Please help me understand per diem
Submitted by Anonymous on Mon, 2008-08-18 09:58.
I am considering a W-2 contact with a firm in NC. I live in Georgia and the job is in SC. It will require weekly commutes to the job location. The contracting firm has stated that they will pay the federal rate of per diem for the job location. I assume this will cover T&L and Incidental Expenses.
According to the federal form the perdiem per diem for this location is $87/day for lodging + $44/day for M&IE.
Then the contract firm told me they paid a 'tax free' amount per hourly rate. As an example: My rate is $50/hour plus I would recieve a $15/hour' per diem rate that is 'tax-free' to cover the T&L.
Since this is my first contract job, this is all Greek to me. Have I got the basics correct?
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Per Deim
Hi,
Generally, per Diem is a fixed amount to cover your expenses. The rates vary by location. For instance the South Carolina per Diem rates range from $109-$190 per day.
The per Diem rate for the first and last days are travel days are 75% of the meals per Diem rate. So for a regular work week the per Diem is $633 = (87 * 5) + (44 * 3) + (44 * 75% * 2). If you assume a 40 hour work week that's $15.83/hr.
Technically, they're not supposed to figure it by the hour. There should be $633 of per Diem per 5 days of work regardless how many hours there are. But as along as they list as per Diem on your pay stub you should be ok. If they lump it into your wages, then it's likely you're being taxed on it.
L:)