$52/80% Meal Allowance Deductible WITHOUT Itemizing?
 

Hello, I'm a wannabe trucker with a tip about the $52 daily meal allowance, now deductible at 80%,
or $41.60 per day that a (HOS-limited) trucker is away overnight.

With all due respect to such informative guys as the Rev. Vassago: I believe the $41.60 daily
deduction can be taken WITHOUT itemizing on Form 1040 (I believe he, and others, have stated
that you must itemize to take it).

If I am not mistaken, Line 24 of the Federal Form 1040 allows Form 2106 or Form 2106EZ
entries, without itemizing.

Furthermore, Line 5 (Part 1) of Form 2106EZ specifically mentions the meal allowance for DOT
workers subject to the HOS limits, and allows an entry there!

Therefore I conclude that the $41.60 daily deduction (for all overnight OTR work) can be listed
on Form 2106 or 2106EZ, and deducted from gross income on Line 24 of Form 1040.

I have, during my former career as a CAD (Computer Aided Design) designer on two aerospace
jobs in 2007 and 2008, sucessfully taken this deduction without challenge. I was taking 50%
of the standard $39 daily rate because I was not a "transportation industry" worker subject to
HOS limits. But as I stated above, those workers -- you truckers, soon I hope to say we
truckers -- are specifically mentioned on Form 2106EZ.

So take that $41.60 per overnight-duty day whether OR NOT you itemize!

If I have misread the rule, Rev (or anyone else), please inform me. I'm not trying to claim to
be an expert on this, but I have done my own taxes for 37 years with only one audit.

Comments, corrections, expressions of everlasting gratitude?....:lol:

According to the intstructions for form 2106 (http://www.irs.gov/pub/irs-pdf/i2106.pdf - specifically under "notes"), miscellaneous deductions on line 24 are limited to 2% of your AGI. Unless your AGI is in the $400,000 - $500,000 range, you would never be able to fully take advantage of your meal allowance by using line 24 rather than Schedule A. At least that's the way I'm reading it.

BTW, this line 24 is new. It doesn't appear on older 1040's.

The Lord giveth - the IRS taketh away...

Rick

But -- again, unless I'm misreading these rules -- the 2% limit is a floor, not a ceiling. Publication 529 states
(under the section entitled Deductions Subject to the 2% Limit, on page 2) "You can claim the amount of expenses that
is more than 2% of your adjusted gross income.

Notice it doesn't say less than. Or that the deduction "cannot exceed 2% of your
gross income." Which is how you are interpreting it.

In other words, if your adjusted gross income is, say, $100,000 -- you could deduct any
expenses over $2,000, or 2% of the 100 grand. So a meal allowance of $10,400 would entitle
you to a deduction of $8,400.

The 2% "limit" is not a maximum figure, or cap, that restricts the deduction. It is a minimum threshold
that must be exceeded prior to taking any deduction whatsoever.

Correct? I believe you're interpreting the rule far too restrictively....;)

After digging into it, I believe you're correct. But why would you want to give up 2% of your deductions just to save having to itemize? If your meal allowance is above the standard deduction, it doesn't make sense NOT to itemize - especially if you have other deductions to go with it.

In any case, the context in which I was referring to it was with per diem pay given by a company, not in which way you file your taxes. If a company is reimbursing your meal allowance with per diem pay, it is essentially taking away that meal allowance from you, which pretty much forces you to take the standard deduction (unless you have other deductions that are greater than the standard deduction).

Taking the meal allowance deduction (that amount exceeding the 2% limit) on Line 5 of Form
2106EZ, and listing it along with some other expenses such as lodging on Line 24 of Form 1040,
allows you to keep the standard deduction too. It works for me. I don't have some of
expenses usually used to itemize, such as mortgage interest, although I did in the past. Now my
condo is paid off.

However I've not yet familiarized myself with the scenario you're talking about, regarding the
per diem pay, 'cuz I haven't received that tax-free compensation in my "road job" CAD assignments.
But if I'm sucessful in entering the OTR trucking industry -- I start school at Nu-Way on Sept. 22 --
I will no doubt be following your advice given in other threads about that situation. :thumbsup:

Hmm...... per the instructions....

Generally, employee expenses are deductible only on
line 21 of Schedule A (Form 1040) or line 9 of Schedule A
(Form 1040NR). But reservists, qualified performing artists,
fee-based state or local government officials, and
individuals with disabilities should see the instructions for
line 10 to find out where to deduct employee expenses.

