A pilot or flight attendant's per diem deduction is essentially the way the IRS allows crew members to write off meals while on work-related travel away from their tax home. When a crewmember first gets hired by an airline, understanding how to enter the layovers into EZPerDiem so it properly calculates M&IE is a common question.
Assume that you were hired by "Happy Airlines" in July of the tax year you are using EZPerDiem for. Assume that your training was from July 4 to August 15. After August 15, you were given a domicile of ORD airport. Prior to being based in ORD, your training was conducted in ATL. While training in ATL, you returned home on weekends, but your receive per diem the entire time you were in training.
Entering Domiciles into EZPerDiem
You will notice as you enter your domiciles into EZPerDiem, that it assumes Jan. 1 is the first date of your domicile. But you were not training until July 4. The date in this case does not matter. Just enter the first applicable domicile in Jan. 1. As long as you do not enter actual layovers from Jan. 1 to Jul. 4, no M&IE expenses will be calculated during that period.
Determining your first domicile
One common question we get asked is, "What domicile do I enter first?" In this example, the apparent choices are ORD or ATL. This poses a bit of a dilemma because the crewmember was not awarded ORD until after training, but the training in ATL was only for about 6 weeks, and it wasn't really a domicile.
Actually, both ORD and ATL are wrong in this example.
The Key Point
The key is that your actual home (where you live) is really your tax home until you are awarded a domicile. This means that if ATL is not in the city where you live, then you get to write off M&IE while in training. If ATL is where you live, then you do not. We will assume your home it location near an airport that is not ORD or ATL. Assume your home is near JFK. So on your weekends during training, you return home to JFK, even though you get per diem the whole time. The per diem you get during training does not matter as far as the calculation of M&IE goes. M&IE will be the same, whether you receive per diem or not. This is because the per diem reimbursement is subtracted after M&IE is calculated for the whole year. Your non-taxable per diem is not considered until after the entire calculation is completed.
So in EZPerDiem, your first domicile that occurred while you were in training in this example would be JFK. It would be entered on January 1. You would have no layovers entered until you began training on July 4.
What layovers get entered during training?
During training, you would enter ATL for every day you actually spent the night in ATL. If you returned home on weekends then you would enter JFK on the days you spent the night at home.
What does my domicile become after training?
After training is complete, the domicile would be entered on August 15 as ORD. Because commuting expenses are not deductible, JFK is not considered anymore because it is not longer your tax home.
There are other possible scenarios that might apply to pilots and flight attendants in training, but these guidelines should help you determine the best way to enter the domicile(s) during that period.
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