Your right… Last year meal allowance was $71 a day in NY. You minus what you get per day for grub ($18) which ends up being $53 a day for everyday you work. The meal allowance changes every year and is different in every region.[/QUOTE]
From my experience this is exactly what the IRS is going after. For “turbo tax” users, when you click the " are you subject to DOT hours of work rules?“box it opens up this deduction: " standard meal deduction”. Last year it was 52$. When you “Chase the rainbow” looking for deductions (like 72$) in excess of the federal MI&E rate RED flags go up. Likely the excess will NOT pass the audit. ( As Kapps clients found out)
I went through audits for the last two years. Meal deductions were not allowed because, although I work on a vessel where the crew does the grocery shopping and prepares meals, I had no documentation of this as company policy. I’m going with standard deduction for 2012 ;-(
[QUOTE=“lemurian;98887”]I went through audits for the last two years. Meal deductions were not allowed because, although I work on a vessel where the crew does the grocery shopping and prepares meals, I had no documentation of this as company policy. I’m going with standard deduction for 2012 ;-([/QUOTE]
So if you have a cook make meals can you claim the deduction?
Ask a tax expert for a reliable answer. But unless you know exactly what the company provides/day for grub per man and can document it I wouldn’t. Luckily i have it right on my paystub.
Unless you are incurring out of pocket meal/incidental expenses that are partially/fully reimbursed its not the best idea.
From my experience this is exactly what the IRS is going after. For “turbo tax” users, when you click the " are you subject to DOT hours of work rules?“box it opens up this deduction: " standard meal deduction”. Last year it was 52$. When you “Chase the rainbow” looking for deductions (like 72$) in excess of the federal MI&E rate RED flags go up. Likely the excess will NOT pass the audit. ( As Kapps clients found out)[/QUOTE]
Depends where you are, and sometimes on the season. I just use the standard “DOT SERVICE HOUR” for the entire continental US at $59 and don’t worry where I am. Some places are lower, some higher, the $59 is like a national standard to claim. My idea is to claim what I’ll have a far easier time keeping track of.
[QUOTE=Capt. Phoenix;98912]$72 is the federal m&ie rate for NYC…[/QUOTE]
This is what Kapp was taken to task for. The burden of proof is on the mariner. And when the tax returns (totaling in my case 95 pages) got on the IRS’ ass, they challenged him. He (meaning we) lost. To take the NYC rate, you have to perfectly document that your vessel was in NYC waters the whole time. If you go to Sewaren NJ, you aren’t. This is really hard to do, and the IRS got pissed off Kapp was pushing to the limit. The easy way is to take the federal DOT deduction. If I understand it, from other posts, this year it is 59$ a day (minus reimbursed money) BUT, the legal interpretation is; “You have to actually spend the money” to get the deduction. However, the “No receipts” clause makes this easily doable, for expenses. NOTE: Having successfully undergone an audit (from a Kapp tax return); One thing I learned: You CAN’T ever call this ‘meals’. Meals are specifically NOT allowed. It is ‘the cost of expenses for while at work’. That is what the deduction is for, not meals.
[QUOTE=cappy208;98936]The easy way is to take the federal DOT deduction. If I understand it, from other posts, this year it is 59$ a day (minus reimbursed money) BUT, the legal interpretation is; “You have to actually spend the money” to get the deduction. However, the “No receipts” clause makes this easily doable, for expenses. NOTE: Having successfully undergone an audit (from a Kapp tax return); One thing I learned: You CAN’T ever call this ‘meals’. Meals are specifically NOT allowed. It is ‘the cost of expenses for while at work’. That is what the deduction is for, not meals.[/QUOTE]
You must actually incur expenses that you claim and at the very least provide supportive evidence for them. These rules were written mainly for truckers and the self-employed that actually incur out-of-pocket expenses while on the job; it makes sense for them and little to no sense for the average commercial mariner where the vessel takes care of you and you’re spending nothing. Really, the only difference between this and a regular business expense deduction is what percentage you’re allowed to deduct; all other rules apply.
