Tax Advice Mistake

[golfhobo]

No... I'm sorry to disappoint some... it is not MY mistake. (But, you came here HOPING for a mea culpae, didn't you?)

It's a mistake I've seen a few post here on CAD... and I just read it again posted by an "expert" on TruckersNet... or somewhere.

If you're out for weeks or months at a time... it may not amount to much. But... if you go out and back nearly EVERY week, it could really add up!

It's the "misconception" that you can only deduct 3/4's of the Per Diem amount for the days you leave and return on a RUN. I submit that you should (and can) be deducting the full amount for those days. (at 80% of course... which I don't like and am investigating.)

Before some of you "jump," remember that I always do my research. In fact, I've been doing alot this week as I am doing my taxes (for the last three years) on my week off. But, this is a question (or a claim I had a problem with) for the last 3 years that I have been avoiding filing.

I have thoroughly read and digested IRS Pub 463, 1542 and 17. I analyzed (instead of skipping over) EVERY example they gave to find which one most closely approximated my/our situation. I have concluded that...

WE are able to take the full per diem rate for Transportation Workers (subject to the 80% restriction we are entitled to) for EVERY day that we can show a logsheet (with any time spent on lines 3, 4, or 5) for! [Okay... NOT for line 5!]

Jen's example shows that gov't employee's are the only ones required to take 3/4 days! [because they often claim the specific rate for the visited area and/or because they work for the GOV't!]

From either Pub 463, 1542, or Pub 17....

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 3/4 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: 3/4 of the daily rate for Wednesday and Friday (the days she departed and returned), and the full daily rate for Thursday. [Washington has a higher per diem rate than the average.]

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.

[golfhobo]

I just realized that line 5 counts. Someone on that other forum said his/her accountant said they couldn't claim per diem exemptions for 34 hour restarts "on the road." That CPA is wrong. WE most certainly CAN claim the trucker's daily exemption for these days, as we are away from our home, and on the business of the company.

The amount of time spent on line 5... [or line 1 and 2] during a 34 hr restart... has NO bearing on its tax deductibility!

[Malaki86]

Question: which damn form do we fill out for the per diem?

[golfhobo]

Question: which damn form do we fill out for the per diem?

I'm pretty sure it is form 2106. There is an "e-z" form, but I'm not sure we can use it.

2106 is the form used for "itemized" business deductions. This "result" is transferred to some line on Schedule A and then to your 1040.

But... are you SURE you want to listen to ME.... Malakai?

Whether or not YOU need to fill out that form, depends on whether or not your per diem amount (in whole or part) is reported in box 1 [wages, tips, etc.] on your W-2.

I must point out that, by asking ME any question about this, you are assuming I might know what I am talking about. IF you don't believe that I have done my research and MAY know what I am talking about... you should not be asking such a simple question.

I'm not looking forward to having to quote paragraphs and sections (as well as examples) for the Pubs I referenced to back up my claims... but, I am capable and willing.

I'm gonna have to do it ALL tomorrow for my accountant. Lucky for me... he was a railroad employee at one time. That IS part of the Transportation industry that qualifies for the "special treatment." So he will be easy to show this information to.

[golfhobo]

Question: which damn form do we fill out for the per diem?

First question: Does your W-2 form show wages, etc. in box 1 that represents your TOTAL income (miles times cpm) or is it "reduced" by an amount equal to (or less than) the $50+ per day we are allowed to deduct for "per diem?" Mine represents an amount reduced by ONLY $30 per diem... per day. Since I am allowed to claim MORE than that... I have some major "filing problems." Hence... my research efforts.

There are MANY rules and calculations that could apply to us truckers. But, it all starts from how your employer reports your total income.

I don't need, nor want, to know the figures. I just need to know whether or not they represent TOTAL income or a reduced amount.

[Malaki86]

No - my W-2 does not show any per diem at all. It reports my full wages. As for days out, Drivers Daily Log shows that I was out 291 days for the year.

[GMAN]

You can either keep track of your actual expenses or claim the per diem for all days out. It is usually easier to take the per diem deduction.

[Malaki86]

Not to mention that there's no way I spend $59 per day, even with my wife in the truck with me LOL.

Found both the form 2106 & 2106-EZ in TurboTax. Just have to figure it out.

[golfhobo]

No - my W-2 does not show any per diem at all. It reports my full wages. As for days out, Drivers Daily Log shows that I was out 291 days for the year.

That is probably a good thing. As a result, I'm not sure you have to fill out form 2106...(but, I think you do. It will be simple.) Then, the "business-related" deductions will be transferred to Schedule A (if you ALSO do itemized deductions for mortgage interest, etc.) I need to know this, TOO... before I can advise you further.

The point is.... you can deduct the full rate for "transportation workers" in lieu of proving WHERE you were. And you can deduct the FULL amount for every day you are not at home... without regard for the 3/4 day calculation. If you have log books... or Daily Log computer files... that show you were on the road for 291 days.... then multiply THAT by the trucker per diem for the year in question ($59 for last year,) and you get 80% of that right off the top of your income. If you own a home, I'm sure you will want to itemize your deductions and include this figure.

I HOPE you are not doing your taxes on your own. And, I am not sure that turbotax will work perfectly for everyone UNLESS... they take the full $59 (used to be a lower amount) for EVERY day they were out as if it was a full day. It has an automatic 80% reduction built in.... which is correct. 80% of the MOST you can deduct is preferential.

My point here is to convince some who have posted otherwise, that you are not required to REDUCE your business expenses by 1/4 on days you go out... or come in! That's about $15 per day... $30 per week for a driver that does a weekly run OTR. That's about ($30x50) $1500 per year you don't want to leave 80% of on the table!

I'm expecting someone to come on here and say I am wrong. I expect them to be civil. I just hate to see "experts" telling truckers on every board out there that, we can only take 3/4's of the deduction for in and out days. They are smart.... but, they are wrong. This has been going on for years.

The IRS will let you get away with claiming LESS deductions, and paying MORE taxes. But, likewise.... they will not even look TWICE at you if you claim deductions that they KNOW are reasonable for a trucker who has "special dispensation."

[golfhobo]

Not to mention that there's no way I spend $59 per day, even with my wife in the truck with me LOL.

Found both the form 2106 & 2106-EZ in TurboTax. Just have to figure it out.

The good thing is... you don't HAVE to prove anything. You don't have to even spend the 59 bucks/day. All you need is RODS to prove the number of days "out." Another "driver" out with you can also take the deduction... but, I doubt you can take it for your wife. This brings in aspects I am not investigating.

According to the regs/ IRS rules.... your logsheets (or equivalent) are all that is needed to support a claim of $59 per day for M&IE (assuming you are not re-imbursed for lodging.) M&IE... is meals and ALL "incidental" expenses. That includes GLOVES, notebooks, pens, etc.

I can't believe no on is challenging my interpretations of IRS law! I could have "sworn" YOU were one of those who posted that it had to be 3/4's on in and out days!

THIS is the major claim I am debating. THIS is where I think everyone could save more money. THIS is where so many are wrong!

[MichiganDriver]

Question: which damn form do we fill out for the per diem?

Silly wabbit. You fill out the Amazon purchase form. Turbotax should cost 1/2 what it does but at least it's tax deductible.