simple tax question

[cougarblue]

ok Ive got a simple per diem question that i need some help with!

If I have 40 4-day trips, I take the standard deduction of $52 (i think thats what it is) and was paid 4000 ntax perdiem. what is the actual deduction?

would you also include how you came up with your answer. Thanks

 

[Dashmonster]

The IRS language states that you have to use a "consistent" method to calculate your per-diem. I also used the $52 figure (dont know if it is right). Then I only multiplied by the number of hotels I stayed in (4 day trip = 3 nights). then multiply by 52 and in your case I got $6240. subtract the 4000 they paid you and you come up with a 2240 deduction.

If you want to get closer to an actual number take that extra day that you subtracted from the four day and multiply it by half of the IRS $52 standard. In your case 40 X 26 = 1040 then add that to your 6240 and get 7280.....Subtract the 4000 they paid you and use a 3280 deduction.

I am not an accountant and have done this method for four years now without incident. but from what I read in the tax code and from talking to other pilots about this i think the key is being consistant from year to year....you dont want to raise any flags on your return by having big differences from year to year.

Hope this helps....cheers

 

[captainv]

you can also use the specific M&I rates for individual cities, taken from the IRS chart. Most big cities will be more than $52.

 

[regionalcap]

The IRS language states that you have to use a "consistent" method to calculate your per-diem. I also used the $52 figure (dont know if it is right). Then I only multiplied by the number of hotels I stayed in (4 day trip = 3 nights). then multiply by 52 and in your case I got $6240. subtract the 4000 they paid you and you come up with a 2240 deduction.

If you want to get closer to an actual number take that extra day that you subtracted from the four day and multiply it by half of the IRS $52 standard. In your case 40 X 26 = 1040 then add that to your 6240 and get 7280.....Subtract the 4000 they paid you and use a 3280 deduction.

I am not an accountant and have done this method for four years now without incident. but from what I read in the tax code and from talking to other pilots about this i think the key is being consistant from year to year....you dont want to raise any flags on your return by having big differences from year to year.

Hope this helps....cheers

Remember..you can only claim 80% of the difference.

 

[SplitBar]

are you sure it is 80% ? That is the question I was going to post. I know you can't claim the entire difference but I thought it was 75%. Perhaps it got raised of I was using the wrong # all along.

Thanks for any insight

 

[NCFlyer]

It was 75% in the past, this year it was raised to 80% for transportation industry workers.

 

[Roger Dat]

If you use Turbo Tax, does it calculate the 80% difference for you????

 

[SkyNation]

ezperdiem.com will figure it all out for you for like 29 bucks.

 

[NCFlyer]

If you use Turbo Tax, does it calculate the 80% difference for you????

Yes.

It is figured while completing Form 2106 for business expenses.

TurboTax will ask you for your allowable M&IE amount. Which you will have to figure in what ever way you like. i.e. the standard $52 / night or each individual overnight city. It will then ask for any amount that you were paid by your employer. TurboTax will calculate the difference and then allow the 80% deduction.

It really isn't that complicated.

 

[Roger Dat]

So how would you compute a 4 day trip....3 nights at $52. Or do you do 2 full days @ 52, then partial days for the first and the fourth day....

 

[indianboy7]

read IRS publications 463, when it opens, search for "transportation workers". There are a couple methods you can use. The first one (the one I use) counts the first and last day as 3/4 days each. So a 4 day trip would count as 3.5 days.

Publications 463, 529, 1542 and Form 2106 all have references to what we do. It takes a while to sift through everything, but take the time to read it and do it right...

 

[Roger Dat]

OK thanks...So if you use the standard $52 / day calculation, a 4 day would be worth $182 and a 3 day $130....

Does that sound right???

 

[bluefly72]

OK thanks...So if you use the standard $52 / day calculation, a 4 day would be worth $182 and a 3 day $130....

Does that sound right???

That is correct, but then again I'm not a CPA

 

[vclean]

I may be wrong, but without looking it up, I believe you can only deduct the amount over 2% AGI (adjusted gross income). Same as medical expenses, uniforms, etc

 

[Nevets]

ok Ive got a simple per diem question that i need some help with!

If I have 40 4-day trips, I take the standard deduction of $52 (i think thats what it is) and was paid 4000 ntax perdiem. what is the actual deduction?

would you also include how you came up with your answer. Thanks

Day 1 $39
Day 2 $52
Day 3 $52
Day 4 $39
Total $182 per 4 day trip

40 4 day trips x $182 = $7280

$7280 - $4000 = $3280

$3280 x 80% = $2624

 

[Roger Dat]

How would you calculate a 2 day trip...$52 + $52 then 75% of the total

 

[IHateDaley]

I used a different method for calculating partial days. I claim 100% ($52) for any partial day where the trip begins before noon or ends after 5 p.m. This is permitted by publication 463 (I picked these times on my own though).

