Per Diem - Is It Income?

There are several jobs where Per Diem is an integral part of the pay structure. We know you physically see the money in your pay check, but is it actually income? It may surprise you to learn the answer is NO. It is NOT income. It is considered a reimbursement. It isn't taxed, and it is not considered in your income calculation. Per Diem is payed for expenses you are supposed to have already incurred. Per Diem is often quite lucrative and many people opt for per diem pay specifically because it isn't part of taxable income. That means you get to keep more. And because you get to keep more, per diem feels as if you make a lot more money. But it is not counted as part of your income for mortgage purposes which can leave one feeling they can afford way more than lending regulations will give them credit for.

NMLS# 1416990
Company NMLS 2438205
Licensed in the following States: KY, IN, FL, MN, AR

[Aaron-cyl]

Ive been at a shipyard job for 7 years. I make $15 an hour but take home $1800 a week due to my perdiem!! I started at $8 an hour and made $1000 a week while getting food stamps and free health care!! My dad always claimed i had to pay taxes on that and it seems crooked, but im glad you clarified it!!! Ppl need to learn about perdiem jobs!! I wouldnt work a job without it!

[yougottabekiddingme]

Well the company I work for started taxing our perdiem about two and a half years ago and they tell us that the only way that they will stop taxing it is for us to take a 210 day break aka quit or take a lay off for the to do a reset

[jaysant]

I am a truck driver & thank you for being straightforward about this. I don’t know why it is that when I speak to loan officers about how they consider per diem, they struggle in their answers as if never having heard about it before. I simply ask whether it negatively affects my purchasing power by being on it, but no clear answer.

But yes, to be on the safe side, I will stay off per diem until I buy a home.

Just to be sure tho, per diem is different than tax deductions right? Because as a w-2 employee, I heard deductions don’t count against purchase power when it comes time to get a mortgage. Only to the self employed it would apply. But since per diem is a reimbursement, then that income would not be counted even for w-2 employee, correct?

[raulmendoza]

I don’t see why it can’t be used as income. It’s like when I would get BAH in the military. It’s not taxed either

[TrollFalcon]

So, question: I worked for a company where we would go out of state for 10 days at a time and then home 4 days. The per diem on the first and last day was $117.50 and the 8 days in the middle was $157.00 per day. Halfway through working there, they started saying that was income and taxed it. Is that legal?

[Michelle__]

So if the company is using the per diem program for a w2 truck driver, how do we handle taxes at the end of the year? We always filed expenses for the per diem rate per day, which is $69 2022. The company is doing the .17 per mile per diem. Not happy about this & they do not give an option It’s automatic to help themselves out I guess. It helps the company with paying less in taxes & no 401k has to be matched by the employer due to this program. It also lowers your gross that will effect SS & unemployment compensation or any loans you may need

[jssj]

Thank you for the help truck driver here about to be a company driver(company employee), not an owner-operator(self-employed entrepreneur). So to understand this a little better if they are offering me $65, 000 a year whether I op-out of per diem or not, should I take it. To be clear the amount above is the only amount I get but they are offering to turn a percentage of it into per diem. Should I opt out or not? Also is borrowing and a lower tax return the only thing affected

[BooskiD]

Hmmm I work for my state government and they give us per diem to cover food cost on 12+ hour days. And it shows on my tax return but from what I know they give me the amount specified then it adds up and pays out in a separate payment from my paycheck. And usually I get less than $100 back but all a sudden this year I broke even and and I was out for 7 weeks paid parental leave and was wondering how they may correlate and affect my taxes together. Because all a sudden the little bit I did get back is gone.

[Perhapsawiseman]

What about per diem in the armed forces?

[Mike_xx]

What if I’m working for a company and they haven’t paid me my per diem in two months and they said that I would get it once a month

[velocityaimer]

I don’t understand this maybe it’s certain things. You explained well but my company is offering me this for otr truck driving . I’m trying to see what’s the best option . Where is this “reimbursement” coming from ? And basically if I sign up for it I get “paid” more money ? Just at the end of the year I can file it as taxes ?

[namgigurung]

Thank you for the info but I have a question regarding W-4 form. So, do we need to fill up W-4 or not ?

[rafelito]

Hello, can I ask my employer to add it to my pay check so I could get tax on it and use it to ge a higher loan?

[mariap.schoeffler]

How does PD affect social security after retirement?