per diem issue

[r_seigart]

i am an over the road truck driver and i'm just trying to find out if my company is doing the right thing with the per diem. i don't want to find out later that they're doing it wrong and i end up having to pay the consequences. i know as an O T R truck driver, we are entitled to claim a per diem on our tax returns or the company can do it on (i assume) a weekly basis. what they are doing is taking 30% of my gross pay, setting it aside, and taxing the remaining 70%, then put the 30% back on as a reimbersement. they say that i wont get taxed for the per diem. is this the correct way for them to do this? i just don't want it to backfire on me and be responsible for some outragious amount of money later.

 

[Michael Wechsler]

I don't know this area but understand the concept. As of now, this method would seem to benefit you. I'm not sure what the 30% is a reimbursement for - perhaps gas and other costs? It would seem that you can deduct your expenses directly and it's better for you to have the company reimburse you for the expenses and not be taxed rather than have withholding of the entire amount and then have to get a check back from the government many months later. Just my thought but you may need to speak to a tax specialist.

 

[r_seigart]

thank you

thank you. i was just wondering. somebody else had told me something about they can only do that for a certain amount. i want to say somewhere around 40 or $50k. after that they have to lower the percentage or something.

 

[Michael Wechsler]

DId you ask the person who gave you this information? There may well be a cap or number which is a red flag.