Originally Posted by
jackcarls0n
I am new to the regional and to the tax system.
I do taxes myself and it has been fairly simple.
However, I wanted to ask regarding per diem deductions. I am not able to figure out how to add the rates. If someone can help me would be great.
For eg. lets say I start a 4 day trip on 1st of a month (I am based out of IAD). I overnight on the 1st at Cleveland, OH; on the 2nd overnight at Norfolk, VA; on the 3rd overnight at Houston, TX.
The GSA rates for Meals and incidental for those cities are - $56, $61 and $71- for a total of $188.
If i use standard rates of $59x3, the total is $177
(I understand I can only use one type of deduction, either the GSA rates or standard)
I get paid $1.70 per hour and for a total of TAFB 80 hours= $136.
Just to make it easier lets just use the standard rate of $59 for calculations.
So my additional deduction is $41.00 ($177-$136)
But they is the 80% rule- if i use that then do I take 80% of first overnight at Cleveland, Oh and last overnight at Houston, TX- the total now would be (59x0.8)+59+(59x0.8)=$153.4
Now my total additional deduction would be = $153.4-$136= $17.4
Is this is correct or am I doing something wrong?
Thank you
You're not using the 80% correctly. You're also cheating yourself out of the last day's per diem. You work four days, you have four days of per diem, not three.
You figure each trip like this (using your example):
Partial days (so, the first and last) are figured using 75% of the city rate. Each day's rate is based on where you sleep that night. Last day is based on last city you slept in (so you use Houston twice).
Day 1: .75 x $56 = 42
Day 2: Full $61
Day 3: Full $71
Day 4: .75 x $71 = 53.25
Total for trip: $227.25
If you get paid $136 for that trip, then your deduction for that one trip would be 227.25 - 136 = 91.25 x .80 = $73
Normally, you don't figure a deduction for each trip.
In reality, you're going to calculate a total every trip you fly for the calendar year using the government rates. Remember the domestic rates are updated 1 October each year and international destinations are updated monthly. Add up each trip total and get your yearly total. Then you take the amount on your W-2 box 12L (total per diem paid by employer) and subtract that from the per diem total you figured.
THEN you multiply by 80% (since DOT workers get to deduct 80% of the difference rather than the normal 50%).
That 80% of the difference between what you're paid by your employer and what the government would pay you on the same trip(s) can be claimed as a business expense.
Using standard rate usually results in a lower deduction unless you are
always in smaller cities that have a lower rate than the standard. If you're all over the country (or especially international) and hitting large cities on a regular basis, I recommend using the actual city rates.
You may also want to consider using Pro Diem. $59 and 15 minutes of your time and they'll do all this work for you. They'll give you the total and you just do the subtraction and take 80% of the difference for your deduction. They have a proprietary method that usually beats my calculations by enough to justify the cost. I get a higher deduction, more money back even after the $59 (which is tax deductible too).