Taxes for Travelers

[BeerCourt]

http://www.irs.gov/publications/p463/ch06.html#d0e6854

Per Diem and Car Allowances

If your employer reimburses you for your expenses using a per diem or a car allowance, you can generally use the allowance as proof for the amount of your expenses. A per diem or car allowance satisfies the adequate accounting requirements for the amount of your expenses only if all of the following conditions apply.

    *

      Your employer reasonably limits payments of your expenses to those that are ordinary and necessary in the conduct of the trade or business.
    *

      The allowance is similar in form to and not more than the federal rate (defined later).
    *

      You prove the time (dates), place, and business purpose of your expenses to your employer (as explained in Table 5-1) within a reasonable period of time.
    *

      You are not related to your employer (as defined next). If you are related to your employer, you must be able to prove your expenses to the IRS even if you have already adequately accounted to your employer and returned any excess reimbursement.

If the IRS finds that an employer's travel allowance practices are not based on reasonably accurate estimates of travel costs (including recognition of cost differences in different areas for per diem amounts), you will not be considered to have accounted to your employer. In this case, you must be able to prove your expenses to the IRS.
......

Regular federal per diem rate.   The regular federal per diem rate is the highest amount that the federal government will pay to its employees for lodging, meals, and incidental expenses (or meals and incidental expenses only) while they are traveling away from home in a particular area. The rates are different for different locations. Your employer should have these rates available. (Employers can get Publication 1542, which gives the rates in the continental United States for the current year. Publication 1542 is available on the Internet at www.irs.gov.)
............

Allowance less than or equal to the federal rate.   If your allowance is less than or equal to the federal rate, the allowance will not be included in box 1 of your Form W-2. You do not need to report the related expenses or the allowance on your return if your expenses are equal to or less than the allowance.

  However, if your actual expenses are more than your allowance, you can complete Form 2106 and deduct the excess amount on Schedule A (Form 1040). If you are using actual expenses, you must be able to prove to the IRS the total amount of your expenses and reimbursements for the entire year. If you are using the standard meal allowance or the standard mileage rate, you do not have to prove that amount.




Note that NOWHERE in the tax code will you find anything that says that you can deduct expenses in excess of your actual expenses - regardless of the federal rate.


I had two CPA's as clients.  Most CPA's do not do personal income taxes.  They contract them out, hand them over to employees who are not CPA's, or don't touch them at all.  If you find a CPA with a shingle out, who does taxes, he/she is probably retired and doing it as a side business.  They also rely heavily on software.  TaxWise is the professional program most commonly used by accounting firms.


If you blew this by an IRS auditor, that's no surprise either.  They are mostly entry-level seasonal employees or contractors.  They are no more experts on YOUR tax return than the CPA who has done cost accounting for the local trucking firm for 30 years.  The thing is that YOU need to be, because it is your life, your money and your name on the line.

If you get $85, and the fed rate is $120, and you don't have any proof that you exceeded $85, you can't deduct anything.  You never claim per diem that is below the federal rate as income unless you are paid the per diem when yuo are not entitled to it, or your employer's plan is non-accountable.  Anything you are told to the contrary is WRONG.

[BeerCourt]

If you use the standard mileage rate, there are no additional vehicle expenses that you can deduct.  The standard mileage rate encompasses all costs of owning and operating the vehicle - but not parking or storage of the vehicle.  Taxes paid on the vehicle are either sales taxes, or property taxes.  If the license fee you pay for your tags is based on the VALUE of the vehicle, it is a property tax, and can be deducted under the taxes you paid section of schedule A.  Sales tax can only be deducted if you elect to deduct sales tax in lieu of state income taxes.  Neither of these have anything to do with business use of the vehicle.  If you can deduct either of these taxes, you can do it for any vehicle you own - regardless of business use.  If you can't deduct them, business use (by an employee of an employee owned vehicle) won't change that.  If you use a van for your own flower delivery business, the rules are totally different.  Use of RV's for business is different too.
If you use the actual expenses method for your vehicle, you can deduct the business use percentage of all vehicle expenses, including depreciation, wiper fluid, AAA membership, license tags, ... etc.  You need to keep very good records, and you still need to track mileage to calculate the business use percentage.  If you are really good at keeping records, and you use your vehicle a lot for business, and your reimbursement is not very much (this is probably true for most roadies) you may get a better deduction this way, but it is a lot of work.

