In our earlier post, we defined what per diem jobs are, how they are the types of jobs that require daily payments rather than hourly or salaries. We also talked about how some industries in Nigeria also practice per diem jobs. We shall revisit per diem jobs as we progress in today’s post.
Per Diem Taxable?
Per diem payments are a type of reimbursement that employers provide to employees for expenses incurred while traveling for business. These payments are typically made to cover the cost of meals, lodging, and other expenses. However, per diem payments can be taxable, depending on the circumstances.
For instance, according to the Internal Revenue Service, per diem payments are considered taxable income if they exceed the federal per diem rate for the location where the employee is travelling.This is what the IRS does: it allows employers to reimburse employees for business expenses without paying taxes on those reimbursements, as long as the reimbursements are made under an ‘accountable plan.’
An accountable plan requires that employees substantiate their expenses and return any excess reimbursements to the employer. If the employer reimburses the employee for expenses that are not substantiated or if the reimbursement exceeds the federal per diem rate, the excess amount is considered taxable income to the employee.
This is why employers are required to report per diem payments that exceed the federal per diem rate on the employee’s Form W-2, in the United States. This also applies to Wage and Settlement Tax Settlement. This is why it is considered important for employers and employees to consult with a tax professional to ensure compliance with all applicable tax laws and regulations.
What are Per Diem Jobs?
The term ‘per diem’ is Latin for ‘per day’, and it refers to the daily payment structure. So, if you know anyone whose job requires a daily payment rather than an hourly or salary payment, they are working per diem jobs. Per diem jobs are often used in industries where workers are needed on a temporary or as needed-basis, such as healthcare, transportation, and hospitality.
This is a type of job that is said to have various benefits. One of the benefits of having this kind of job that pays daily is that it has flexibility, that means workers get to choose when they want to work and can often select from a variety of shifts.
This is considered to be appealing to workers who prioritise and value work-life balance. In addition, per diem jobs provide opportunities for workers to have a handful of experience and expand their professional networks.
Cons of Per Diem Jobs
The cons of per diem jobs include not having access to benefits, such as health insurance or paid time off. These are benefits that are important and can relieve employees’ burdens, however working per diem jobs may exclude these benefits. Also, per diem jobs do not have job security, and the continuation of the job cannot be predicted, which may lead the workers to experience fluctuations in their income from one day to the next.
Lastly, per diem workers are subjected to be classified as independent contractors rather than employees, which can affect their tax obligations and legal rights. In the midst of the challenges associated with per diem jobs, having this type of job can still be the saving grace for any worker.
More so, individuals who value flexibility and autonomy in their work, find per diem jobs to be fitting.
Does Per Diem Jobs Exist in Nigeria?
Per diem job does not only exist in other parts of the world, it is also practiced in Nigeria. The concept of per diem is widely applied in various industries in the country, including healthcare, hospitality, and business.
