Taxes

[lucky81698]

Originally Posted by katbuad

True, but not complete. Box 12d code is L is Substantiated employee business expense reimbursements (nontaxable). These are per diems that exceed the M&IE rates.

Per diems can also be included in wages (taxable), especially those earned on day trips (no overnights).

Tthe amount in box 12d with the letter L (I'm talking crewmembers) is the amount your company paid for reimbursements (per diem since we are talking pilots). It has nothing to do with the M&IE rates, it is what you were paid and the amount you are paid in per diem is determined by the contract at each individual company. My husband's per diem was $5265.33. After figuring out the allowable amount as per the IRS for every city he overnighted in, he was entitled to $8761 in pay for his overnights in those cities. Per diem that was taxed. such as that for day trips is not included in this amount so you don't even have to worry about it since the taxable per diem was already included in taxable income. Figuring the actual allowable per diem for each city as per IRS allowances is the most difficult part. You have to determine if you will use the standard rate or each individual city rate. Once you determine which one you will use, you have to use it for the whole thing, you can't pick and choose. Then there are 2 ways to figure the percentage since you obviously aren't on an overnight for 24 hours on your first and last days of work. I know one way is to use 75% on the first and last day. I have found it much easier to have someone do that part for a relatively small fee. It really is pretty simple once you understand what you are doing.

On form 2106 you enter your expenses for stuff such as union dues, flightbags, medicals, etc on line 4, 6, 8 and 9 in column a (ours was $3389). Then the allowable IRS per diem is entered on lines 5 and 6 in column b. Ours was $8761. then you enter the amount from W2 box 12d (L) on line 7 column b. Ours was $5265. Then you subtract line 7 column b from line 6 column b. Ours was $8761-$5265=$3496. The you multiply line 8 column b by 75%. So $3496 x .75 = $2622. You then add line 9 columns a and b to get your employee business expenses. Ours were $3389 + $2622 = $6011. So by doing the per diem and adding in the other expenses we get a $6011 deduction. If you use turbo tax, it automatically puts everything on the correct lines. You just have make sure you check the box for transportation employees. Hope this helps.

Jan

[katbuad]

Originally Posted by lucky81698

Tthe amount in box 12d with the letter L (I'm talking crewmembers) is the amount your company paid for reimbursements (per diem since we are talking pilots). It has nothing to do with the M&IE rates, it is what you were paid and the amount you are paid in per diem is determined by the contract at each individual company.

I am sorry. Don't want to start a fight, but that is not correct.

From IRS 2008 Instructions for Forms W-2 and W-3. (page 12). . .

Code L—Substantiated employee business expense

reimbursements.

Use this code only if you reimbursed

employee for employee business expenses using a per

diem or mileage allowance and the amount that you

reimbursed exceeds the amount treated as substantiated

under IRS rules. See Employee business expense

reimbursements on page 5.

Per diems may not appear on the W-2 at all if the amount is under the federal rate. My hubby's W-2 looks just like mine, with no box 12 or code L information and I know he received per diem and I sure didn't.

Per diems are tricky. Seek professional assistance.

[lucky81698]

This is the way my taxes have been done for the last 13 years (12 of which were done by tax preparers that specialize in pilot taxes) and as per the directions on Turbo Tax when I do them myself. Code L is on the w2. Maybe I am not explaining it correctly, but Box12d with the letter L is the tax fee amount pilots are paid as per diem (or for whatever reason you were paid and not taxed).

[christykay]

Originally Posted by katbuad

Christykay, not to beat up on you here. . . as this this statement is typed it is not a correct statement. A true statement would be "we couldn't deduct travel charges because his company is reimbursing him." Reimbursing means hubby is turning in receipts to his company and they are paying him back dollar for dollar. Reimbursements net no income and no expense and have no tax effect.

Per diems, on the other hand, are flat amounts that are given for expected business expense. If my hubby gets $40 a day per diem but takes leftovers, he has income of $40. Or if hubby eats fancy restaurants that cost $60, he has additional business expense of $20. Income and expenses are what taxes are all about.

There are different type of per diems, taxable and non taxable, and excessive per diems. Per diems can be giving to cover lodging, meals, or other. Heck per diems are different for transporation workers than any other type of employee per diem. Because there is so many variations of per diems, you can't apply a general statement of "we couldn't deduct travel charges because his company is paying him per diem." I would suggest you dig deeper on this issue.

My apologies...aparently I mis-typed, but my pilot isn't turning in receipts to his company for reimbursement he is paid a per diem amount for the time that he spends away from base. This amount is paid to him once a month.

I understand completely that there are different types of per diem, I was just confused considering we had gotten different information from the family IRS agent. (Whom obviously isn't a pilot ) As for your sound advice and suggestion to dig deeper into the per diem tax issue- I thought that is what I was doing when I brought up this question in the first place here on the forum. I appreciate your help as well as Jan's, but I guess the next step is to take my per diem tax questions to our Certified Public Accountant.

[katbuad]

Originally Posted by christykay

but I guess the next step is to take my per diem tax questions to our Certified Public Accountant.

Hey your right. Boy my face is RED!!! I should have double checked my card!! A case of the mind working too fast with a million other things going on at once. Thank god that wasn't a question on the CPA exam.

[lucky81698]

Try this website Per Diem Reports . There is a free per diem calculator there.

Jan

[Mrs.Alchemist]

That's great... so we have to find someone who specializes in pilot taxes? It's enough that I have to find someone that specializes in Fire/Police taxes... now we need both..??? I hate filing...

[Kristie]

Let's just say it's *better* to find someone that knows how to file taxes for those who are pilots.