Taxes for Travelers

[vikingfan]

Looking for information on kiwi tax service. does anyone know anything about them, such as quality of service ect.?? or does anyone know of a quality tax service out there that specializes in doing taxes for the traveling worker such as most of us roadtechs ??

[shovelheadred]

....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.......

[cairnit]

Used Kiwi once. Had problems with my return being incorrect.

It seems that to them 1541- 0 = 0.

Go figure. Paid the tax owed + interest. E-mailed them to let them know what happened, got no response.

Didn't use them again.

[alphadude]

use turbo or a good business program, it walks you through all the issues and the IRS dont mess with the results very much. it even tells you the "magic numbers" which the IRS uses to audit people.  However, if you get an inexperienced local IRS manager its hell- you win eventually but only after a lot of screaming and yelling. The IRS farms out all tax returns and only get a single screen info page on you from the boiler room contractor that did your taxes. These companies use turbo tax type software to do your forms and if any flags-then the IRS sends your the letter. Tax returns done by individual companies may have a higher rate of audit due to the error rate- HRBlock head is very very conservative - not usually in the favor of the tax payer but in favor of HRBlockhead. (in other words they will not push your legal deductions as needed in your favor.)

[workinman]

Tax and Business Consultants

Tom Tomasek
(402) 426-4144
tomt@rvrco.net

This guy used to work for the IRS so he knows what he's doing!  He has done several returns for nuclear workers!

[maxparity]

Being a member of the infamous 1990 ARC tax bust at Cook, the best advice I could give would be no matter who does em for you,or what instrument you employ to do them yourself, make sure their and ultimately your grasp on the per diem thing is a firm one. 30 LARGE is a sum most of us never really ever recover from. To this day I still ponder who it was that dropped dime on us. Even as a man trying to lead a christian life, I would still obtain the utmost in satisfaction knowing that this individuals life was filled with pain and agony. On a bad day I may even extend this wish to those near and dear to him.

[TENN-1]

I have to agree with Max. I too am a member of the Cook club sans the thirty+ large. Whatever you do, leave the breakroom CPA stuff behind and validate every move you make with fact. When you sit across from the man at the appeals level it's too late in the game for the  "he said, she said" stuff. Get professional advice and follow it. The rules will fall where the IRS wants them to fall. Good luck.

[SloGlo]

gift da i.r.s. alla yer pay fer taskes, keep yer diem.  dat aughtta keep ya aughta trubble.

[LaFeet]

I used Turbo Tax for the past few years without any trouble...

[shahin214]

I am n desperate need of an tax prof. that knowa how to find all deductions on perdium

[Already Gone]

I am no longer a tax professional, but I do my own taxes and I get per diem.  I have studied the rules until they are burned in my brain.  What I can tell you is that tax "professionals", such as I was, are not extensively trained and have zero knowledge of per diem until they have to deal with it.  Then, they do what everyone else does; they look it up.  All the publications available to them are also available to you at:

www.irs.gov

[alphadude]

all perdiam is a deduction unless u have no home and your employer reported it as income.. them u are screwed, its fully taxable then...you may even take more than the provided perdiam if you can prove your expenses.. dont forget the cost of job hunting, phone calls, lost deposits etc 

[UncaBuffalo]

I am test-driving the 'consultant' route, and learned something interesting about paying taxes quarterly:

The taxes for the 1st & 4th quarter are due 15 days after the end of each quarter.
The taxes for the 2nd & 3rd quarter are due 15 days before the end of each quarter.

Guess who was late on their 2nd quarter payment? 

[Already Gone]

all perdiam is a deduction unless u have no home and your employer reported it as income.. them u are screwed, its fully taxable then...you may even take more than the provided perdiam if you can prove your expenses.. dont forget the cost of job hunting, phone calls, lost deposits etc 

Let's get this straight;

Per diem is NOT a deduction.  It is not an expense or income.  It is a REIMBURSEMENT for your legitimate meals, lodging, and incidental expenses while away from your tax-home for business purposes.
As such, it is "neutral".  You don't have to pay taxes on it, and you don't get to deduct the expenses either.  However, you do get to deduct the other employee business expenses that are not covered by per diem; such as lodging and meals in excess of your reimbursement, rental cars or mileage that are not reimbursed, parking, laundry, supplies and equipment required by your employer, ... etc.

Where the confusion comes in is the part known as "substantiation".  This is where you are required to prove your expenses if you deduct them.  If you are given a per diem allowance, AND that allowance does not exceed the federal maximum for th area, then you can claim the amount of the allowance as your meals and lodging expense with no other documentation (except you have to document the reason that you are entitled to this reimbursement --- keep a log of where you were and when.)  In other words; the per diem allowance given to you by your employer, if it does not exceed the federal rate, is proof in itself of the lodging, meals, and incidentals without the need for receipts.  It works out to a ZERO SUM. 