You still need to use schedule A last I knew. Your form 2106 rolls up into the schedule A (or supports it)

Unless you are a reservists, qualified performing artists, fee-based state or local government officials, or an individual with disabilities you should probably stay out of line 24 on the 2008 1040 form. IMHO

Thinking i need to submit an amended tax return since i never itemized, just took the basic deduction. Granted i was only OTR from early Nov. till the end of the year. but i should still get the per diem for the days i was OTR....yeah?

NO :hellno: :hellno: :hellno: . The OP was way off with this... but then....you go right ahead.....:D

Incorrect assumption, but I can see how folks would believe this considering how vaguely the
rules are written. But Form 2106 (or 2106EZ) does NOT have to be used with Schedule A
exclusively, I am positive of this. I have successfully written off meal, lodging and travel
expenses this way three times during my long drafting career -- in 1983, 2007 and 2008,
when working in other states away from my tax home.

No, I am not "way off" on this. Whichever way you file -- itemizing or standard deduction --
the meal expense deduction can be taken. You simply use 2106 or 2106EZ if you lack enough
unreimbursed expenses, mortgage interest, etc. to make itemizing worthwhile. Then, you use
the standard deduction PLUS the Line 24 deductions. That's why it's there....

But you do whatever you are comfortable with. As I said previously, we (my wife and I) simply
don't have enough of certain expenses to enable us to itemize anymore. :thumbsup:

And you are a qualified Attorney that is well versed in Tax Law? Or a CPA?

More like a major in trucker tax law from the CB school of trucker math with a minor from the lunch counter law school.:lol:

you are way off . You aren't ( from what you have stated) qualified to bring your 2106 to line 24 of the 1040. "being successful" might mean you haven't been audited or rejected by the IRS but still doesn't mean you filed correctly. You didn't.

Wow, some fairly hostile challenges here. I'm not claiming to be a tax expert of any kind, as ANY
reading of my original posts would reveal. Did any of you skeptics even bother to do so?

Dobry4u, it is rather naive' to believe only "reservists, performing artists," etc. are eligible to
use Line 24. Do you really think the IRS lists all eligible parties on a single line? Read a Lasser's
manual. That source is in agreement with IRS policies, just as HR Block manuals are, and
happens to be the one I use.

The reservists and performing artists ARE listed as eligible parties on Form 2106EZ...on Line 6.

But "employees subject to DOT hours of service limits" -- OTR truckers -- are specifically
listed as eligible on Line 5 of this very same form! Again -- did you read it?

Read Form 2106EZ itself. AGAIN, as I originally wrote, that very form lists other eligible parties
(transportation industry workers limited by HOS rules, etc.) and alsospecifically mentions
the $52/day meal allowance and the 80% limit!

Now, why in the world would Form 2106EZ list these things if only "reservists & performing artists"
were allowed to use it?

So please cool your skepticism until you read everthing; your responses lead me to believe you
have not. I'm not some know-it-all trying to impress anyone with bogus tax preparation methods
here; I am trying to help folks out. You might save yourself some money IF you can't
itemize but want to take the meal-allowance deduction anyway.

Please note my original post is a query to Rev Vassago, not a lecture on tax deductions.
I'm not qualified, true.

As far as you thinking I slipped under the IRS radar on this....no, I did not. My 2007 return was
recently examined because the IRS wanted to tax $26K I had withdrawn from a Legacy Treasury
Direct account that year, after losing my job in the auto industry. But they didn't get a dime and
closed the exam, because I was able to prove that the money was entirely after-tax
money (meaning it was ALREADY taxed when received in 1997 thru 2006, and was not in a tax-
advantaged account such as an IRA). It pays to keep good records....and of course the Federal
employees at Legacy Treasury Direct were able to confirm the status of the account. Withdrawing
the cash was not a taxable event, just as withdrawing money from a bank savings
account isn't taxed. The IRS's little fishing-expedition netted them nothing.

And by the way, an "exam" is not a full-fledged audit, although it can lead to one. THIS one
never made it past the polite-letter stage.

My point?....about the exam? Simply that my Line 24 listing of my Form 2106EZ deductions
(50% of the standard $39 per day for 225 days in Utah) never raised an IRS eyebrow
....nor should it have. It's legal.

