Travel expenses - van driver tips?

[Benjamin Dover]

On page 5 of Pub 463 it says.....

Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. It allows you to use a set amount
for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. The set amount varies depending on
where and when you travel. In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance. If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel (my notes: company probably does that under their accountable plan). See the recordkeeping rules for travel in chapter 5.

It then goes on to define incidental expenses, which I would think tips to a van driver fall under...

Incidental expenses.
The term “incidental expenses” means:
· Fees and tips given to porters, baggage carriers, bellhops, hotel maids, stewards and others on ships, and hotel servants in foreign countries

So if you're taking a standard meal allowance, which you clearly post in your last reply to me, then that standard meal allowance includes meals and incidentals. Incidentals = tips to van drivers (see definition above). If you deduct tips in addition to the standard meal allowance, you would be deducting your tips twice: once with the standard meal allowance and once again when you deduct the tips.

This is all assuming, of course, that you weren't fully reimbursed by your company in the first place. I assume you're using Form 2106 to deduct the difference between Box 12 Code L on your W2 and your standard meal allowances.

Or I could be wrong

Thanks for the reply UALDriver. I thought I was pretty clear in my first post that I was using the Standard meal allowance for transportation workers and I also referenced that same page 5 of IRS pub 463 that you quote??

At any rate, you say :

"Incidentals = tips to van drivers (see definition above)."

Does it really say that, or is that your interpretation of that definition? It makes no mention of domestic tips in the definition of "incidentals". It mentions tips on ships and for hotel servants in foreign countries. If the intent was no tips can be deducted at all for business travel if you are using the standard meal allowance, why doesn't it state this?

So, the crux of my question that I was wondering if anyone's CPA, or any CPA's on FI, had a stance on the interpretation of that incidental definition as it relates to domestic tips.

I know it's pretty clear to you UAL, but not to me. Thanks.

 

[FlyinGuy]

Remember you have to get to 2% AGI for your business expenses or it is not deductable.

 

[Secret Squirrel]

Thanks for the reply UALDriver. I thought I was pretty clear in my first post that I was using the Standard meal allowance for transportation workers and I also referenced that same page 5 of IRS pub 463 that you quote??

At any rate, you say :

"Incidentals = tips to van drivers (see definition above)."

Does it really say that, or is that your interpretation of that definition? It makes no mention of domestic tips in the definition of "incidentals". It mentions tips on ships and for hotel servants in foreign countries. If the intent was no tips can be deducted at all for business travel if you are using the standard meal allowance, why doesn't it state this?

So, the crux of my question that I was wondering if anyone's CPA, or any CPA's on FI, had a stance on the interpretation of that incidental definition as it relates to domestic tips.

I know it's pretty clear to you UAL, but not to me. Thanks.

Yes, BUT it breaks out transportation as separate. For me this is a TRANSPORTATION expense.

 

[SteelerMan]

Anyone use an accountant who has a theory on this. IRS pub. 463 page 5 describes tips for service on ships and in foreign countries being part of "incidentals" in the standard meal allowance rate, but does not mention tips for domestic travel.

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


So, if using standard rate for transportation worker, can we deduct domestic tips or not? Thoughts?

Thanks

Bad Theory, this is pretty clear, no you can not. Because it does not specifically say "domestic hotel van drivers" tips, does not create a loophole that would stand up in an audit. Any tips will be dissallowed when dedcucting via this method. Now just remember who has to pay the fees for the back taxes you owe, its not your tax guy, its you and only you, definately not worth it. But you can deduct whatever you want until an audit Also be aware of the crackdown against cell phone deductions. Tough to justify anymore in an audit. Cheers.

Standard Meal Allowance





Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. The set amount varies depending on where and when you travel. In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. See the recordkeeping rules for travel in chapter 5.
Incidental expenses. The term “incidental expenses” means:

• Fees and tips given to porters, baggage carriers, bellhops, hotel maids, stewards or stewardesses and others on ships, and hotel servants in foreign countries,
• Transportation between places of lodging or business and places where meals are taken, if suitable meals can be obtained at the temporary duty site, and
• Mailing costs associated with filing travel vouchers and payment of employer-sponsored charge card billings.

Incidental expenses do not include expenses for laundry, cleaning and pressing of clothing, lodging taxes, or the costs of telegrams or telephone

 

[Benjamin Dover]

Bad Theory, this is pretty clear, no you can not. Because it does not specifically say "domestic hotel van drivers" tips, does not create a loophole that would stand up in an audit. Any tips will be dissallowed when dedcucting via this method. Now just remember who has to pay the fees for the back taxes you owe, its not your tax guy, its you and only you, definately not worth it. But you can deduct whatever you want until an audit Also be aware of the crackdown against cell phone deductions. Tough to justify anymore in an audit. Cheers.

Standard Meal Allowance





Generally, you can use the “standard meal allowance” method as an alternative to the actual cost method. It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of your actual costs. The set amount varies depending on where and when you travel. In this publication, “standard meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance . If you use the standard meal allowance, you still must keep records to prove the time, place, and business purpose of your travel. See the recordkeeping rules for travel in chapter 5.

Incidental expenses. The term “incidental expenses” means:

• Fees and tips given to porters, baggage carriers, bellhops, hotel maids, stewards or stewardesses and others on ships, and hotel servants in foreign countries,
• Transportation between places of lodging or business and places where meals are taken, if suitable meals can be obtained at the temporary duty site, and
• Mailing costs associated with filing travel vouchers and payment of employer-sponsored charge card billings.

