Tax Q. regarding per diem

[John Pennekamp]

Just do like Snipes. Don't pay taxes.

 

[PCL_128]

1. CDO (stand-up, highspeed, naps, illegals, whatever) are NOT allowed to be deducted at all because the trip does not include a DOT-required rest period away from your home.

The IRS publications never say that it has to be a "DOT required" rest period, merely that there must be enough time to sleep. I don't know about you, but I sleep on stand-ups, so they qualify.

 

[trainer8]

I just bought a laptop and is that deductible since i use it to check my schedule and weather?

I also deduct my entire cell phone since i can prove that i was on reserve the entire year and it is a requirement for my job.

You may do that if those items are used soley for your employer. You get audited and they see you called your mom, your busted.

Your laptop can be totaly deducted, if you use it soley for your company. But...if you look up e-trade, do, email to your significant other, skype your friends, facebook, etc, you can only depreciate the value of the laptop.

You can depreciate it if it is a "convenience" for your company...in other words, your company "benefits" from you having the laptop...and you must prove that they do. (not hard to do, in most cases) Perfectly legal, but, you must document it with the appropriate IRS publications and forms.

Don't take my word for it. Contact a tax professional.

T8

 

[legalalien]

You fall under the transportation category. You cannot deduct 100% every day. It has to be prorated. Read page 6 of this publication.

http://www.irs.gov/pub/irs-pdf/p463.pdf

I think that you should reread the publication you quoted. Look at the second paragraph on the third column. Under Method 2 proration can be 100% if that is reasonable! The example they give shows 100% as a proration.

 

[No.W.]

My tax professional says that I can take 100% of the unreimbursed figure(NOT using the 75% for DOT employees). We chatted about that yesterday. He feels strongly that it is a fair and easily defendable deduction. His reasoning is that the deduction is for more than my meals and entertainment, but also for other expenses I incur as I travel(I guess since I don't deduct the cost of internet/laptop/100% cell phone/luggage etc....he has a point...we aren't just talking about ME&I here). I guess we'll see, eh? As far as the 75% for first and last days...I do that. It seems reasonable...and defendable. However, the document quoted above DOES state that you can take the 100% on that as well. This stuff is confusing...that's why it's good to pay someone to do your taxes.

 

[John Pennekamp]

As said before, anyone asking for or taking tax advice from a message board needs to have their head examined.

 

[SizzleChest]

...here's a spin. Let's say you are a SIM instructor and live in the town where you train in the SIM. This is NOT your domicile however. Can you deduct the per diem you get while sleeping in your own bed???

 

[regionalcap]

I think that you should reread the publication you quoted. Look at the second paragraph on the third column. Under Method 2 proration can be 100% if that is reasonable! The example they give shows 100% as a proration.

Yea. I see what you are talking about. I guess every pilot tax service that I have used has always used the 3/4 method for the first and last. It's too much of a headache to figure out what is right. That's why I let a pilot tax service figure it all out. I just tell them where I overnighted, and they do the rest.

 

[CLR2LAN]

I know i asked before...and before doing it i'd ask a professional...but just trying to get a feeling for this situation.

You work somewhere where your per diem is "under the table" Nothing but wages reported. Would you try and deduct your road expenses still?

 

[chperplt]

You probably don't make nearly enough money to worry about an audit....

Just deduct it all... Add in some Lifetime Learning Credit, a few charitable donations, toss in 10 or 20K in sales tax (or state tax) and keep playing with it until you're getting nearly every penny back.

They won't audit you.... I promise.


:nuts:

 

[trainer8]

...here's a spin. Let's say you are a SIM instructor and live in the town where you train in the SIM. This is NOT your domicile however. Can you deduct the per diem you get while sleeping in your own bed???

Is the company paying you from your home or from your domicile? That answer will answer your first question.

However, a squirrely/bean counter auditor might think otherwise.

T8

 

[druglord]

you chperplt,
long time no talk. i miss PQI this time of year

 

[chperplt]

you chperplt,
long time no talk. i miss PQI this time of year

Those were the days...... :beer:

I hear you're off to bigger and better things soon??

 

[Motown]

You fall under the transportation category. You cannot deduct 100% every day. It has to be prorated. Read page 6 of this publication.

http://www.irs.gov/pub/irs-pdf/p463.pdf

I re-read the publication, but I don't see any restriction on transportation workers from deducting the full ME&I rate every day. I found the following:

Special rate for transportation workers. You can use a special standard meal allowance if you work in the transportation industry. You are in the transportation industry if your work:

• Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and
• Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates.

If this applies to you, you can claim a standard meal allowance of $52 a day ($58 for travel outside the continental United States) from January 1, 2007, through December 31, 2007.

Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year.
​

Travel for days you depart and return. For both the day you depart for and the day you return from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day). You can do so by one of two methods.

• Method 1: You can claim ¾ of the standard meal allowance.
• Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice.