Kindly SHOW ME where the IRS states I can't bring my Form 2106EZ deductions to Line 24. And
don't repeat that "reservists, performing artists, etc." mantra. Yes, the rules are VAGUE on this,
which is why you believe I'm wrong. But this method is used widely in the technical-services
industry by engineers and designers like myself to deduct motel, transportation and meal costs
(at the 50% of $39 rate mentioned above) when working out-of-state for less than one year
....another limitation I forgot to mention previously.

So in conclusion, please don't be offended because I implied you're naive....I apologize if you
resent that. I simply think you're accepting the intentionally vague IRS pronouncements about
these rules at face value....and we all know who's side THEY are on, right? :thumbsup:

No sir. Never claimed to be; and if anyone can prove I am wrong, I'd appreciate it and I mean
that sincerely! I'm not looking for any fights with the IRS, that's for sure, nor with anyone on
this forum. I'm just trying to help.

And of course no one here has to listen to me either. If you aren't comfortable with this
approach to taking the meal-allowance deduction, by all means don't.

Frankly I'm still confused about the circumstance involving when an employer pays you tax-
free per diem, having not dealt with it before. So I'm about as far from a "qualified attorney",
well versed or otherwise, as can be.

But somehow, I get the distinct impression your question(s) were in fact, rhetorical. ;)

Just a suggestion, you might want to ask dobry4u what her qualifications are before you dismiss her answer so quickly.

No it is not.

You are giving tax advise to people. We have no clue as to what your true knowledge is.

Just because you may have survived an encounter with the IRS does not give you any claim to having special knowledge in an area.

The way I am interpreting your post is that is in fact what you are using to base your advise.

I've never itemized when taking the deduction. I get my logbooks out and add up the days spent away from the house and do it like that. A couple of different CPA's never had a problem with that. Also, you can take the standard amount or higher amounts depending on where you spent the night. Example: if you log an overnight in NYC the per diem amount jumps over $100. I took to stopping near cities for the night to get the higher deduction. I just wrote them down for the year off of my logs, figured the total amount and used that saving my logbooks in case of an audit to prove I spent the night there.

In response to dle: I am not a tax lawyer or CPA. This is just my experience and where taxes are concerned I would never advise someone to do what I do. Get a CPA knowledgeable about the trucking industry or per diem rates and follow their advice.

Jonp wasn't targeted toward you - sorry if it sounded like that.

It was targeted toward the OP.

We have done several clients this way. We go through the process of figuring out the per diem for the client, and it still is better to go with the standard deduction. They went to the trouble of bringing in all of their info, so that's the least we could do. They probably think that they are getting the per diem when in fact, they are not because the standard deduction is greater. This, mind you, is on Schedule A not Schedule C (self-employed).

Correct. It is always a good idea to check the current tables. They even can change rates mid year.

Why don't you read the IRS instructions that go with the form.



http://www.irs.gov/pub/irs-pdf/i2106.pdf (page one notes, it can't get any clearer).

and the 1040 instructions http://www.irs.gov/pub/irs-pdf/i1040.pdf (page 29 first paragraph, can't get any clearer).

BBA University of Michigan majoring in accounting.

Work tax season for a CPA firm.

Also have several Girl Scout badges :)

That's the part I was hinting at. :lol:

And she stayed last night at a Holiday Inn Express.

Wow, another tax "outlaw" like myself at large....quick, call the IRS storm troopers! :D

Seriously though, this is what I am talking about. Dobry4u is obviously well versed in
this area, but working for a CPA firm isn't necessarily going to expose you to ALL
approaches to filing. Most CPA firms are firmly, strictly adhering to narrow IRS dictates
and aren't liable to be in ANY WAY aggressive for their clients. At least not in relatively
mundane, everyday-working-stiff affairs like this. They're like H.R. Block: just the plain-
vanilla, super safe toe-the-IRS-line deductions, Ma'am.

As I've asserted before, there is a definite reason why form 2106 is available for deducting
employee expenses separate from (and in addition to) the "itemizing" process. It is also
TYPICALLY MISLEADING of the IRS to (seemingly) limit the eligible parties to "reservists,
performing artists, etc."....as is their limiting statement in the "Notes" section that I believe
Dobry4u refers to. Those who blithely accept their self-serving, narrow "rulings"
-- which aren't actual court rulings -- simply genuflect at the altar of our governmental
"church." But I choose not to, as does the quoted person above....and there are CPA's
THAT AGREE WITH THIS APPROACH. Imagine that!

