Does per-diem count towards income?

[KGUtah]

Newbie here - great resource.

I work as a contract engineer and receive a portion of my pay when away from home as a per-diem in accordance with GSA and IRS regulations.

My W-2 at the end of the year only shows the W-2 wage which is my total wage, minus the per-diem split, plus any overtime at the full wage.

Does the PD income count towards my 'income' since it is intended to offset the expenses of living away from home for work?

If it does have to be counted, how do I ensure the means-test accurately reflects my total cost of living?

Thanks in advance for any help.

KG

[lrprn]

My W-2 at the end of the year only shows the W-2 wage which is my total wage, minus the per-diem split, plus any overtime at the full wage. Does the PD income count towards my 'income' since it is intended to offset the expenses of living away from home for work?

It depends if your company shows your per diem on your checks as income or not. I've read through your first sentence several times and am still not sure which it is. Can you clarify?

[justbroke]

Per Diem can become income when you exceed or "know you will exceed" twelve (12) months of travel to the same location (or within 50 miles of the same location). ThIs is an IRS "income" rule.

Most companies will try desperately to make sure you don't exceed the 12 months, because the good companies will "gross up" your salary to cover the payroll taxes that you (and the employer) incur from the travel.

So, it's not income until it's being reported as wages on your paystub and/or W-2.

[Clouddancer]

So does that mean you would subtract the PD from your gross before entering it in the means test or is that subtraced later during actual expenses versus income?

[justbroke]

So does that mean you would subtract the PD from your gross before entering it in the means test or is that subtraced later during actual expenses versus income?

If a company is putting your per diem into your Wages (not check, but into your total wages paid), then they consider it income, and so will the IRS!

My company can pay through my payroll check, but it is very clear that it's not wages, and it's not include in gross wages.

[KGUtah]

Checked a paystub while home for Easter, per diem is a separate line item as 'Reimbursable Per-Diem'.

All wages and taxes paid are calculated on the so-called per-diem split wage which is total wage minus per-diem (seven days divided by 40 to equate to an hourly wage).

I believe the amount I am paid for both wages and PD will be a potential obstacle with the Trustee (if I file) but the amounts are clearly separated on the stubs so I feel reasonably clear it is not 'income' - this plus my unsecured debts clearly meet the means-test.

My next step will be to try and negotiate with the creditors for a 20-40% payoff over 3-5 years (without the middleman of a settlement company), otherwise, hello CH-7.

[LuciluS]

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My next step will be to try and negotiate with the creditors for a 20-40% payoff over 3-5 years (without the middleman of a settlement company), otherwise, hello CH-7.

If you are able to negotiate with the creditors instead of a CH-7, that's Great. But, keep in mind, you will receive a 1099 for the difference and it will be added to your income on your yearly Federal and State Tax return. Could put you in quite a higher tax bracket; thus, more taxes to pay.

Luci

[justbroke]

I believe the amount I am paid for both wages and PD will be a potential obstacle with the Trustee (if I file) but the amounts are clearly separated on the stubs so I feel reasonably clear it is not 'income' - this plus my unsecured debts clearly meet the means-test.

I don't share your pessimism. Trustee's are smart people and should know that employees like you and I, travel for companies and that we receive per diem to cover expenses from traveling. Mine are actual. They are included on my "wage" statements, but the reimbursements are not included in my wages.

The Trustee never questioned that they are not in my wages.

[Billssuck]

I have a similiar situation. I work for the Post Office and deliver mail in my personal vehicle. I receive an Equipment Maintenance Expense (EME) to cover car repairs, gas, etc. It isn't included in block 1 of my W-2 but is put in block 32, employee business expense. I don't think that they will include it as income. What do you think?

[justbroke]

I have a similiar situation. I work for the Post Office and deliver mail in my personal vehicle. I receive an Equipment Maintenance Expense (EME) to cover car repairs, gas, etc. It isn't included in block 1 of my W-2 but is put in block 32, employee business expense. I don't think that they will include it as income. What do you think?

I don't believe it's income. It's quite simple though. If it is included in Box 1, Wages, then it is accountable and it is income and is taxable.

If it is, or were, taxable, the employer should have included the amount in Block 32, in Block 1 as well, indicating that it was taxable wages.

I still see no problem.

[Billssuck]

That's what I thought too. However, my attorney's assistant thinks they may add it in if I am under the means test with it included. Then if they need to counter other arguments, they can explain that the EME isn't income. It's possible that they may argue over my true family size (one son at college who is moving back home for the summer) and this angle with my EME may help my case.

[KGUtah]

I don't share your pessimism. Trustee's are smart people and should know that employees like you and I, travel for companies and that we receive per diem to cover expenses from traveling. Mine are actual. They are included on my "wage" statements, but the reimbursements are not included in my wages.

The Trustee never questioned that they are not in my wages.

My concern is that the amounts are well above average/median income when taken on the surface - with expenses and such and if PD does not count, we meet the means-test, if PD counts, I have to fill it out as married filing separately in order to qualify under the means test. My gross wage averages between $55-60/hr.

I am paid Per-Diem based on the GSA per-diem rate table, e.g., $158/day in Salt Lake City - I am away from home for months at a time, so PD ends up being about $1100/wk pre-tax (which essentially reduces my taxable wage by $27.65/hr). My actual expenses are a bit lower of course but as a contract engineer it is fully in line with current IRS guidelines.

When I get my W2 at the end of the year, it only shows the payroll wage, in other words, it does not include the PD.

My debts are the result primarily the result of a small business I owned failing, about $200K in the hole after slowly paying about $50K back over the past 18 months - just cannot keep up anymore and can not continue to live paycheck to paycheck when making the kind of money I do.

Curious if anyone tried and was successful, or not, in negotiating charge-off buyouts of their debts. If I can negotiate reasonable payoffs I would prefer to do that rather than take CH-7 protection, but I need all creditors to take it, if only 1 does not agree, I will have no choice.

Ideas/suggestions appreciated.