You can only deduct the cost of a computer if your employer REQUIRES you to have and use your own personal computer.  Using email on the road is not a legitimate business expense.  But, if you use the computer for your own business or for investment management, you may be able to deduct part of the costs.

Like any employee business expense deduction, you need to have proof of the expense, and the expense must be incurred by you in the course of your employment and for the benefit of your employer.

Maybe I was wrong, I don't think that anyone ought to do your own taxes.  In a perfect world, you should be able to do them, but there is too much misinformation and wishful thinking out there.  Hire a professional - but ONLY if he signs a contract that says he will pay all interest and penalties resulting from his errors and omissions.  Good luck finding one of those.

[Rennhack]

Note that NOWHERE in the tax code will you find anything that says that you can deduct expenses in excess of your actual expenses - regardless of the federal rate.

Also, nowhere does it say that you can't. It does not specifically state either way.  It may imply, but it does not specifically address it. You are drawing a conclusion based on their other words.

[SloGlo]

Mine does!

Time for another margarita!

sew, watt's he charge, 'n duz he buy margaritas or due yinz git a price brake four supplying them?

[cairnit]

I guess I was hoping for more professional recommendations than opinions. I guess I thought more travelers were like me, too busy to do the taxes themselves and wanting a knowledgable professional to be there in case of questions or audits.

I have used Kiwi in the past (once) but tax was figured wrong....which I discovered when the IRS sent me the correction and the bill for the miscalculation + penalty and interest. I emailed Kiwi about the situation and never received a reply.

So, I used someone else for year after that.........now she has retired and I am looking once more.

[BeerCourt]

You are not the first person to have said this about that particular tax preparer.

I suggest that you learn how to do your own tax return, and find the time.  The IRS allows you to extend until August.  As long as you have paid all that you owe by April 15, you can actually delay for THREE YEARS, with no penalty.  I don't suggest that you let them hold your refund for that long.  In fact, you should not be getting a big refund at all.  If you do, fix your withholding so that you are not lending your money to the government at 0% interest.  But, as long as you are sure that you don't owe, you can file during the summer without a penalty, and without filing an extension.

The only penalty for filing a late return is if you file late and owe.  If you don't owe, there is no penalty.  If you know you are going to owe, file an extension, send a check with it to cover what you think you will owe, and file by August 15.
Turbotax or TaxCut will help you do this.
If you are a roadie, you have plenty of time to do your taxes, and you can do them a lot better than someone who does not know you.  Use software, and it is idiot proof.


WARNING!!  As a former Manager of one of those storefront tax companies, I can tell you with confidence NOT TO USE THEM!!!  They are ill-trained, make lots of mistakes, and are really in the business of LENDING you your OWN MONEY at astronomical interest.  If you are a single mother with two kids, make $15,000 a year or less and want an Earned Income Tax Credit and a Refund Anticipation Loan this minute, and are willing to let them keep several hundred dollars of your refund, you are their ideal customer.  Many of their "tax-preparers" have less than 8 hours of training in taxes and are making minimum wage plus a commission on your fees.  They are far more concerned with getting a lot of returns done than with getting any of them done well.  This is why I don't run one of their offices anymore (aside from the fact that they pay nothing).  They are primarily in the business of ripping off low income working people, just like those payday loan places, and I want nothing more to do with them.

[SloGlo]

eye nebber had a tacks year aye coodent due da taxes four.  da onliest time eye filed leight was when dey owed me cash.  'n i nebber filed early.  never.

[Camella Black]

You are not the first person to have said this about that particular tax preparer.

I suggest that you learn how to do your own tax return, and find the time.  The IRS allows you to extend until August.  As long as you have paid all that you owe by April 15, you can actually delay for THREE YEARS, with no penalty.  I don't suggest that you let them hold your refund for that long.  In fact, you should not be getting a big refund at all.  If you do, fix your withholding so that you are not lending your money to the government at 0% interest.  But, as long as you are sure that you don't owe, you can file during the summer without a penalty, and without filing an extension.

