Per Diem Tax Credit?

Rodger Wilco

Well-Known Member
Hey it is that time of year again!

Question: What is the thing about calculating extra per diem based on where your overnights were? I have heard people talking about this but I don't understand it. It isn't something that just pops up on turbo tax if you know what I mean!

Is it worth taking the time to do it?
 
I dont itemize because I don't have enough deductions to beat the standard (6k i think).

HUMPH! Taxes! First year regional pay, I can't believe that I am not getting more back!

Hey Uncle Sam why don't you just step on my head while I am drowning!
 
I dont itemize because I don't have enough deductions to beat the standard (6k i think).

HUMPH! Taxes! First year regional pay, I can't believe that I am not getting more back!

Hey Uncle Sam why don't you just step on my head while I am drowning!
Start some sort of business, maybe consulting. You need to drum up some real business to make it legit. You can sustain losses for about 3 years before the government starts to think you are running a scam. Lots of businesses lose money in their first few years. Make a portion of your home your office. Purchase as many items as you can with said business. Make it to where you are consulting with people at the airport you work at. Suddenly, all of your mileage from your home office to your airport is deductible. The key is to have a legit business plan together, and you could possibly turn it into a side business.
 
mojo6911 said:
Start some sort of business, maybe consulting. You need to drum up some real business to make it legit. You can sustain losses for about 3 years before the government starts to think you are running a scam. Lots of businesses lose money in their first few years. Make a portion of your home your office. Purchase as many items as you can with said business. Make it to where you are consulting with people at the airport you work at. Suddenly, all of your mileage from your home office to your airport is deductible. The key is to have a legit business plan together, and you could possibly turn it into a side business.
I've done quite well consulting but get a good accountant. Remember if you write off a portion of your home as an office that when you sell the home you have to reclaim (and pay) back a portion in taxes. Even if the business lost money. After you show a profit you can go negative multiple years if you are a inc. it's just company money you know. 8)

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Remember that you can itemize quite a bit. The per diem deduction is a big one (for me, the difference was about $9,000, but of course, you can only take 80% of that). Union dues. Uniforms. State income tax paid. All deductible, and there's a good possibility it'll put you over the standard deduction level.

I use pro-diem, personally. The $59 pays for itself many times over.
 
I dont itemize because I don't have enough deductions to beat the standard (6k i think).

HUMPH! Taxes! First year regional pay, I can't believe that I am not getting more back!

Hey Uncle Sam why don't you just step on my head while I am drowning!

You would probably benefit from itemizing. $6300, the standard deduction is ~133 days away from home at 80% of $59.(I don't know what your per diem is, so I can't factor that.) I'd imagine you did at least that as a regional FO. Throw in the union dues, shoe polish, uniforms and you should be there no problem.
 
Everyone should itemize if they have more deductions than the standard deduction.
while I agree here, I don't understand how people itemize food from per diem since per diem isn't taxed already. am I missing something?
 
while I agree here, I don't understand how people itemize food from per diem since per diem isn't taxed already. am I missing something?

The thing to remember with itemizing your overnight expenses is that airlines never provide the amount of per diem that the government considers to be sufficient. The government calculates a rate for every major city, and they also calculate a standard rate for the other cities. For example, let's say you overnight in a city that the government has a CONUS rate for meals and incidental expenses (M&IE) of $70/night. Your airline only pays you $2/hr in per diem, though, so you only get $48 for the day. As far as the IRS is concerned, the company shorted you $22. So you get a deduction because the airline didn't reimburse you for your theoretical expenses. That's why it's deductible even though the airline pays you tax free per diem. The per diem they paid just wasn't enough.

The other way of doing it is with actual expenses. If you keep track of the actual cost of all of your meals and incidental expenses (like tipping), and that amount is more than using the government's standard rate, then you should use that. Most pilots are cheap, though, so the standard rate usually does better than the actual expenses method.
 
The thing to remember with itemizing your overnight expenses is that airlines never provide the amount of per diem that the government considers to be sufficient. The government calculates a rate for every major city, and they also calculate a standard rate for the other cities. For example, let's say you overnight in a city that the government has a CONUS rate for meals and incidental expenses (M&IE) of $70/night. Your airline only pays you $2/hr in per diem, though, so you only get $48 for the day. As far as the IRS is concerned, the company shorted you $22. So you get a deduction because the airline didn't reimburse you for your theoretical expenses. That's why it's deductible even though the airline pays you tax free per diem. The per diem they paid just wasn't enough.

The other way of doing it is with actual expenses. If you keep track of the actual cost of all of your meals and incidental expenses (like tipping), and that amount is more than using the government's standard rate, then you should use that. Most pilots are cheap, though, so the standard rate usually does better than the actual expenses method.
Beautifully explained.

I should definitely go over my return from 2014 and maybe file an amendment. Stupid me.
 
That's not really true. Lots of junior RJ FOs don't have anywhere near enough deductions to hit the standard deduction amount.
As a 1st year FO I overnighted over 200 nights. I figured it was the same for everyone in this environment. Reserves are flying, possibly more than the linehoders.
 
Still, your per diem deduction almost certainly won't get you over the standard deduction alone. You would need to have a mortgage, business expenses, or something else to get you there.
 
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