Per Diem pay ?

[KelCorn]

What is the name of your state (Alaska)? Hi, My husband was offered a 6 month contract to work for $65 an hour. The company stated he can have $20 an hour as per diem and $45 as his base pay. I have read the IRS publication and I can't determine if this is ok or not. It seems like this would be a tax break for us but I feel like the company is trying to get away with not paying social security etc on the $20. My husband will have to live part time in Indiana and part time in Alaska. I will stay here with our son and try to sell the house this summer. If we move there he will no longer get per diem but will get $65 and hour. Is this legal?
Thank you
KelCorn

 

[OHRoadwarrior]

Yes, Per Diem pay is legal.

 

[davew128]

Yes, Per Diem pay is legal.

But it might be taxable since the DAILY amount will be far and above what the unsubstantiated allowable amount is. Unless the company can demonstrate the actual out of town travel cost for the husband equates to $20/hour, it's taxable above the stated rate which IIRC is $52/day for CONUS out of town travel.

 

[LdiJ]

But it might be taxable since the DAILY amount will be far and above what the unsubstantiated allowable amount is. Unless the company can demonstrate the actual out of town travel cost for the husband equates to $20/hour, it's taxable above the stated rate which IIRC is $52/day for CONUS out of town travel.

I agree. Although, even when its taxable the employee can deduct documented employee business expenses on form 2106.

However, I do think that the OP was more confused by the fact that while he is officially out of town working its 45.00 wage and 20.00 per diem, but if the family moves to where he is located then its just 65.00 wage. That is a little shady.

 

[KelCorn]

Thank you for the replies. Would it be better to ask the employer for the $65.00 an hour and no per diem and then just keep records for our taxes to claim deductions?

Thank you
Kelcorn

 

[LdiJ]

Thank you for the replies. Would it be better to ask the employer for the $65.00 an hour and no per diem and then just keep records for our taxes to claim deductions?

Thank you
Kelcorn

You will want to track expenses no matter what. However, I think its unlikely that the employer will budge on the 45 per hour and 20 per hour per diem. The employer saves money that way...even though its definitely shady.