Selecting Full-Day vs. Three-Quarter Day
Internal Revenue Publication 463 titled TRAVEL, ENTERTAINMENT, GIFT, AND CAR EXPENSES
explains the rules for deducting per diem allowances and business travel expenses. It also
defines the concept of your Tax Home and the
Standard Meal Allowance method of calculating your per diem travel deduction, which
is used in our Per Diem Calculator©.
When using the Per Diem Calculator©, you have the option of assigning a Full Day Allowance
or a Three-Quarter Day Allowance for each day of travel. In Publication 463, page 10,
the IRS cites the following example to explain the use of the full-day vs. a three-quarter day:
"Travel for days you depart and return. For both the day you depart and the day you return
from a business trip, you must prorate the standard meal allowance (figure a reduced amount for each day).
You can do this by one of two methods.
- Method 1: You can claim ¾ of the standard meal allowance.
- Method 2: You can prorate using any method that you consistently apply and that is in
accordance with reasonable business practice.
Example. Jen is employed in New Orleans as a convention planner. In March, her employer sent her
on a 3-day trip to Washington, DC… She left her home in New Orleans at 10 a.m. on Wednesday and arrived
in Washington, DC at 5:30 p.m. After spending two nights there, she flew back to New Orleans on Friday
and arrived back home at 8:00 p.m…
Under Method 1, Jen can claim 2½ days of the standard meal allowance for Washington DC:
¾ of the daily rate for Wednesday and Friday (the days she departed and returned), and the full daily
rate for Thursday.
Under Method 2, Jen could also use any method that she applies consistently and that is
in accordance with reasonable business practice. For example, she could claim 3 days of the standard
meal allowance, even though a federal employee would have to use Method 1 and be limited to 2½ days."
We recommend that you use Method 1, and assign a ¾ day to the days you depart and return, as this
is a more conservative approach. Using this method, we recommend the following the trip guidelines
(assume that your base if JFK):
- One-day trip: Depart JFK, travel to DET, and return to JFK on the same day. Duty day terminates
upon arrival at JFK. No allowance if stay in DET is brief. If stop in DET requires meals and
sleep, count as ¾ day at DET rate.
- Two-day, one overnight trip: Depart JFK on day one, spend one overnight at ORL, and return to
JFK the following day. Assign a ¾ ORL-rate day to each, for a total of 1½ days for the trip.
- Three-day, two overnight trip: Depart JFK on day-one, overnight ORL, travel to CHI on day two
& overnight, return to JFK on day three. Assign ¾ day at ORL rate for day one, one full day
at CHI-rate for day-two, and ¾ day at CHI-rate for day three. Total is 2½ days.
We recognize that Publication 463 seems to allow using a full day of standard meal allowance for
every day you travel, as stated in Jen's example of Method 2. The Wolcott & Associates, PA
Per Diem Calculator permits you to report per diem allowances in either manner. However, we recommend
the more conservative Method 1. Different circumstances may prevail, and we recommend you
review Publication 463 to determine which method is most appropriate for you. Regardless of the
method you chose, stay consistent with that method for the entire tax year.
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