Two Big Per Diem Calculator Misunderstandings that Flight Crews Often Have About EZPerDiem

When we began EZPerDiem.com, our first goal was to develop a web-based software program that could easily compute the per diem deduction for pilots and flight attendants, thus creating a simple way for flight crew employees to get bigger tax refunds. But, as EZPerDiem.com grew, so did the requirements that our customers wanted us to provide. Believe it or not, the most important part of this website is not its ability to prepare a per diem calculation in less than 30 minutes. It isn't even that a flight crew employee can calculate their employee business expenses with ease and have the computer describe where all those numbers go on their tax forms or in TurboTax or TaxCut.

Rather, the most important part of the EZPerDiem.com network is flight crew tax education. Teaching other flight crewmembers about their personal tax situations is, by far, the biggest challenge we have. Understanding flight crew taxes is not intuitive. The tax code is complicated, boring, frustrating, and downright miserable to sift through. Despite that, it is important to understand the basics about flight crew taxes.

The following paraphrased excerpt from a flight crew employee was posted on an online forum, and it illustrates why it is so important that we make education about flight crew deductions our top priority. It is from an anonymous poster who advised someone against using EZPerDiem.com. This is what that poster said (paraphrased):

While easy, EZPerDiem.com is very limited because it only allows you to input your base city and where you had a layover. If there was no layover, EZPerDiem.com does not include those days to be counted towards the M&IE expenses, and furthermore, you can't input more than a departure and arrival city per day. That means you do not get credit for the per diem amounts of multiple cities flown in one day.

The poster, in this case, is exactly the reason EZPerDiem.com publishes articles, why we created AviationTaxGlossary.com, why we strive to provide pertinent FAQs, and why we give detailed replies to emails. We know it is easy to misinterpret the tax code, as this gentleman did, and because we want you to learn more about the rules of the per diem deduction, we will now point out the two big errors in this gentleman's comment.

Error #1: If there was no layover, EZPerDiem.com does not include those days to be counted towards the M&IE expenses. The issue here is that the IRS only allows M&IE expenses to be counted when you are on a work-related trip that involves a rest period (typically a layover). The IRS describes this rest period as not being satisfied by merely napping in your car. For flight crew employees, this means a typical sit at an outstation is NOT considered a rest period. Pilots and flight attendants get their rest periods via a layover.

On a day-trip, pilots and flight attendants are ineligible for the M&IE deduction according to IRS Publication 463 because their is no rest period. That also means their per diem for day-trips should be taxable per diem rather than non-taxable per diem. The irony is that the gentleman who posted was complaining about us not allowing day-trips to be entered, but when we built the EZPerDiem.com Per Diem Calculator, we didn't leave out day-trips by accident. Day trips intentionally cannot be entered because they are not supposed to be according to the IRS.

Error #2: ...you do not get credit for the per diem amounts of multiple cities flown in one day. The error the poster is making here is that you cannot legally write-off per diem rates for several cities per day, as he suggests. He is very, very wrong. The only cities that matter for the per diem deduction are the rest cities (i.e. layovers). If a flight crew employee flies four or five legs in a day, he or she cannot get credit for every stop. Only the stops with a layover count toward the M&IE expenses.

EZPerDiem.com is designed be user-friendly, but it is also designed to protect flight crewmembers from making the big errors that this poster tried to make. The gentleman who posted above likely got frustrated because EZPerDiem.com did not compute the per diem deduction the way he wanted. But, you should be relieved that EZPerDiem.com computes the per diem deduction the way the IRS wants it.