Example:  You go to a place where the CONUS rate is $99/day.  Your employer gives you $85/day.  You spend less than $85/day.  You can claim an expense of $85/day and a reimbursement of $85/day -- leaving you with zero to deduct.  But, it gets better.  You actually claim your laundry, car expenses, et. al. and come up with a few hundred bucks a year to deduct.

Example 2:  Same as before, but you spend between $86 and 99/day on meals and lodging.  You have RECEIPTS for all of this.  You can deduct the difference between what you ACTUALLY PAID and have proof of, and the $85.  Plus you can still deduct the mileage and laundry, etc.

If you spend more than the $99/day and have receipts, you still may get the full deduction if you can show a good reason why you had to spend so much (i.e. the local hotels raised their prices because there was a NASCAR race that week)

DO NOT use the tired old argument that you can deduct difference between the federal rate and the rate you were paid.  The IRS regulation does NOT allow this.  They allow exactly what I posted above.  If you try to claim expenses greater than your per diem, you need receipts PERIOD!!!

If your employer does not give you a separate per diem allowance, but includes it in your pay, then your actual expenses are deductible without having to subtract any reimbursement.

I use an MicroSoft Exel spreadsheet for all this and just print it out when I do my taxes.  You could just use a calendar or a logbook.

[ladyinrad]

BeerCourt:

That was very well said. I applaud you!!!!!! You just summarized Publication 535,Business Expenses.

Can you explain the difference in the Accountable and non-accountable plans?

ladyinrad

[alphadude]

cut and paste is a wonderful thing... perdiam may be taxable if you exceed the conus or exceed the limitations of the perdiam.. if you dont have a perm tax home perdiam as provided by the employer is fully taxable as income.

[ladyinrad]

From my experience, and please correct me if I am wrong, some employers will provide an offer letter stating the per diem is issued either on an accountable or nonaccountable plan. Accountable means you account to them all expenses and they reimburse you with per diem. On the nonaccountable plan, you have to account for your expenses to the Internal Revenue Service, if audited.

For example: nonaccountable plan-you receive $86/day diem for meals and lodging. Your actual expenses are $50/day. You have to report the excess, $36/day as income.

On the accountable plan, the IRS believes you accounted for your expenses to your employer, therefore, no tax on that money.

They will ask for copies of offers of employment, etc., to make the determination.

BE VERY CAREFUL!

[alphadude]

exactly, I have had my perdiam taxed as income and also have been paid below the CONUS which means I am allowed to claim or justify part of my income as perdiam. I have had perdiam reported as income untaxed and had to claim it as perdiam on my 1040 (that caused some heartburn) but I didnt get an audit hit fortunately... also I have worked on a 1099 which is a whole world unto itself..

most rent a techs are used to the typical pay schedule - pay check and perdiam check no questions asked.. if they are paid below the CONUS they dont ask questions and follow the model that beercourt presented.. which is conservative and exactly out of the tax info provided by the IRS. 

[Already Gone]

cut and paste is a wonderful thing... perdiam may be taxable if you exceed the conus or exceed the limitations of the perdiam.. if you dont have a perm tax home perdiam as provided by the employer is fully taxable as income.

So true.  There are other times when per diem is taxable.  For example:  you take a job at a D&D site with no definite end date; you take a job at a site with an end date expected to be more than a year away but they pay you per diem anyway.  If you take a "voluntary layoff" to "restart the clock" you are just kidding yourself.  If you leave a site with the understanding that you will return and continue with the same job, it is still considered a continuous assignment - even if you work for someone else at another place during that time.  You have to go with the understanding that you will not have a definite return to work date.  (You can work at a site for more than a year with per diem that is not taxable, but you have to continue to expect the job will end within a short time.  The very minute that your end date becomes indefinite you are no longer entitled to per diem.  Likewise, a "voluntary" layoff is not a layoff.  You would not be eligible for unemployment insurance during any period that you voluntarily left a job.)
The key here is that the job must have been temporary from the beginning and continue to be so as long as you get the per diem.  If, at any time, the duration of the job is expected to be longer than a year or if the projected end date is unknown, it is no longer a temporary assignment.
It also has to be away from your tax home.  If you have worked 10 or 11 months a year at SONGS1 for the past couple of years, the IRS is going to consider that your tax home.  It makes no difference if you came there from somewhere else and intend to return.  So, those of us who believe that we can work at one site for years on end with a month or so off every year are actually establishing that site as our tax home.

