shefali_mehta_23
09-09-2007, 02:55 PM
Hi,
I am working with a Desi IT Consulting company in US for more than 1 year now. I am on % basis and now I got a new project which doesn't pay expenses. However, I have heard something about "Per Diem" rate and my employer is willing to do that. However, from my side, I am getting mixed-views about Per-Diem rate usage and how to accurately define it. I would really appreciate, if someone - experienced on this - can give some information. I am sure, there might be many consultants, like me, out here on this board, who would have similar questions. So, if someone can detail on it, it will be really helpful for all of us.
My Case:
I am on H1B. The billing rate, which I will be receiving from my employer (after applying his % share) is $62. My employer first applies his % split and then gives the remaining to me, on which, he will apply Per-Diem. So, I will be getting $62 from him -- on which, I need to let him know about how much shud go to Per-Diem and how much as a Salary.
My LCA salary is $60000 per annum. (as a safe assumption -- considering 140 hours a month for 11 working months a year -- it comes to around $38-$39 per hour).
********************************************
Now, what I saw on Wikipedia about Per-Diem (http://en.wikipedia.org/wiki/Per_diem) -- Per Diem is applied on "per-day" basis, regardless whether it was a working-day or not. So, in that case, Saturday-Sunday can be counted as Per-Diem, as well. I checked the allowable Per-Diem rate on GSA website, for my county, and it is $148 per DAY. Meaning for 31 days' month -- Per Diem amount would be = $148 * 31 days = $4588 per month. Just as a conservative estimate -- suppose, I worked for 140 hours in that particular month -- My total rate comes to $62 * 140 hours = $8680, out of which, $4588 would be non-taxable Per-Diem, as per above calculation. However, in this case, I am having 2 MAJOR DOUBTS.
1) If I work as per above calculation -- total TAXABLE SALARY comes to $4092, which would be less than my EXPENSES for that particular month !! Is it okay? I mean, it would look like this -- My EXPENSES would be 12% HIGHER than my SALARY??? or in other words, 53% of my billing will go to my Expenses and only 47% as TAXABLE SALARY -- This will look like -- I don't want to pay TAXES !!! Is it okay, or can someone, tell with a proper calculation, what would be the IDEAL case?
2) As per my LCA -- My SALARY is $60000 per Annum or around $39 per hour (as I mentioned above). In case, when I go with REAL PER-Diem definition and start putting the amount on DAILY basis, rather on hourly --- MY SALARY comes to $4092 for 140 hours and $4588 for expenses (as I mentioned above). So, if we just consider SALARY figure for LCA purpose (I am not sure, if I can show Expenses, as well, as my income -- against what my LCA says) -- it comes to $29 per hour (considering $4095 for 140 hours)!! So, AM I violating LCA requirement? and will this be an issue later? -- esp. while changing H1B or stamping related purpose -- considering that I was getting less than my LCA figure and so, I was out of status.
Well, 2 little off-the-track doubts --
3) I have heard that, Tax-Exemption on this Per-Diem expenses is ONLY valid for 11 MONTHS, not after that? Is it true? Can someone please throw detail on this?
4) What about the addresses? As per the Wikipedia information on Per-Diem -- you need to have 2 RESIDENCIES to quality for Per-Diem. Well, I theoretically don't have 2 addresses. I mean, in this new project, I moved from my old location. My pay-stub has my Desi employer's address -- and from that address to my current project -- the distance is 246 miles (as per Google Map) -- Do I qualify the distance-limitation for Per-Diem? And, since, my Pay-stub address is not an address, for which I pay mortgage or rent, its just my employer's address, Can I SHOW that as my second residency to qualify for Per-Diem??
I know, its littler long to read and also might require some experienced's opinion, however, if someone will answer this, it will be really helpful for me, and also will a good resource for others in future. Murali/Simran can you please throw some light on this?
Thanks & Regards,
Shefali
I am working with a Desi IT Consulting company in US for more than 1 year now. I am on % basis and now I got a new project which doesn't pay expenses. However, I have heard something about "Per Diem" rate and my employer is willing to do that. However, from my side, I am getting mixed-views about Per-Diem rate usage and how to accurately define it. I would really appreciate, if someone - experienced on this - can give some information. I am sure, there might be many consultants, like me, out here on this board, who would have similar questions. So, if someone can detail on it, it will be really helpful for all of us.
My Case:
I am on H1B. The billing rate, which I will be receiving from my employer (after applying his % share) is $62. My employer first applies his % split and then gives the remaining to me, on which, he will apply Per-Diem. So, I will be getting $62 from him -- on which, I need to let him know about how much shud go to Per-Diem and how much as a Salary.
My LCA salary is $60000 per annum. (as a safe assumption -- considering 140 hours a month for 11 working months a year -- it comes to around $38-$39 per hour).
********************************************
Now, what I saw on Wikipedia about Per-Diem (http://en.wikipedia.org/wiki/Per_diem) -- Per Diem is applied on "per-day" basis, regardless whether it was a working-day or not. So, in that case, Saturday-Sunday can be counted as Per-Diem, as well. I checked the allowable Per-Diem rate on GSA website, for my county, and it is $148 per DAY. Meaning for 31 days' month -- Per Diem amount would be = $148 * 31 days = $4588 per month. Just as a conservative estimate -- suppose, I worked for 140 hours in that particular month -- My total rate comes to $62 * 140 hours = $8680, out of which, $4588 would be non-taxable Per-Diem, as per above calculation. However, in this case, I am having 2 MAJOR DOUBTS.
1) If I work as per above calculation -- total TAXABLE SALARY comes to $4092, which would be less than my EXPENSES for that particular month !! Is it okay? I mean, it would look like this -- My EXPENSES would be 12% HIGHER than my SALARY??? or in other words, 53% of my billing will go to my Expenses and only 47% as TAXABLE SALARY -- This will look like -- I don't want to pay TAXES !!! Is it okay, or can someone, tell with a proper calculation, what would be the IDEAL case?
2) As per my LCA -- My SALARY is $60000 per Annum or around $39 per hour (as I mentioned above). In case, when I go with REAL PER-Diem definition and start putting the amount on DAILY basis, rather on hourly --- MY SALARY comes to $4092 for 140 hours and $4588 for expenses (as I mentioned above). So, if we just consider SALARY figure for LCA purpose (I am not sure, if I can show Expenses, as well, as my income -- against what my LCA says) -- it comes to $29 per hour (considering $4095 for 140 hours)!! So, AM I violating LCA requirement? and will this be an issue later? -- esp. while changing H1B or stamping related purpose -- considering that I was getting less than my LCA figure and so, I was out of status.
Well, 2 little off-the-track doubts --
3) I have heard that, Tax-Exemption on this Per-Diem expenses is ONLY valid for 11 MONTHS, not after that? Is it true? Can someone please throw detail on this?
4) What about the addresses? As per the Wikipedia information on Per-Diem -- you need to have 2 RESIDENCIES to quality for Per-Diem. Well, I theoretically don't have 2 addresses. I mean, in this new project, I moved from my old location. My pay-stub has my Desi employer's address -- and from that address to my current project -- the distance is 246 miles (as per Google Map) -- Do I qualify the distance-limitation for Per-Diem? And, since, my Pay-stub address is not an address, for which I pay mortgage or rent, its just my employer's address, Can I SHOW that as my second residency to qualify for Per-Diem??
I know, its littler long to read and also might require some experienced's opinion, however, if someone will answer this, it will be really helpful for me, and also will a good resource for others in future. Murali/Simran can you please throw some light on this?
Thanks & Regards,
Shefali