Example.
Jen is employed in New Orleans as a convention planner. In March, her employer sent her on a 3-day trip to Washington, DC, to attend a planning seminar. She left her home in New Orleans at 10 a.m. on Wednesday and arrived in Washington, DC, at 5:30 p.m. After spending two nights there, she flew back to New Orleans on Friday and arrived back home at 8:00 p.m. Jen's employer gave her a flat amount to cover her expenses and included it with her wages.
Under Method 1, Jen can claim 2½ days of the standard meal allowance for Washington, DC: ¾ of the daily rate for Wednesday and Friday (the days she departed and returned), and the full daily rate for Thursday.
Under Method 2, Jen could also use any method that she applies consistently and that is in accordance with reasonable business practice. For example, she could claim 3 days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited to only 2½ days.


​

I don't see any discussion on page 6 or anywhere else limiting transportation workers to different proration amounts than any other non-government employee, but I am more than happy to look at whatever text you think applies.

 

[Motown]

The IRS publications never say that it has to be a "DOT required" rest period, merely that there must be enough time to sleep. I don't know about you, but I sleep on stand-ups, so they qualify.

I pulled up the Publication 463 because I was SO sure it was in there... but you're right; I can't find it. I swear it was in there a few years ago when I was trying to figure it all out for the '00 or '01 tax year. So, hoping for a little clarification, I telephoned the IRS (1-800-TAX-1040), but I just hung up more confused than I was before. During the same telephone call, the IRS representative changed positions 5 times. In the end, I heard the following:

1. FAA and DOT rules don't have anything to do with IRS rules, so the fact that the FAA says it's not legal rest doesn't matter to the IRS. (Supports deducting CDOs)
2. We are not "off duty" at all during the night; we are shown as "on duty" and our schedules even list it as "Continuous Duty Overnight". (Supports NOT deducting CDOs)
3. Tax is withheld from our CDO per diem but not from our multi-day per diem (Supports NOT deducting CDOs)
4. The argument seems to come down to "necessary rest". Do we need to sleep or rest to meet the demands of work? The argument could be made that we do NOT need the rest since the company is allowed to work us all night without any rest. (Supports NOT deducting CDOs)

 

[PCL_128]

Tax is withheld from our CDO per diem but not from our multi-day per diem (Supports NOT deducting CDOs)The argument seems to come down to "necessary rest".

Some airlines tax per diem from CDOs, some don't. Pinnacle did, AirTran doesn't. It all comes down to how each accounting department interprets the rules. I think the rules are fairly clear that if I'm getting enough of a break to sleep, then it's non-taxable, and it's deductible.

Do we need to sleep or rest to meet the demands of work? The argument could be made that we do NOT need the rest since the company is allowed to work us all night without any rest. (Supports NOT deducting CDOs)
</ol>

I would refuse to work all night, citing fatigue. Since my contract requires the company to schedule a certain amount of time on the ground, and requires them to provide me a single-occupancy hotel room, I think it's clear that sleep is expected.

 

[Motown]

Some airlines tax per diem from CDOs, some don't. Pinnacle did, AirTran doesn't. It all comes down to how each accounting department interprets the rules.

That's interesting. I didn't know that some airlines provide the CDO per diem tax free.

I think the rules are fairly clear that if I'm getting enough of a break to sleep, then it's non-taxable, and it's deductible. I would refuse to work all night, citing fatigue. Since my contract requires the company to schedule a certain amount of time on the ground, and requires them to provide me a single-occupancy hotel room, I think it's clear that sleep is expected.

My contract does not require any amount of time on the ground, and in fact I have flown the entire night before (a couple of times due to super late departures after weather or maintenance, and once to ferry a plane to CVG after it sustained major bird strike damage after arrival at the CDO city). Sounds like you have some features in your contract that I wish we had. Maybe someday. I keep checking my phone every day to make sure it still works, and yet no other airline is calling me for an interview. (sigh)

 

[DoinTime]

I re-read the publication, but I don't see any restriction on transportation workers from deducting the full ME&I rate every day. I found the following:

Method 2: You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice.

If you apply 100% of the day for every day you meet the first part of Method 2 about applying a standard consistently. The second part though requires you apply reasonable business practice.

The good part about the "reasonable" standard is that it gives you some wiggle room to ease accounting. The bad part about it is that YOU don't get to define "reasonable." If your trips don't start prior to 01: 00 and end after 23: 00 your not going to be able to convince an auditor that you are being reasonable if you take a 100% credit for every day.

I use Method 2 and account for me being at work 75% of every day I am scheduled. Some days are more, some days are less but it works out to be a "reasonable" representation of the truth.

 

[HoserASA]

ALPA's "Airline Pilot" through the years has had excellent articles on what to claim. It has always been 75% for partial days, and 100% for a full day. Example, a 3 day would have you claim 75% on the 1st and 3rd days, and 100% on the 2nd day.

I believe you can go to crewroom.alpa.org and find the articles in the archives if you want.

Hoser

 

[PCL_128]

My contract does not require any amount of time on the ground

Really? What airline do you work for?