Tax Question

Why do you say you dont qualify for per diem If you stayed out overnight you should qualify from day 1

 

That has nothing to do with the IRS perdiem deduction. For each day you are required to be away from your tax home you are allowed to deduct 52.00 per day. 75% of the 52.00 per day is what you are actually allowed to deduct.

Stay away from company sponsored per diem plans. They are not in your best interest.

 

Are you sure that is accurate?(the percentage) I thought It was up to 80% this year and will be froze at 80% from here on unless they decide to change the tax code yet again. I'm not at all sure on this one, you may be right. Then again you may have made a typo.

 

This years tax return you are filing for last years earnings is set at 75%.

With the earnings you make for tax year 2008 (which you will file next February does in fact go to 80%.)

 

The above is correct. I assume you are a company driver?
For the future, if you use a binded company log book, write the total days worked on the cover. If you use a loose leaf log book put a sheet of paper in it to keep a monthly total. The "rule" is, if you leave your house for work you are entitled to the deduction for every night you are away. On days you are off duty(34 restart,etc..) away from home make sure to write the town on the bottom of the log. That way you will not miscount by usuing just days off and it will be clear you were away from home. Days off, away from home(work related), still count. PLEASE note: the IRS allows a note at the bottom of the form when filing. This is used to explain exemptions that may not be the normal(grandchild,fosterchild,etc..) but you can include--,"days worked supported by log books." ALSO, if you run teams,filing together(ex.--husband/wife), this amount is X2.
For anyone to note: If you file a 1040 with schedules(for interest on mortgage, etc..) there are MANY other deductions you can use that so many people do not.
I will state that if you are a company driver the daily deduction is the best but if you are an owner-op you may want to check both ways, actual and per-diem, as it will depend on your overall expenses.

 

No, I am not a company driver and don't need a lecture on accounting. I do appreciate your post though as others may learn from it. I just hadn't even begun to look at taxes yet in depth because I won't file a day sooner than I have to. I knew that JLLKL would verify the info, thats why I mentioned it.

 

I will offer the following as well when calculating your days away from home.

The old method was to divide each day into quarters (4 quarters equalling 6 hours) and based upon the fractions you could actually factor in your partial days so you would not miss any legitimate deduction. It appears the IRS has recently amended the way drivers may calculate these partial days to actually permit a driver to claim a whole day even for partial days (provided the driver was required to be away from home and take a break).

I have picked up this info in 2 places and so I will offer my source material as I believe it to be legitimate and encourage others to review this "change" as it may benefit them.

The first source (and first time I heard this) was in a segment on Sirius radio channel 147 regarding truck driver taxes. I regret that I do not recall the name of the cpa that was the guest on the show.

The second source was an accidental discovery. I have read LOGSRUS posts and recognize her as being a valuable source and sounding board for all things relating to logs and compliance issues on this site. She is rarely incorrect as I have spent hours verifying her info. Anyway back to the point. Logs mentioned a program called Drivers Daily Log Program (DDL). I looked it up and found the folllowing;

Amount of standard meal allowance.
Start Quote---> "Special rate for transportation workers.
You can use a special standard meal allowance if you work in the transportation industry. You are in the transportation industry if your work:
1) Directly involves moving people or goods by airplane, barge, bus, ship, train, or in truck, and
2) Regularly requires you to travel away from home and, during any single trip, usually involves travel to areas eligible for different standard meal allowance rates.
If this applies to you, From Jan 1-2005 to Sep 30, 2005 you can claim a $41 a day standard meal allowance ($46 for travel outside the continental United States) this is and from Oct 1, 2005 to Dec 31, 2005 you can claim $52 a day standard meal allowance ($56 for travel outside the the continental United States). Special Note 1 Truck drivers who are subject to "hours of service" limits read the chart below. Special Note 2: Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. If you choose to use the special rate for any trip, you must use the special rate (and not use the regular standard meal allowance rates) for all trips you take that year. 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).
Meals when subject to "hours of service" limits. You can deduct 70% (2005) of your business-related meal expenses if you consume the meals during or incident to any period subject to the Department of Transportation's "hours of service" limits. You apply this 65% limit before you apply the 2%-of-adjusted-gross-income limit. In 2003 you can claim 65%
In 2004 this will increase to 70%
In 2006 this will increase to 75%
In 2008 this will increase to 80 %

Example:
Driver was away from home 200 days from Jan 1, 2003 to Sep 30, 2005 and 75 days from Oct 1, 2005 to Dec 31, 2005. All days were in the United States. Using this information you can do the math.
200 X $41 = $8200 (from Jan 1, 2005 thru Sep 30, 2005)
75 X $52 = $3900 (from Oct 1, 2005 thru Dec 31, 2005)
Total= $12,100 X 75% = $9,075 this is what you would be allowed to claim. **This is before you apply the 2% -of-adjusted-gross-income limit.






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." <--- End Quote.
Based on the examples that follow this description of the Methods 1 and 2. If you are away from home any part of the day, it is acceptable business practice to count that day as a full day for meal allowance if you so wish. So I don't know why IRS lists Method 1 or Method 2, because it would be foolish not to count the days leaving and arriving home as full days away from home. Weird.... So to maximize the benefit, you should record 'leave home' at the start of the log day in which you leave (midnight normally), and similarly record 'arrive home' at the end of the log day when you arrive home (midnight at end of log day).

 

I think that is good advice and I have heard this method (totaling the number of days away from home and writing that number on the front cover) also on Sirius channel 147. Perhaps you were the caller that suggested it?

Thankyou for offering the advice as it may help others figure out there actual days quicker (rather than sitting at their desk and counting 12 months worth of log books at 1 sitting).