like2fly2

There are a million and one threads on per diem calculation, but I haven't found any that have been able to answer my specific question... so I figured I would try here.

Federal employees are required to pro-rate the M&IE deduction by 75% for the first and last days of travel. However, I'm not a Federal employee (121 guy). IRS Pub 463 says that "You can prorate using any method that you consistently apply and that is in accordance with reasonable business practice." Even the example provided in Publication 463 says that the prorate may not be necessary.

The way I'm looking at this is that many of my trips start early AM and end late PM. It appears to me that based on the guidance in 463, I do not need to prorate my first and last day of travel.

It sounds as if this may be inconsistent with the methods used by the popular online per diem calculation companies. Can anyone provide insight?

OceanicPilot

I never prorated my first and last day. It was defined as a "generally acceptable accounting principle". I filed my air crew taxes like this for many years while working in the US and never had a problem.