The following is the IRS rule for an accountable plan:

The following are the three requirements for an accountable plan:

1.  There must be a business connection and the expense must be reasonable.
2.  There must be reasonable accounting for the expenses.
3.  All excess reimbursements must be repaid in a reasonable time.
For Test #2, amounts paid up to the allowable federal per diem rates for meals, expenses for incidental expenses and lodging are deemed substantiated, without the usual requirements for keeping records of the expenses with receipts.

As you can see, you do NOT have to account for your "excess" per diem as long as the payments are at or below the allowable federal rate.  If the plan is "unaccountable" all payments are included in taxable income.  It payments are made under an accountable plan (as defined above) your accountability is to the employer - not the IRS.
An example of this is that your employer pays more than the federal rate for meals and lodging.  You must give him receipts or return the excess.  (Note that rule 1 states that the expense must be reasonable.  If the CONUS rate for an area is $99 for lodging and $49 for M&IE, you are not going to get away with staying at the Crowne Plaza and eating Champaigne and caviar with every dinner - no matter how many legitimate receipts you turn in to payroll.)

To translate: a plan is accountable if the employer either; requires receipts, holds you to reasonable expenses and requires you to repay any excess reimbursements; or pays you per diem at or below the federally allowed rates for qualified business related travel.

My biggest caution here is that you have to be careful and as honest as you can.  The fact that you or "someone you know" has gotten away with some other way of doing this is no guarantee that it is the legal way.  The IRS doesn't audit a lot of returns, but they can select a group and audit them all if a pattern emerges.  They have 10 years to come and get the money, and the interest accrues during that whole time.  The longer they wait to come after you, the more they can take from you.

If any of that makes any sense to anybody - then I must have said it all wrong.

[Already Gone]

From my experience, and please correct me if I am wrong, some employers will provide an offer letter stating the per diem is issued either on an accountable or nonaccountable plan. Accountable means you account to them all expenses and they reimburse you with per diem. On the nonaccountable plan, you have to account for your expenses to the Internal Revenue Service, if audited.

For example: nonaccountable plan-you receive $86/day diem for meals and lodging. Your actual expenses are $50/day. You have to report the excess, $36/day as income.

On the accountable plan, the IRS believes you accounted for your expenses to your employer, therefore, no tax on that money.

They will ask for copies of offers of employment, etc., to make the determination.

BE VERY CAREFUL!

Let me just clarify what I said earlier.  If, as in your example, the plan is deemed to be "non-accountable", then ALL the per diem would be reported as ordinary income by your employer on your W-2.  You could then deduct the $50/ day of actual expenses using form 2106.  THis is the same form you would use to deduct expenses that are greater than your reimbursements.

In addition, expenses deducted on form 2106 are subject to the 2% AGI threshold.  Which means that only those un reimbursed expenses exceeding 2% of your AGI can be deducted.  You have to itemize your deductions on schedule A.

Example:
Your AGI (Adjusted Gross Income) is $50,000
You had $20,000 of expenses; including lodging, meals, mileage, laundry, supplies ... etc.
You received $18,000 in per diem and other reimbursements.
The result is $2,000 in un-reimbursed employee business expenses.  This would go onto your Schedule A. Then you would add this to other expenses like tax preparation fees.  (let's say you paid $99 for Turbo Tax and all the bells and whistles)  The total in this section would be $2099.
Subtract $1000 (2% of your AGI) and your actual deduction is $1099.

In this tax bracket, your net tax savings is going to be about $164.  This is why most people just take the per diem check and leave it at that.  It is a lot of work to do just for $164.

[ladyinrad]

BeerCourt:

Again, well said. Thank you for putting that together. I just successfully passed an audit with the IRS over per diem issues and you have covered everything that was discussed between myself and the auditor.

Yes, honesty (and compliance with the rules) is the best policy. It worked for me.

[Already Gone]

Congradulations, and thank you.  The fact that you got through an audit means that you followed the rules.  This speaks well for us all.  If you had been found to have been breaking the rules, the auditor would likely have asked you for a lot of information about the people you work with.  This has happened before, and the effect was like an avalanche.  One person gets it wrong, and suspicions are cast upon us all.  Thanks for keeping our skirts clean, and thanks for paying your fair share of taxes (I know it hurts) so that the rest of us don't have to pay it for you.

[ladyinrad]

There were no questions about fellow employees and I don't seem to remember who worked there anyways, it was such a short period.  Doesn't mean we did our taxes together or the same way either, oh well. Great experience, learned alot. Thanks for the great (and very accurate) information.

[shovelheadred]

....just a little update...my tax preparer has changed her phone number,,,it is now 843-634-3540....she is still in the business of making sure you get the refund due you...legally.....red

[cairnit]

It's almost that time of year again.....and I'm wondering if anyone has a line on a good tax professional that is up on the per diem rules. Since Deb the Tax Lady retired last year, who are you going to use?