Per Diem Calculation
 

I apologize if this has been addressed already, but after searching the forums I did not find a suitable answer.

When calculating per diem for tax purposes, how does one use the rates for each city and how does one apply the 75% rule for first and last days? For example, let's say I'm MSP based on a 4 day.

Day 1 - Leave MSP, overnight MKE.
Day 2 - Leave MKE, overnight MCO.
Day 3 - Leave MCO, overnight ATL.
Day 4 - Leave ATL, arrive MSP.

If rates for these cities are (I'm making this up):

MSP - $30
MKE - $40
MCO - $50
ATL - $60

What numbers would I put together to come up with my "how much the IRS thinks I would have spent" number?

Note: I know there are a lot of great per diem services out there, and I'll probably use one however this is more for my curiosity.

Pro-diem ............

You can try Online Per Diem - Home - Per Diem It really is free. Enter you data and get a report emailed immeadiatly. Use or don't doesn't cost anything. They only ask for a small donation if it saves you some bucks.

I tried it with your example and got the following results (sorry about the formatting, I cut it out of the PDF hat they send you):

STANDARD METHOD: using (3/4 rate for partial days)

MKE MILWAUKEE, WI Government Rate:61
Sequence: 1-0603 FY2015 GSA Table
PerDiem Start FROM: MSP on 03 Jun 2015 Layover at: MKE
PerDiem End: 04 Jun 2015 at MCO Based on GSA Domestic rates.
0.75 + 0.50 Days yields: $76.25 Running Total: $76.25

MCO ORLANDO, FL Government Rate:56
Sequence: 1-0603 FY2015 GSA Table
PerDiem Start FROM: MKE on 04 Jun 2015 Layover at: MCO
PerDiem End: 05 Jun 2015 at ATL Based on GSA Domestic rates.
0.50 + 0.50 Days yields: $56.00 Running Total: $132.25

ATL ATLANTA, GA Government Rate:56
Sequence: 1-0603 FY2015 GSA Table
PerDiem Start FROM: MCO on 05 Jun 2015 Layover at: ATL
PerDiem End: 06 Jun 2015 at MSP Based on GSA Domestic rates.
0.50 + 0.75 Days yields: $70.00 Running Total: $202.25

You never use the rate for your domicile unless you actually layover there. The government allowance for this trip would be:

Day 1: .75 x $61(MKE) = $45.75
Day 2: $56(MCO)
Day 3: $56 (ATL)
Day 4: .75 x $56(ATL) = $42

So total government rate for this trip is $199.75. If you were paid $100 in per diem by your company for the same trip, your deduction for just that trip would be 80% of $99.75.