Per Diem Scam? Please explain the payroll calculations to me.

call payroll and have them explain it to you, then slap hubby on the back of the head for driving for .35 cpm...

 

I've seen it paid both ways. On top of the gross, or deducted from the gross then paid back. The company is calling it "Per Diem" so they have less payroll tax.

 

Sadly they are taking advantage of both your hubby and the IRS, the only one who wins when the employer does per diem this way is the employer. What they are doing is legal and to some people it looks like a good deal. You will end up with more bring home in your check because they are caculating payroll taxes on a lesser amount which saves them a lot of money as well. The employer pays an equal amount of taxes as you do so if they can reduce it they save, plus their workers comp is based on a percentage of payroll so with a lower payroll they save money there as well.

What happens to you as the driver though is not fair. You get a few more dollars each week in bring home but you lose the ability to deduct the per diem from your taxes which can be a big help if you are away from home alot and itemize your taxes. The other drawback is that your gross income shows lower which will change what you get paid if hubby gets laid off or hurt since workers comp and unemployment are based on gross pay and not bring home or other extras such as per diem allowances.

If they give you the choice to opt out of the per diem I would jump on it because if you are used to getting a refund each year from the IRS you will be shocked come tax time as there may not be enough taxes withheld at the "lower" gross pay level nor will there be as big of a refund from claiming the per diem on your own so you could end up owing tax money.

 

per diem has always been a loser for the employee and a win win for the employer.

regardless of you getting a second paycheck or not. what you described is how it has always worked. come tax time. your gross ( or net) will be less and you'll have to pay taxes on that per diem.

the government allows $68 per night out from home. but tax time only allows 80%. by having the company pay you. they pay less for your taxes. and since you got that money tax free. from payroll. you get to pay taxes direct to the irs. 20% of that $68 every night out from home.

 

http://www.irs.gov/uac/Publication-1542,-Per-Diem-Rates

Transportation rate is $59.

The company basically is take $ from your pay, taxing your pay, then adding the per diem back. You will get more per pay check since it is at a lower tax rate. What Per Diem is not taxed at pay roll time is not taxed again at end of year taxes. The company wins in this situation by paying less payroll taxes. Your end of Year Per Diem is lowered by the company.

A company will never exceed your Max Yearly Per Diem. If they do, then they are dropped out of this IRS program. So, a company paying Per Diem will always be less than what you are allowed to claim. This does not mean you are now out at the end of year out of any Per Diem allowed. Simply take what the company has paid you, deduct it from what you are allowed for max, then the difference you can still claim.

Your Payroll stubs should have what Per Diem was paid by the company for that pay period.

If your company takes out Per Diem.

Track the amount that they take out. Usually it will be broken down by load.
Keep track of the days you are out.
Home time - going/leaving - you are only allowed 75% for that day. No Per Diem while on home time.
days out x (59x80%) = max per diem allowed.
Max Per Diem - Company Per Diem = what you are allowed to still claim.
A company will never take out 100% of the Per Diem you are allowed and they cannot exceed the max Per Diem you are allowed.
The amount you are still able to claim is deducted from your Gross income.

This will affect Loans, Workers Comp, etc, etc as they look at Gross Income.

If your company does not take out Per Diem.

Keep track of the days you are out.
Home time - going/leaving - you are only allowed 75% for that day. No Per Diem while on home time.
days out x (59x80%) = max per diem allowed.
The amount you claim is deducted from your Gross income.

This will affect Loans, Workers Comp, etc, etc as they look at Gross Income.

If you know how to do a spreadsheet then you can set up by month the days you are out.

 

It doesn't affect you for loans. Someone says this every time and it's not true. Per diem pay isn't magical money that appears in your account and no one sees it. It's simply non-taxable income. It shows on your W-2. It shows on a financial summary your employer might give you when you need documentation like that for say a loan. Just because it's not taxed doesn't mean it's not reported.

Per diem is part of your gross pay and it's reported. Taxable and non-taxable gross are just sub-categories of gross.

 

Without going back and digging up my W2's. Per Diem did not show up on the W2. When I ran and Per Diem was taken, the driver gets

.xx amount per mile.
.xx Per Diem pay per mile
.xx company kept per mile.

.16 per mile
.12 per mile
.03 per mile.

The W2 showed what I earned. This did not include any Per Diem. So if applying for a loan and a W2 is shown they only see the .16/mile paid per mile for the year.

I kept track on a spreadsheet what each trip I ran paid for mileage and for Per Diem. The Per Diem was shown on my pay stub for each load.

I took weekly/monthly/yearly what the company paid for Per Diem. I kept track of how many days I was out to include To/From home time on another spread sheet.

I also kept track of each state's rate/flat per diem. This was broken down by state and how many days in that state.

By taking the greater of the two I then subtracted the Company Per Diem.

This usually left anywhere from $8000 to $12,000 that I could still claim and subtract from Gross.

You do not have to claim Per Diem on your taxes at the end of the year. Nowhere on my 1040's does it show what the company took out for Per Diem. I simply got a W2 that was showing what I was paid over the course of the year for taxable mileage.

I also kept track of any thing that was truck related and took that off my taxes. I was a company driver.

I have been audited for 2008 by the IRS for Per Diem and to clear the doubts up of claiming approx $xx,000 Per Diem off my gross I had to show logs and a letter from each company showing what was paid/not paid by the company when a driver was on the road.

The Per Diem that a company takes out is what you are allowed per day while away from home. The Company cannot take out $59 each day so they break it down to .xx per mile.

The company cannot exceed total Per Diem what you are allowed. If they do, then the IRS will drop them out of the Per Diem program.

If your W2 shows Per Diem paid please blank out any info and let me see. I would stand corrected then.

I kept about 14 different spreadsheets. One even had the date/time I bumped the Dock.

They did come in handy.

 

It's late and I won't go into a lot of details tonight but will add more in the next 3-7 days.

It is illegal for companies to take out drivers "Per Diem", tax what's left and give it back. This practice is going on all over the country and it needs to change. When companies do this our Gross wages are lowered which means less taxes now. It also reduces what is reported to Social Security, Workers' Compensation and Unemployment as our gross wages. When and if we ever need any of those 3 services we get less benefits back. Social Security benefits when we retire become far less.

Again I say it's illegal for companies to do this. I will supply links to the documentation in the next 3-7 days. I'll explain the delay at that time. The problem is us drivers aren't banding together for change and the companies continue to get away with it.