|
Who can use the federal meal
and incidental rates for their expenses? |
The IRS has determined, through Federal
Revenue Procedures, that persons in the aviation industry are
allowed to deduct, without receipts, an allowance for meals and
incidental expenses up to a specified maximum rate for each city per
day. The
Domestic and International rates are usually much higher than you were
actually paid in per diem.
Because it is almost impossible to keep
receipts, using this method is the best way for pilots and flight
attendants to determine how much they can deduct. |
| What kind of
information does Pro-Diem incorporate into a report? |
Our report is a precise
calculation of your maximum allowed meal and incidental expenses
based on your flight times/ or duty times, partial days and
layovers. We give you an accurate detailed breakdown for each trip,
and a yearly reports broken down into months. We also give you
instructions on how to use our service. |
| How can I
determine if using this method will help me save money on my taxes? |
Starting for the year 2006 flying, if you
itemize on your taxes you will want to have your
per diem calculated to save money.
Domestic rates are up making this no longer an
exclusive deduction for international crew
members! For the years
2003-6 and on, if you flew overnight
trips and already itemize on your taxes, you are probably able to benefit
from our service. Because the domestic rates have increased
this deduction is no longer just for international flyers!
Naturally, if you fly international trips your saving will be much
greater. As a rule, you must use schedule A
(itemized deductions) to use this as a deduction. If you already
itemize, this will help you tremendously. If you don't normally
itemize, and you fly internationally, this deduction may help you to be able to itemize, thereby
allowing you to deduct your union dues and uniform expenses, etc.
This is often the case for those who have not itemized in the past
but claim only the standard deduction for one person and have no
other dependents. |
| Where do the
rates come from? |
Government rates are published
each year for domestic cities (CONNUS) by the IRS. The OCCONUS
rates (outside the continental United States) are published once a
month by the Department of State. |
| I saw a list
of rates at my base. Can't I just use that? |
Unfortunately, it is not that
simple. It is very important that you follow the rules in the code
of Federal Regulations 41 and the most current Revenue Procedures.
One of the most common mistakes made is using a rate that is not
precise (i.e. an average or lowest rate for that area). The
Revenue Procedure is clear that you must be consistent when using
these rates. The rates are constantly changing and often change in
the middle of the month. You have the burden of proof if you are
called into an audit as to which rates you used for each leg of
travel. One of the major difficulties in doing this is calculating
precisely the number of hours and flight legs that apply to a
layover, not to mention taking into consideration the very specific
rules as to exactly what constitutes a legal layover and the amount
of hours to be applied to partial days. Partial day rules are very
strict and drastically effect the amount you are allowed on your
first and last travel days. |
|
My company pay sheets show
the allowable amounts based on the half day. Can I use
those amounts? |
The answer is NO! The Revenue Procedures
have changed in recent years and you must claim the partial day
portion on the 3/4 day. The Airline is actually allowed to pay
on the half but the employee MUST claim on the 3/4. If you use
the half day amounts you will be significantly over-claiming what
you are allowed. (For Example: Same 3 day trip
calculated on the 1/2 might show value of $220.00, however, it may
actually be worth $180.00. That is a significant difference
over the course of a year) It is the taxpayers responsibility
to claim the correct amount.
We have had a tremendous
amount of new clients turn to us for help
this year because they used the 1/2 day amounts
and were audited! |
| Can my
accountant do this for me? |
Though many accountants are
familiar with this deduction, they are not able to calculate your
maximum allowed meals and incidental expenses for you.
They
realize, due to the complex nature of the math calculations and the
ever changing legalities on how per diem must be calculated for your
taxes, it is truly a data processing function. It would be a
monumental task to for them to try to do this by hand, and would
probably short their clients a tremendous amount of expense money
because they were not able to calculate the amount accurately, not
to mention how time consuming it would be and entirely too costly
for their clients.
That is why many CPA's across the nation agree
that it is much better to have us calculate this for you.
In fatc, many CPA's insist that their clients
have their calculation done by Pro-Diem, Inc. If your
accountant is not familiar with this deduction, we would be happy to
explain it to them or to recommend you to one who is. Your
accountant will be glad to have something solid to use when
calculating your taxes. |
|
The company that does my
taxes said that I can just send them the average
number days I flew each month or the % that my
trip were international or domestic. I
think they may even have a sheet that lets me
put the days I flew to each city, what do you
think about calculating per diem that way?
|
We would NEVER claim
your per diem using anything but the LEGAL IRS
published method! A tax preparer
using a method like that either honestly doesn't
understand the rules that are specific to you
being in the travel industry or has motivations
for doing so that are not in your best interest.
They have no business trying to do your
calculation.
Beware of the bait and
switch tax person cutting you a deal on your per
diem just to get your tax business. They
are likely not only costing you hundreds of
extra dollars on you tax bill but also setting
you up to be disallowed in an audit!
Don't forget that if you are audited you will
want to provide documentation for each and
everyday showing how the calculation was
derived. A magic number will be hard to
explain, you will want the IRS to be able to
verify that the rates used on a particular day
were the rates allowed for those days.
Even more important than
what we think is what the IRS says. We
asked this specific question to the current
author of the Revenue Procedure allowing this
deduction for crew members. His response
stated that the Revenue procedures are clear
that you must substantiate Time, Date and Place
to calculate these amounts and 3/4 day portions
MUST be used.
Tell this tax person that you would prefer to
use Pro-Diem's calculation in their tax
preparation. |
| What does
the IRS think about using this method? |
We have earned our excellent
reputation with the IRS by working hard to follow the Revenue
Procedures to the letter. We do not guess at your days and we are
not here to help you evade your taxes. We are in business to help
you claim the EXACT amount you should be claiming on your taxes with
accurate documentation to make the IRS's job easier as well.
If you have had problems with your taxes in
the past, we invite you to use our service to help you claim the
right amount for your expenses! We guarantee that you and the IRS
will be happy.
We have spoken to the IRS pertaining to the
meal and incidental expense deduction, helping those with audits,
disallowance's and inquiries with a 100% approval rate. We have
also worked with the IRS to improve specific parts of our program
and have been noted by individuals with the IRS as being the best
service that they have ever seen pertaining to the meal and
incidental expense deduction and that there is no problem with
approving the expense figure calculated by us.
|
| Can I use
this to amend my previous years taxes? |
Yes! After seeing how much
money our clients have saved on their taxes, many have gone back and
amended tax returns from previous years. It is a simple process and
well worth doing it, especially if you only claimed what you were
paid in per diem. You can generally go back 3 years. Please call
our office for help to see if you are within your time constraints. |
|
How do I get started? |
Just send your
flight data in the format required for your
airline (see Airlines served) a check for $50.00 for each year that you
would like for us to process along with your name, address,
email and
phone number. It's that simple. There is no need to bother sending
information to us monthly. Just send it all to us at the end of
the year and we will process it and have it back in the mail to you
in approximately 24 -48 hours
If your company does not supply you
with a printout of your flight data we
have an electronic log form we can take via
email. Again, see instructions listed for
your airline.
You may also call
us at (817) 421-8389
or (888) PRO-DIEM
if you have further questions. |
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