....Because this particular approach has been shown to be legal and allowable, of course.

I suspect these CPA's (that jonp refers to) aren't exactly anarchist skinhead tax protesters,
either. They're just doing a good job for their clients.

Don't really understand what dle's problem is; I've stated repeatedly now that I'm not
a tax expert and am simply trying to help, and he or she continues to parade his or her
mocking skepticism. That's fine with me; you may grovel at the feet of the IRS and it
won't change my life one iota.

But, really: I "survived an encounter with the IRS"?

Survived? Wow. Not scared of them much, are you? :lol2:

By the way, jonp, thanks for the post basically supporting my approach. This is the kind of
feedback that makes this forum worthwhile -- not because you agree, but because it helps
open up discussions and ideas, as well as some people's eyes. Unfortunately some folks
mis-read such input as balderdash, just because it removes them from a certain way of
thinking, or challenges a previous belief. Oh, well, that's why we're in this thread I guess...

And I do also appreciate Dobry4u's energetic debate on this; although I probably won't ever
use her services. No doubt she'd throw me out of her office anyway.

Can the Rev explain the nuances of how the tax-free per diem pay -- IF paid by a trucking
employer to an OTR driver -- affects a tax filer like myself, who normally lacks enough
deductions to itemize? I'd appreciate any insights you have. Thanks in advance.

They're also well versed in tax law, unlike you.

Redundant. Previously acknowledged. But thanks anyway. :roll:

Not redundant at all. She is more knowledgeable about tax law than you, and she says you're wrong. Done. End of story.

Not a problem. The reason that I never itemize is pretty simple. Unless your eating 3 meals a day in a steakhouse and staying at the Ramada overnight you are never going to rack up an amount over your standard deduction. I can't imagine eating up over $50/day. At least I never have and why bother saving all of those receipts? I do save the receipts for items that are job related such as tools I keep in the truck, clothing with the company logo on it, etc.. I never get fancy so fly under the radar. If the IRS wants to waste time on me in an audit I have nothing to fear. The more deductions that you claim, the higher the likelyhood you will meet the IRS up close and in person.

Not all CPA's are versed in the trucking industry and like lawyers can specialize in certain areas. I've had a couple of CPA's that through no fault to themselves just didn't do a good job for me because they were not familiar with what we did on the road or the deductions and per diem differences like the different amounts depending on where you spend the night.

Thats not hard. Go back a couple of years and take what you made, gross, and apply the standard truckers per diem and then compare the tax implications to what your employer is wanting to "give" you and see how it comes out.
I've never found that it makes that much difference in my pay one way or the other because I don't take a great deal of deductions anyways. My taxes are pretty straight- forward.

Ummm, I don't think you realize how the meal allowance works. You don't HAVE to spend the full $50 per day to CLAIM the full $50 per day. The "allowance" is the standard amount the IRS lets you claim without saving receipts. All you need for proof is a log book.

EXAMPLE: If you're out on the road 280 days per year, that is an $11,468 deduction. The last I checked, the standard deduction wasn't even CLOSE to $11,468. But to claim that $11,468 deduction, you have to itemize.

I know very well how it works, rev. You can either take the per diem the company is offering or do the meal deduction. Either taking the standard rate or go the trouble, like I used to, and find all the different places I stopped for the night and then adding those amounts up. What I was getting at was not saving every receipt for meals, soda, etc as those added up for me never came to the standard deduction so I just ignored those.

:hellno: ah.. not right

You can take the per diem amount the IRS allows or use actual expenses. As Rev said, it is usually much better rate using per diem (from the IRS Tables) then actual. Your company does not dictate allowable per diem rates. The IRS does. HTH

I know that. Sweet Louise! Thats what I said. You can either use the per diem or actual expenses. I said that the standard $54/day or whatever was better because I never ate up $50 a day on the road so saw no point in saving all of my meal receipts.

Nope. :thumbsdown:

Do anything you want, dosn't matter to me. However, Dobry echoed what I just said the post before yours in the first sentence. Do one or the other not both.

No she didn't.

The only comment I have is

Shut her down Clancy, She's a pumpin mud.

You can take the per diem amount the IRS allows or use actual expenses

Notice the big OR in that sentence then get out your grammar book. One or the other but not both.

so I guess Steve Booth is the only one qualified to take it:D:D