ATTN: Professional Contract Pilots - Tax question

[ILOVEBEER]

Do you guys write off your initial/recurrent sim training as an "educational expense" or a "business expense"? If you use business expense, what category do you file it under?

Thanks!

 

[PiratePilot]

Irs

It's not an educational expense because I believe it does not fall under the IRS guidelines. I'm pretty sure that FSI or any of the other training center out there is not considered a "qualified university." Besides even if it was you are limited on how long you can take that deduction. Here is all the information that you need for your contract flying:
http://www.irs.gov/pub/irs-pdf/i1040sa.pdf

Depending if you're a full time contractor with another source(s) of income or a part time contractor with a full time job you may want to consider forming an an LLC example: ILOVEBEER LLC so that the IRS dosent take away all your hard earned money. That way you can have the company(s) pay your LLC instead of 1099ing you. You can set up a business account through Chase for free, get into a SEP IRA or something of that nature so you can put some, most, or all of that money away tax free. You can even have your LLC match your contrabution (up to 45K per year).

Good luck!

 

[AZ Typed]

Depending if you're a full time contractor with another source(s) of income or a part time contractor with a full time job you may want to consider forming an an LLC example: ILOVEBEER LLC so that the IRS dosent take away all your hard earned money.

How would having an LLC prevent the IRS from taking it's share of your earnings? Isn't an LLC a pass-through entitiy for income, deduction, and tax purposes - unless you elect to be taxed as an S or C corp?

That way you can have the company(s) pay your LLC instead of 1099ing you. You can set up a business account through Chase for free, get into a SEP IRA or something of that nature so you can put some, most, or all of that money away tax free.

Are you sure about that? Did you mean to say put money away pre-tax? That is to say, you will still pay tax on the money at SOME point.

You can even have your LLC match your contrabution (up to 45K per year).

The limit for 2008 is $46,000 in a defined contribution plan (401(k), SEP). You do not need an entity like an LLC to set up a defined contribution plan.[/quote]

 

[PiratePilot]

T, I'm not really sure on the specifics... that was the advice that I got and it seems to be working. I did mean to say pre-tax, I gotta work on my lingo.

 

[AZ Typed]

T, I'm not really sure on the specifics... that was the advice that I got and it seems to be working. I did mean to say pre-tax, I gotta work on my lingo.

Ha Ha Ha...I didn't realize it was you man!!! In that case, forget everything I wrote, you know what you're doing!!! Be good bro!!!