Prorate is a term used in
IRS Publication
463 under the topic of the
standard
meal allowance. The first day of a trip and the last day of a trip
are subject to the prorating rules described in IRS Publication 463. The
reason prorating is important to the standard meal allowance is because the
first day and last day of a trip are considered partial days. A full
day goes from midnight to midnight while the first partial day goes
from some time after midnight to midnight, and the last partial day
goes from midnight to some time before midnight. Because the first and
last day are shortened, a taxpayer may be subject to a reduced (or prorated)
standard meal allowance on those days. The following is an example:
Assume Amy, a flight attendant for
Continental Airlines, is on a 4-day trip. Amy is based in EWR so EWR
is Amy's tax home.
On this particular 4-day trip, Amy has overnights (layovers) in LAX, TPA,
and DFW respectively. The following illustration shows how a
per diem
calculator should select the overnight and prorate them for the standard
meal allowance:
Notice that the last day of the trip where
Amy returned to EWR uses the previous day for the layover city. That is
normal and can be found within IRS Publication 463.
How much gets prorated is subject for debate.
As of this writing, IRS Publication 463 says the following:
It is up to the
tax preparer or
taxpayer to interpret whether an airline pilot or flight attendant should use
75% or 100% on the first and last day of a trip. The EZPERDIEM.COM
Settings Page allows pilots and flight attendants to change this to 75% or
100% depending on their interpretation of the prorating rules. The
EZPERDIEM.COM Per Diem CalculatorTM
is defaulted to prorate at 75%, but changing the proration rate to 100% is
simple and can be done at any time (even after all of the layovers are entered
for the year).