 

[IHateDaley]

Also don't forget to use $58 a day for any overnight outside the continental U.S.

 

[Nevets]

How would you calculate a 2 day trip...$52 + $52 then 75% of the total

The rate may be prorated using any method that is consistently applied and in accordance with reasonable business practice. For example, if an employee travels away from home from 9 a.m. one day to 5 p.m. the next day, a method of proration that results in an amount equal to two times the federal M&IE rate will be treated as being in accordance with reasonable business practice (even though only one and a half times the federal M&IE rate would be allowed under the Federal Travel Regulations).
http://www.irs.gov/pub/irs-drop/rp-08-59.pdf

Another thing to keep in mind, if you use the special rates ($52 CONUS/$58 OCONUS), the deduction may be somewhat less than if the standard M&IE rates are used, especially if you usually travel to higher-cost or international destinations.

Also, this is all only deductable to the extent that a pilot’s aggregate miscellaneous itemized deductions (including business expenses) exceed 2 percent of the pilot’s adjusted gross income.

 

[Nevets]

One last thing, things that are subject to the 2% limit other than per diem are, union dues and expenses; depreciation on a computer or cell phone your employer requires you to use in your work; dues to professional societies; job search expenses in your present occupation; legal fees related to your job; licenses and regulatory fees; medical examinations required by an employer; occupational taxes; passport for a business trip; subscriptions to professional journals and trade magazines related to your work; tools and supplies used in your work; work clothes and uniforms if required and not suitable for everyday use; and work-related education among other things.

 

[Roger Dat]

Thanks...I just enter it all into Turbo Tax and let it figure it out....

 

[Nevets]

Thanks...I just enter it all into Turbo Tax and let it figure it out....

Except for that Turbo Tax will not figure out what you were asking. You have to figure out what the substantiated amount of per diem that is deductible and then plug that number into Turbo Tax.

 

[SplitBar]

Where do you enter it into turbo tax? Is it just a line item entry where you enter your rob related expenses? That is where I have always put it.

 

[another cfii]

2 questions:

1) I'm kinda fuzzy about the >2% AGI term, can someone please explain it?

2) I know i can find my per diem paid by the company in box 12 L on my w-2. But my last company doesn't use that box, and i was told to use the amount shown with "Misc. Non-taxable comp.". Does that sound right?

Thanks!

 

[NCFlyer]

Several deductions are limited to a certain threshold.

For example, medical expenses are only deductible after they exceed 7.5 % of your AGI.

The deduction for unreimbursed employee expenses is among those limited to the amount that exceeds 2% of your AGI. Meaning there are several deductions that fall under the 2% AGI limit. As you complete your taxes, after you calculate your business deductions, on schedule A you will subtract 2% of your AGI from the total of those deductions. That is the amount that you will be allowed to deduct.

It really isn't that complicated.

As for how your employer handled the non-taxed per diem, I have no idea. It sounds like what you say could be accurate. You also could look back at your pay records and add it up. It should be the same.

 

[CptMurf]

Where do you enter it into turbo tax? Is it just a line item entry where you enter your rob related expenses? That is where I have always put it.

When you put it into Turbo Tax it is going to go into the ME&I section of the job related expenses. Put the total Per Deim allowed by the government in the first box. Another box will ask you how much you were reimbursed, you will enter the Per Deim paid to you by your company. Turbo Tax will calculate the difference and put it on the forms. Make sure you click the check box that you are subject to the DOT rules. This will let you get the 80% and not just the 50% that any other traveling career would get.

Those that have posted partial pay for the first and last days are correct in calculating the total that you are allowed by the govenment. Plus you do not have to use the standard $52 dollar amount. You can figure it out per city (Some cities rate more $$ due to the cost of living). You have to go one way or the other though, so choose wisely. Day trips and CDOs do not count, the idea is you have to be gone on multiple day trips to claim Per Deim.

 

[JustaNumber]

Day trips and CDOs do not count, the idea is you have to be gone on multiple day trips to claim Per Deim.

I could be wrong, but I was under the impression that the trip had to involve an overnight rest period in order to count; in that case, CDO's usually meet that criteria. The IRS definition of rest does not have to meet the FAA's definition of minimum rest.