A Per Diem story, does this sound right?

Subject: A Per Diem story, does this sound right?
From: Len Humbird <lenh -at- PCEZ -dot- COM>
Date: Mon, 9 Mar 1998 10:00:16 -0800

I'm curious how per diem is paid to workers living and working away from
home. The first time I was paid per diem worked like this.

I was offered a contract position more than 100 miles away from home. The
offer was that they (the agency) could pay as much as $400 per week,
depending on what my estimated expenses were. That was subtracted from my
weekly gross pay and then issued as a separate, non-taxed paycheck.

The way this was ultimately worked out was that my calculated hourly rate
was reduced by about $10/hr to compensate for the per diem. This was
explained to me as, "that's how the industry does it", "we couldn't afford
to pay you $400/wk in addition to your normal hourly rate", and "this puts
you in a lower tax bracket because it's non-taxible income". The bizarre
part is that I later found out that the agency's written policy regarding
per diem payments is completely the opposite of the way it was actually done.

About the same time, I moved to the city where the contract was taking
place, and shut off the per diem arrangement. I haven't yet talked to an
accountant about all this. Is this the way it's supposed to work? What are
your experiences on this?

Thanks.
Len




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