To enroll or not to enroll in a company-paid per diem program that includes a fleet per diem administration fee, that is the question.
Background: ABC is a truckload carrier that offers voluntary company-paid per diem. Drivers who enroll are paid $.045 CPM of which $0.10 CPM is allocated to per diem, less a $0.02 CPM fleet administration fee. Drivers who choose not to enroll earn a flat $0.45 CPM and can deduct per diem on their own tax return.
John Smith recently went to work for ABC and is unsure if he should enroll in the company per diem plan. He departs home every Monday morning and returns home Friday evening, averages 2250 miles per week and works 50 weeks a year. John is married, but his wife is not working. He owns a modest home, and pays state income, real estate and personal property taxes.
The motor carrier claims he will take home more money and pay less taxes if he enrolls in their per diem program even after giving back $2,250 in fleet administration fees.
Conclusion: John may save a few hundred dollars in federal taxes, but he must forfeit $2,250 of additional income to do so. In addition, the tax savings come at an additional cost: $9,000 of wages omitted from his Form W-2 that will be noticed by a home or auto lender and may lower his employer 401(k) match, social security and workers compensation benefits.
This article was written by D R Sullivan & Company, CPA PC, an accounting firm that has been providing taxpayer advocacy, consulting, and litigation services since 1998. The firm is tax counsel for Per Diem Plus, an automated per diem and expense tracking mobile app.
Please remember that everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult your own tax or accounting professional.
Copyright 2016 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.