Meals are certainly allowed (the deduction is called “M&IE”, Meals & Incidental Expenses, after all) as long as they are actually incurred. See that’s the problem though and gets to the heart of this mess. Everyone was just lying out of their asses and calling it a “meals” deduction and trying to claim that they spent $59/day (or whatever) while on board a vessel. The only way to even attempt to account for that money is through meals. I’m surprised it took the IRS this long. So lets get this straight… a mariner no longer can claim meals because the company pays for them and the IRS finally saw through that bit of BS. But now they can use the same deduction for incidental expenses less meals (none of which they ever incurred), have even less to show for it, and this somehow makes it legal all of a sudden? Lets tag all of this for what it really is – fraud.
This will no doubt get shot down by numerous defenders because they want to continue getting away with it and convince their buddies to do so too. Because if “everyone does it” (or you paid top-dollar to have a “mariner tax specialist” do it), it makes it ok.
Talking about taxes? First, I will start with mariner taxes. For Mariners, the tax liability is to the state the Mariner Lives in. Key word is Mariner, or Seamen, Merchant Marine. However land based employment is different. For land based you would be taxed in the state that you work, maybe also the state you live in. Example; If you lived in Pensacola Fl, and worked at a Starbucks in Mobile,Alabama, you would have to pay Alabama’s state income taxes. You have to ensure the state your fighting receives the correct KEY WORD. Remember when California was bankrupt? That might explain the going after merchant marine…As far as Marty Kapp, I had him do my taxes for a few yrs.Then I received an IRS audit, and Marty Kapp, did nothing to stand behind his work. No phone calls answered. Seems the IRS, goes over Marty Kapp’s prepared tax returns with a microscope. It is like the preparer Marty Kapp is an IRS red flag.
Did anyone even read the USC 11108 that was referred to? For one, it only applies to fishing boats or fish processors. Two, do you understand that voluntary part? That means you can work for the company or not, they aren’t forcing to into employment but if you work for them you agree to have earnings withheld.
Now on the non-fishing side of the fleet. If you’re on a boat that never leaves that state, i.e. working a harbor tug in Long Beach, you can totally have earnings withheld legally. You then have to file a non-resident claim at tax time and hopefully get most of that back.
I live in MS. Worked at a tow company in LA. They took out LA taxes. End of year I would have to fill out MS and LA tax forms. I’d basically get a big refund from LA and smaller refund from MS, bc I’d show a credit for state tax paid, and the MS taxes are lower.
Now I work at a different company, based in LA, and still live in MS. And they are only taking out MS tax on my paystub. Confusing. I will call HR Monday and get some clarification, but just seems weird to me. And I wanna make sure i catch this early.
Thing is, i know lots of folks out here don’t pay any attention to their pay stubs, especially when they’re posted online only, which is increasingly the case these days.
If your checks are cut from an MS office they may be doing that, illegally I assume, to cut down on their own paperwork and save you money in the process. Had an inverse situation: My brother lived in NYC, worked at an airport in NJ (lower income taxes). His company also had an NYC airport office and they cut his checks out of there, so NYC income tax. He paid the same he would have but only filed one state return. NYC got undeserved money and NJ got stiffed.
Some comments about California taxes. . . . I did some work for Crowley on the West Coast back in the 80s, while living in (tax free) Florida. The DID withhold California income tax. When the next year rolled around, I got a love letter from the California Franchise Tax Board (they operate the state income tax) with a tax form. Thinking I was going to get all of that dough back, I started to fill it out. Oh, crap. Because I was working for a California based company, and from their San Francisco base, I had to pay taxes on the wages that I earned. But it wasn’t so straight forward. Instead of just paying tax on the amount that I made, I had to pay a percentage equal to my total income when compared to my CA income. . .what the hell? At the time, my father was a lawyer for the California Franchise Tax Board, so I called him and started bitching. . .well, at that time (and may still be the case), that was the law. It was written primarily to get revenue from the Hollywood types that came out to the state to make movies. . . well crap. I did the calculations. I was due a refund of seven cents. . . I didn’t file. . …
I have run into a situation for the last 3 years which has caused me some grief. I worked for a NJ based company. I live in NY. They deducted NJ income tax, however NY also sees fit to tax the income I make in other states. So I had to pay some NY out of pocket.
My present employer is also in NJ. I have asked the payroll company to deduct NY as well as NJ income taxes, which they are doing. It took them a couple of tries. At first they had me deducting NYC local tax. I think they have it straight now and we will see next year when I file.
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