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? 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!

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 fact, 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 payment for $59.00 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 accept.  Again, see instructions listed for your airline.

 

You may also call us at (817)421-8389 if you have further questions.