule A as itemized expenses. The standard deduction for married couples in 2015 is $12,600. I don't have mortage interest so I am thinking that my per diem expenses would not exceed the regular standard deduction so I would certainly be better off having the company pay me per diem.

Am I reading this right?

Thanks all!

It is my understanding that if you drive a company truck and are considered a company employee, then any per diem claimed at tax time would have to calculated on your Schedule A as itemized expenses. The standard deduction for married couples in 2015 is $12,600. I don't have mortage interest so I am thinking that my per diem expenses would not exceed the regular standard deduction so I would certainly be better off having the company pay me per diem.

Am I reading this right?

Thanks all!

Daved - There are other employee expenses you can deduct, that have not been employer reimbursed), such as tools, paper towels, parts, etc. Also as previously mentioned truck drivers are allotted 80% of the government per-diem rate (which is currently $59). What I noticed is that the companies that do offer the per-diem option, do not offer the full 80% (one company offers $44) so the driver can deduct an additional $3.20 when they itemize their taxes. If a driver is out 100, 200 or 300 days in a year that is $320, $640, $960 additional dollars back in your pocket. So I ask, why would you not want to itemize and receive all the credits and deductions you can. If the driver itemizes for full per-diem for the year that's $14,160 for 300 days on the road.

I currently work for a company (non-transportation), and they give me 75% of per-diem rate and end of year I itemize the remaining 25%. Highly recommend consult a tax-advisor that specialize in trucking taxes.

R/Scott

Whenever a company offers a benefit..be very afraid. Per diem gets paid up front,but company doesnt pay ss tax,on that income. At the end of the year,you can deduct $47.20 per day,for every day out,then subtract that amount,from your gross wages,pay less tax,with company paying full taxes into your ss benefits. Your tax refund will be higher,and you get the money,in a lump sum. Owner ops would be in a whole different battle..not subject to this reply.

Why take the per-diem? If it just about wanting money in your check and getting less refund at the end of the year, why not just increase the number of exemptions you take. That way you still get the money in your check and you don't have to pay the 1 or 2 CPM to the company.

An account friend of mine told me a very long time ago to max out my exemptions. I said I would get no refund. He said, "That is correct." He said when you raise the exemptions and see more money in your check, "Take the extra and put it in an IRA or 401K like it was not there." At the very least put it in a money market account. That way the money is making interest instead of sitting in the government coffers until you get a refund. You get no interest on that money while the government is holding it.

So, again, I ask why would it ever be smart to take per-diem if the company charges a fee to do it? Why not just increase your exemptions?

What am I missing?

That shell game is going to come crashing down soon.