Tax question for per-diem pilots

[AdlerDriver]

I've got TurboTax now and I'm trying to mimick what my CPA did last year as far as deductions for per-diem are concerned.

I like to use the averaging method...which from what I understand is legal. Let's say I was gone (at work) for 180 days last year, plus 20 days at recurrent training.

Is there a standard deduction I can use per day? Then, would I subtract that deduction from the per-diem the company gave me to pay for overnight expenses?

I apologize in advance if these are stupid questions, but I'm new to this and reading through the IRS paperwork online makes me more confused.

Thanks,

METARMan

The average rate if you don't want to figure each city rate is $41/day CONUS and $46/day Outside CONUS. I've never seen an exception about getting 100% of it if you start before 0600. Just my .02

 

[AdlerDriver]

I am so bloody confused......

I am on the road for 19 straight days at $42 a day. The per diem is not taxed come tax time.

So, i can deduct this?

Wankel

If you got the rate for each city you slept in, you might get a deduction. You don't get full credit for a city unless you spend a full 24 hours working that day. On any given day, you use the rate for the city in which you will next rest/sleep. The only change to this is on the last day of your trip. You use the rate for the city you slept in the night before for the day your trip ends. The IRS allows you to use 75% of the rate for the first and last day of your trip (unless you started right at 1201 midnight and finished at 1159 pm). You would need to take 3/4 of the rate for the city you slept in on day one of your trip, add full rate for each city on days 2-18 and then add 3/4 rate for the last city you slept in (on day 18) for your last day. You never use your home town rate for the last day of your trip. This will give you a total the government allows for the trip. Do this for all your trips and get a grand total for the year. If it's more than what you got paid in per diem for 2004, you can deduct 70% of the difference.



If you use the standard rate (don't get the city rate for each city), its $41/day. Since you get $42/day, right there you know you won't get a deduction. If you stay in lots of small cities/towns on your trips, I wouldn't bother. Some rates for small towns are as low as $31/day. ORD, LAX and other expensive cities have the max rate of $51/day and would obviously allow you a deduction. Also, if you travel outside the U.S., it is definitely worth the trouble. I do and will get a deduction of over $2500 this year just on per diem. (And my rate is $56.40/day)



Here are links to the per diem rates if you want:



CONUS rates - www.policyworks.gov/perdiem

These only change once a year on Oct 1



OCONUS rates - www.state.gov/m/a/als/prdm

The OCONUS rate change monthly.



Cheers.

 

[cherokee]

Quoted directly from IRS Publication 463...see especially the last paragraph...this is my source...


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:

1. Directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and
   
2. 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 $41 a day ($46 for travel outside the continental United States) for 2004.


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

 

[wood pecker]

I have talked to the irs on 2 different occasions concerning per diem and each had their own formula so how are we to all do our taxes the right way?

The way that seems common is to take your overnights x standard conus rate - company reimbursement x %70 = deduction.

150 overnights x $41 = $6,150 x .70 = $4,305
The 70% on turbo tax might already be calculated for you in the transportation box so do not calculate twice.


Speaking of taking advantage of the rules, one pilot is deducting an additional $50-60 per overnight for meals. For expenses < $75 = no reciept but you must have a log/record. So he reports taking the crew out every overnight which really adds up. $50 x 150 = $7,500 x 9 years at airline $67,500. His record book looked pretty funny with all of those fictional dinner dates. But hell he did not get caught so it must be right.

 

[Secret Squirrel]

He did not get caught and he did not get audited are two different things. You can do what ever you want until the audit and then you pay. Don't listen to anybody who said they know somebody who did this and it worked for them.

Remember it is a FEDERAL offense for TAX FRAUD. You might get away with paying back taxes PLUS interest. Or you could go to Jail. Count your dogs as dependants if you want.

Listen to people on an anonymous web board and you could get screwed. The only path I would follow is to read the IRS publications. Or get an accountant. I have read a lot of false information in this thread. And I did a lot of tax work at one point in my life.

SS