Doing my own taxes

The 2% rule has nothing to do with per diem. The current transportation per diem allowance is $63 a day for every 24 hr period out.

The total amount is then calculated at 80% and that amount then reduces your husband's taxable income.

For instance, you said your husband had roughly 300 nights out. That would be $63 X 300= $18,900 X 80%= $15,120. The $15,120 is what is used to reduce your husband's taxable income.

Any basic tax software program will do these calculations for you. I suggest you do that or hire a tax preparer to do it for you.

 

Oh no Scooter ... it very much does. The employee ME&I deduction is subject to the 2% rule - as are all employee expenses - when deducted on Schedule A.

 

So, explain to all of us what his $18,900 DOT transportation allowance would look like then?

Let's assume he received $40,000 in GROSS W2 wages from his employer and none of it was in the form of per diem.

Without going into his other allowable deductions on schedule A, how much would that $18,900 per diem allowance reduce his TAXABLE income by?

 

I do understand that part of it. The $63.00 a day allowance is reduced by 20%. I am using Turbo Tax and I do understand that the program does the figuring for me. I called H and R Block to ask for help and the woman insisted to me that Turbo WILL NOT allow the 100% expenses we paid in. After that I was even more aggravated, but I think she was just wanting a customer. She would not tell me how much it would cost me to do them with her either.
IRS does not really go into detail or clarity about that part of it, But I did find that one bit of info that was helpful. Thank you for helping. So what I understand is that it depends on what your allowed in deductions. For a married couple filing jointly, this year, the IRS is allowing $12, 600 automatically. If we paid out more than $12,600 in deductions, it will show at the 2% rate. Correct?

 

(18,900×.80 ) - (40,000×.02)=Employee deduction

 

with the example shown, if someone would have over that $14,320, it would give some more refund?

 

MiRig017, yes, the per diem deduction most assuredly will provide a larger refund.

The per diem deduction goes on form 2106-EZ. Look at the form Part 1 line 5. The DOT allowance is 80% of the total days out.

That amount is carried over to Schedule A line 21. The 2% limitation is insignificant in the overall scheme of things. I thought what you were originally saying is that you would only be able to write off 2% off your unreimbursed employee expenses, including per diem.

I have included a snippet of my schedule A lines 21 through 27 from 2013 to give you an example of what the calculation looks like on the form. I can assure you, the per diem deduction, along with my other personal Schedule A deductions, reduced my taxable income by a huge amount and provided a nice refund.

2013 was the last year I took the deduction on my own, as the company I worked for a couple of years after that made the per diem a part of my structured pay.

I now work as an employee of my own S Corp and write the per diem off as a business expense, which is another deal altogether.

 

Which equals a $14,320 deduction, based on the $40,000 a year gross. It only reduces the 80% per diem deduction by $800.

 

This is the reason why so many get someone else to do there taxes its all about maths the smaller the total the smaller the taxes you'll pay, so the more you reduce the amount payable the lower your taxable income will be. This is where you need to know what you can claim as a legitimate deduction examples of this would be any expense on the truck like servicing, replacing tires, repairs, phone calls to brokers, receivers, insurance costs, accommodation costs if more than 100 miles from home base, stationary, computer costs, depreciation on equipment. This is just a rough guide for you, your best off checking with the IRS they will usually help you in this regard. (their not just out to get you as some people think)

 

So was line 12 only your expenses or was that the meal allowance as well?