Incidental expenses do not include expenses for laundry, cleaning and pressing of clothing, lodging taxes, or the costs of telegrams or telephone

So how is this so clear? If "no tips at all" was the intent of the incidental definition, why does that first bullet just address ship/foreign travel? I would think that first bullet would read something like "all fees and tips incurred during travel away from home for business purposes" would cover all business travel if using the standard allowance if that was the IRS intent like you guys say. Why is the ship, foreign country statement there? I don't know, and I say you don't know either.

That's why I would like to know if someone besides a pilot-expert has a take on this, like a CPA. Right now this is like a Navy-Air Force argument about what is authorized - "does the book say we can do it, or does it say we can't do it?"

Again, glad it's clear for you guys, not so clear to me. But I am USN

 

[Benjamin Dover]

Yes, BUT it breaks out transportation as separate. For me this is a TRANSPORTATION expense.

You mean this, bullet two from "incidental definition?:

Transportation between places of lodging or business and places where meals are taken, if suitable meals can be obtained at the temporary duty site

Or are you talking about "Transportation" in the chart (table 1-1) on that same page, page 5 pub 463?

Speaking of table 1-1, it has a pretty generic definition of "tips" there - tips you pay for any expenses on this chart. I would think that first bullet in the "incidental expense" definition that guys are claiming as the "no go" reason would just say something general like this if the intent was to mean all tips. Instead they specifically single out ships and foreign travel??

Getting to be the "dead horse" stage here now, but was hoping to hear input from a real tax expert, or someone who uses one, rather than just us pilot experts.

Thanks for everyone's input.

 

[ualdriver]

Thanks for the reply UALDriver. I thought I was pretty clear in my first post that I was using the Standard meal allowance for transportation workers and I also referenced that same page 5 of IRS pub 463 that you quote??

I was trying to give you a "way out" of using tips as a deduction by using the actual cost method. It was a mild attempt at tax humor, but as most things internet, subtleties are sometimes lost.

At any rate, you say :

"Incidentals = tips to van drivers (see definition above)."

Does it really say that, or is that your interpretation of that definition? It makes no mention of domestic tips in the definition of "incidentals". It mentions tips on ships and for hotel servants in foreign countries. If the intent was no tips can be deducted at all for business travel if you are using the standard meal allowance, why doesn't it state this?

So, the crux of my question that I was wondering if anyone's CPA, or any CPA's on FI, had a stance on the interpretation of that incidental definition as it relates to domestic tips.

I know it's pretty clear to you UAL, but not to me. Thanks.

It would be my interpretation. On page 5 when it defines standard meal allowance, it defines incidental expenses. I don't deduct tips when using the standard meal allowance. If you look long enough, you will find 2 different types of accountants/CPAs/tax professionals: One type will agree with you and tell you to deduct it. The other type will disagree with you and tell you that you can't. Both will be very confident in their answer.

It's not pretty clear to me. Nothing in the tax code is. If you "really" want an answer that you can hang your hat on, what I would do is call the IRS helpline ( 1-800-829-1040 ). Believe it or not, the help line is quite good and I use it to answer my questions and those of others who ask me when I'm not sure. When you get to the operator, tell them you need help with per diem/publication 463. When the person you are routed to answers the phone, the first thing out of their mouth will be their name and IRS employee number. Be ready with a pen and write it down. Tell them you are a transportation worker and plan on using the standard meal allowance for transportation workers. Ask them if you are allowed to deduct tips to van drivers in addition to the standard meal allowance, or if the "incidentals" portion of the standard meal allowance already covers that. Deduct or don't deduct as desired. Keep the name, employee number, date, and time of the person you talked to with your tax records.

I'd be curious as to what they have to say. Please post if you do call them.

 

[Secret Squirrel]

No, a transportation expense to and from the airport. That expense is for transportation to get meals. It specifically spells that out.

 

[Benjamin Dover]

I was trying to give you a "way out" of using tips as a deduction by using the actual cost method. It was a mild attempt at tax humor, but as most things internet, subtleties are sometimes lost.




It would be my interpretation. On page 5 when it defines standard meal allowance, it defines incidental expenses. I don't deduct tips when using the standard meal allowance. If you look long enough, you will find 2 different types of accountants/CPAs/tax professionals: One type will agree with you and tell you to deduct it. The other type will disagree with you and tell you that you can't. Both will be very confident in their answer.

It's not pretty clear to me. Nothing in the tax code is. If you "really" want an answer that you can hang your hat on, what I would do is call the IRS helpline ( 1-800-829-1040 ). Believe it or not, the help line is quite good and I use it to answer my questions and those of others who ask me when I'm not sure. When you get to the operator, tell them you need help with per diem/publication 463. When the person you are routed to answers the phone, the first thing out of their mouth will be their name and IRS employee number. Be ready with a pen and write it down. Tell them you are a transportation worker and plan on using the standard meal allowance for transportation workers. Ask them if you are allowed to deduct tips to van drivers in addition to the standard meal allowance, or if the "incidentals" portion of the standard meal allowance already covers that. Deduct or don't deduct as desired. Keep the name, employee number, date, and time of the person you talked to with your tax records.

I'd be curious as to what they have to say. Please post if you do call them.

Thanks for the time and advice UAL. I've never used a accountant/tax prep service and I've also heard "allowed" dedcutions vary widely out there.

Just for grins, I estimated my tips for the year and it only makes about about a $50 difference to the bottom line. Like someone said, probably not worth it.

Sure wish that pub was written better though. If I get motivated, maybe I'll go that help number. Let you know what I find out.

 

[SteelerMan]

I understand the confusion now, the term "foreign countries" only applies to hotel servants, nothing else in that section. Yes it is worded awkwardly, but that is the intent. Be very careful of these "Transportation Specialist" tax preparers, they sometimes push the limits too far. Cheers