A few months ago I had an interview for a job that would have been more than 60 miles away from my last job and more than 60 miles away from my current house. I was told by that employer that for the first year I can get per diem tax benefits. If the salary is $25 hour, I'd be able to get about $10 per hour untaxed and only pay taxes on $15 per hour the first year.
Now I am in touch with another employer in that same area. I asked them about per diem and they told me they could not do it I have a few questions.
1 - What are the criteria to qualify for per diem pay?
2 - Is every employer required to give this to me?
3 - Is this something that an employer does not have to do but something I can deduct on my taxes at year end if I qualify for per diem?
Thanks for your insight on this topic.
Tue Aug 04, 2009 1:34 am
Elena C. Contributing Member
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Hi dreamer100. I saw your post and what your employer was saying to you didn't sound right at all to me, so I did some Googling on the subject. The truth is that there are definitely some tax benefits to claiming per diem income, but it's not without a couple of catches. I would summarize here, but it's kind of complicated, and the specifics depend on your particular situation... Here's a link to the page that tells all about it: http://www.ehow.com/about_5270829_per-tax-deductions-working-outoftown.html
Fri Oct 15, 2010 5:02 am
coaster Senior Advisor
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You didn't mention what the job was, nor whether you're a sub-contractor or an employee, and those are the crucial qualifiers. You can't get a tax deduction merely for commuting to your work. You can get tax deductions for your out-of-pocket travel expenses when the travel is part of your work. The travel distance is based on the employer's location, not your home. i.e. if your work requires you to travel to a certain location, and you leave from your home and go directly to the work location, your travel distance is from the employer's location to the work location. Maybe that's what was involved with this job offer, I dunno. Apparently the employer was offering per diem compensation, and you're expected to pick up the expenses and deduct them from your taxes? It's hard to figure how that could all work to your advantage to the degree you mention.
~Tim~
Fri Oct 15, 2010 5:17 am
carolina First Time Poster
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Contributions to a 457 plan are tax deferred (not charged federal income tax on your paycheck), therefore, you do not need any withholding adjustments if you change your contributions. You only need to change it to what is acceptable for smaller refund or small amount due based on dependents and deductions.
If you end up owing more than $1000 at April tax filing time, there may be an underwithholding penalty (with a few exceptions). So don't just arbitrarily max out W-4 allowances or it may come back to bite you. Follow instructions.
Wed Jan 19, 2011 11:46 am
coaster Senior Advisor
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