Re: A Per Diem story, does this sound right?

Subject: Re: A Per Diem story, does this sound right?
From: David Knopf <david -at- KNOPF -dot- COM>
Date: Mon, 9 Mar 1998 12:38:30 -0800

At 10:00 AM 3/9/98 -0800, you wrote:
>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?

What a crock! In 19 years of consulting, I've never heard of a per diem
arrangement like this. Per diem payments are in addition to your regular
compensation, not instead of it. As to the agent's comment that "that's how
the
industry does it," the charitable interpretation is that this line originated
with the agent's manager, and the agent him/herself didn't know any better.

Btw, $400/wk is pretty low if you actually had to obtain acommodations near
your contract site. Generally, you are allowed a per diem of x-amount for
accommodations plus y-amount for meals and other expenses. Actual amounts
rates
vary by location and are set each year by the federal government (and others).
You can check out this year's government per diem rates at
<http://<http://www.govexec.com/>www.govexec.com/travel/usdiem98.htm>. Per
diem
rates are also covered in IRS Publication 1542, which you'll find at
<http://<http://www.irs.ustreas.gov/>www.irs.ustreas.gov/prod/forms_pubs/pu
bs.html>.

Hope this helps.

- David Knopf




David Knopf
Knopf Online
Tel: 415-820-2356
E-mail: mailto:david -at- knopf -dot- com
Web: http://www.knopf.com

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