Pilot Taxes/Per Diem

[NCFlyer]

I think you may be confusing the difference between M&IE allowance and the 80% deduction that the IRS allows on form 2106.

You will need to calculate your allowed M&IE deduction in which way you choose. Either standard allowance or per city allowance.

I for 1 still believe that the day of departure and the day of return needs to be prorated others believe otherwise.

After you come up with a total allowance you will need to subtract any per diem that was paid to you by your employer.

That is the amount you will enter it on Form 2106. As you complete the form you will calculate 80% (75% in previous years) of the total allowance as your deduction from taxable income.

It really isn't that difficult.

Like someone else stated, I also keep a running total for the year, probably takes less than 15 minutes each month. Then at tax time I have the numbers already calculated.

 

[DTW320]

Well now I'm confused!

Some are talking of the 75% pro ration on a day as the 75% deduction on the rate (now 80%). The day 1 and last day 75% amount is consistent with ex. 1 of pro rating your days.

I looked on GSA, It says LAX is worth 64/day. So do I use 64/day or 80% of 64/day which is 51.20/day. If you use the standard meal allowance it states that transportation workers are now allowed 80% per day. So the special rate is 52/day domestic and 58 international. Do you use 80% of those....... That would be a standard day at 52x.80=41.6 domestic. I just want to know what do you use. 80% of a day per the GSA per day rate or 52 per day or do I have to take 80% of that to..... Any help, you can PM if its easier.....

Called the IRS forms/pubs devision. They said Pub 463 for 2008 has not been published yet. Didn't know when it would be.....

Happy Landings

Two separate issues.

1. Do you prorate the first and last days of a trip by only counting 75% of the daily rate for that city? See above post where pub 463 is referenced showing that a non federal gov employee can count the full day on the first and last days. Others say only take 75% on first and last day. I think pub 463 makes it very clear that you can take the whole day as I've argued above. IMO. My aviation tax guy agrees.

2. The 80% that applies to travel industry employees is figured after you:

A. total up all your trips for the year.
B.subtract your non taxable perdiem received from the company.

Example(simple for the sake of an example):

A pilot does the same 3 day trip 4 times a month 12 months a year. Leaves at noon on day one, layovers in ORD first night, LGA second night, finishes at noon on day 3.
He can use either the daily rates for ORD and LGA ($64 in each case) OR the "standard rate of $52 (no brainer here....use the $64)

He counts 1 ORD day and 2 LGA days = $64 x 3 = $192. Four trips/month = $768 x 12 = total allowance of $9216.

Per diem is say $2/hr. 48 hours/trip = $96/trip x 4 x 12 = $4608 per diem for the year.

$9216 is entered on Form 2106 then $4608 is entered as reimbursment. $9216 minus $4608 = $4608. THAT total is then multiplied by 80% resulting in $3686.40 This total from Form 2106 gets carried to your Schedule A Itemized deductions. The amount GREATER than 2% of your Adjusted Gross Income gets added to your total itemized deductions.

NC flyer is correct (although we disagree about the prorated first/last day). I have an Excel spreadsheet with the M&IE rates for each city I go to. I have columns for each city and put "1" below the city for every "day" there. Totals at the bottom, total X M&EI rate below that, grand total in another cell near the top.

 

[4got2flare]

Perfect explanation....
I greatly appreciate all the effort....

You were correct in confusing the 2 percent deductions. One has nothing to do with the other. I have always followed the example 1 with 75% per day on day one and last day. I used the standard day for the last few years but this year with all the international flying the per diem rates off of the GSA site are huge in comparison. Paris $162/day vs. 58/day on standard rate.

Happy Landings.....

 

[Ronnie75]

OK, I understand I can't deduct a crashpad. Can I deduct cabs to and from the airport from that crashpad? How about tips on trips--is that included in the per diem? I apologize if this was already addressed.

 

[Truckdriver]

OK, I understand I can't deduct a crashpad. Can I deduct cabs to and from the airport from that crashpad? How about tips on trips--is that included in the per diem? I apologize if this was already addressed.

My understanding is that cabs or transportation from a crashpad to the airport are not deductable. Just like you can't deduct the mileage from home to work if you don't commute.

The tips are a subject that can go either way. My take is that tips are not deductable because they are included in the M&IE rate. Some airline CPA's are including tips in addition to the M&IE rate. In my opinion, Pub 463 page 5 makes it very clear that the incidental portion of the M&IE rate is for tips to van drivers. I don't deduct van driver tips. If you have to pay for a cab because the hotel van doesn't show up, you can deduct that cost and just include the tip in the cost of the ride.

 

[Jurasicpilot]

I now have Carpal Tunnel Syndrome in both wrist due to 4got2flare's avatar. I hope the treatment will be a write off for 09. Think I threw an elbow out too.

 

[DH2WN]

. In my opinion, Pub 463 page 5 makes it very clear that the incidental portion of the M&IE rate is for tips to van drivers. I don't deduct van driver tips.

Table 1-1 on page 5 of Pub 463 clearly states Tips are deductible. Don't forget the tips you leave for the cleaning lady

 

[Secret Squirrel]

This is why we need a flat tax. Bring on Neil Bortz and his fair tax.

 

[Truckdriver]

Table 1-1 on page 5 of Pub 463 clearly states Tips are deductible. Don't forget the tips you leave for the cleaning lady

Correct, if you deduct the actual expenses for the items in that table. So if you can keep track of your meal expeneses, tips, etc. then deduct the actual expense you can include tips. If you chose to use the M&IE rate instead of tracking your actual expenses, then tips are part of the incidental portion and you cannot add them in addition to the M&IE rate. Read all of page 5 and it explains this very clearly.

 

[Truckdriver]

This is why we need a flat tax. Bring on Neil Bortz and his fair tax.

How about no income tax period and just gather revenue through usage taxes. Then we can pay for the services we use and not for what others use. Anything would be easier than the system we currently have which will probably never get changed.