The only penalty for filing a late return is if you file late and owe.  If you don't owe, there is no penalty.  If you know you are going to owe, file an extension, send a check with it to cover what you think you will owe, and file by August 15.
Turbotax or TaxCut will help you do this.
If you are a roadie, you have plenty of time to do your taxes, and you can do them a lot better than someone who does not know you.  Use software, and it is idiot proof.


WARNING!!  As a former Manager of one of those storefront tax companies, I can tell you with confidence NOT TO USE THEM!!!  They are ill-trained, make lots of mistakes, and are really in the business of LENDING you your OWN MONEY at astronomical interest.  If you are a single mother with two kids, make $15,000 a year or less and want an Earned Income Tax Credit and a Refund Anticipation Loan this minute, and are willing to let them keep several hundred dollars of your refund, you are their ideal customer.  Many of their "tax-preparers" have less than 8 hours of training in taxes and are making minimum wage plus a commission on your fees.  They are far more concerned with getting a lot of returns done than with getting any of them done well.  This is why I don't run one of their offices anymore (aside from the fact that they pay nothing).  They are primarily in the business of ripping off low income working people, just like those payday loan places, and I want nothing more to do with them.

I have to agree about store front tax preparer's; I learned to do our taxes back in the 80's after we owed the IRS a couple thousand because of the per diem gaff a lot of us made. I have done our taxes ever since with no problems... last year to earn extra income I went to work for a major store front group and their main goal is refund loans and pushing you through like cattle. They also charge you more when it takes more time.

I file myself and numerous family members using a government recommended website and have had no problems so far.

[krisher]

thank you beercourt for the info on perdiem...fed rate vs what we get from our employer.  i have searched all the publications on perdiem and could not find anything that says we can take the difference as a loss or anything else these people are talking about. my taxes are almost done. also i use tax cut and have for years.  thank you again for clearing this subject up for me............

[Smart People]

....Call 843-260-1644.ask for Rachell....she has been doing my taxes for years....she finds deductions(legal ones, she wont claim any that arent) that I never thought of.....claims perdiem...and travel..knows all the ins and outs.......

I talked to her today, She is not doing taxes this year

[ShovelHeadRed]

..You are right, she is having surgery and will be recouperating through the tax season..Red

[LaFeet]

Ive been using TaxCut by H&R Block for the past 5 years without any concerns of being audited.  I have conservatively claimed what LEGAL deductions I can claim and have allways gotten back a return.

As for using a service or person for doing my taxes.... I still have to keep the records myself, so why pay someone 100$ + for something I can do in less than 2 hours costing only 69$ (of which is deductable as well).


Excellent advice and linkage Beercourt...thanks for trying to point us all in the correct tax direction.
 

[Duke_Nukester]

Okay Mr. court, here is my question on the per diem.  In a previous post on this thread you state the Federal rate is what you go by.  Is that the federal rate where you are residing or where your work is located?  I've heard both sides.

For everyone else, I was told there was a person in FL who does roadies taxes very well and very cheap.  I think he at least use to advertise on this site.  Anyway, I had problems with H&R Block because they wanted proof of my per diem and it's not shown anywhere.  I guess I needed to make photocopies of the checks.  Thanks for any help.  Au revior

[todd]

I've never personally used them but, It's called KIWI tax service. reply back i'll get the info for you.

[Duke_Nukester]

Yeah, that's the one.  Anybody out there have any experience to share?  Kiwi, good, bad, indifferent?  Scale of 1-10?  Bell curve analysis? lol  Thanks Todd, and anyone else who helps out.

[cairnit]

I used them onceand to me that was the audition they failed. I have worked with a few others over the years who also had problems with them.

[BeerCourt]

Okay Mr. court, here is my question on the per diem.  In a previous post on this thread you state the Federal rate is what you go by.  Is that the federal rate where you are residing or where your work is located?  I've heard both sides.

For everyone else, I was told there was a person in FL who does roadies taxes very well and very cheap.  I think he at least use to advertise on this site.  Anyway, I had problems with H&R Block because they wanted proof of my per diem and it's not shown anywhere.  I guess I needed to make photocopies of the checks.  Thanks for any help.  Au revior

The rate you use is where the job is located.

[Atomic Archeologist]

Anyway, I had problems with H&R Block

This is why it's best to do your own taxes.  Get a copy of JK Lassiter, read the applicable sections, go on line and fill out the forms.  Check is deposited in two weeks.