Tax breaks for pilots

[newmei]

In 2001 spent probably $6000 on a CFII, MEI and timebuilding. It is my understanding that I can get some of this back as "career training". Last year I had about $3500 taken out of my pay in FED taxes. Has anybody done this? Would I need to go back to these schools and get receipts? Thanks for the Info.

 

[Alaska]

Can only deduct training NOT timebuildin

Lifetime learning credit. Look it up at the IRS website.

 

[bobbysamd]

CFI add-ons and timebuilding

Sure wish I could file amended returns going back twenty years to recoup the money I spent flying for fun as "timebuilding." I could argue a case for it, if it were permissable.

I'd still be careful about deducting your CFI add-ons. Some IRS people might construe them to be part of initial training.

 

[skiddriver]

Lifetime learning credit? Maybe...

The lifetime learning credit can only be used at accredited institutions. There are some directions on the IRS site as to what kind of institution qualifies. Your average part 91 FBO doesn't. I asked for and received a ruling from the IRS on that one.

See:

http://www.irs.gov/faqs/display/0,,i1=54&genericId=12954,00.html

The interpretations that I have read (and I'm just a pilot, not a tax lawyer), are that CFI add-ons are deductible as a business expense if you are working as a CFI. I have a basic CFI, but am not employed nor have I ever been employed as a CFI. I wouldn't be able to deduct the expense of a CFII add-on. The initial CFI isn't eligible either, because it is entry-level training. These expenditures are deductible only as much as they exceed 2% of your taxable income. (See schedule A).

See:

http://www.irs.gov/formspubs/display/0,,i1=50&genericId=11647,00.html

Good luck, remember - you can deduct anything you want, but you want to be able to withstand an audit. So do your homework!

 

[bobbysamd]

Tax deductions

Good post.

 

[skiddriver]

One other thing....

I haven't researched this to any great extent, because I am past this point, but you might be able to finagle a deduction for your initial CFI training, if you get certified as a ground instructor first, and get some FBO to bring you on as a ground school instructor. It might meet the "improving your job skills" test. The rationale behind the FAA not allowing the intial CFI as a business expense is that it's an "instructing job" vice a "commercial pilot job" (in their humble opinion). Getting the ground instructor job first might then be the ticket.

I'd knock that one around a bit first, maybe with a tax lawyer. There are a couple of places that specialize in aviation tax law (do an internet search). Also, I'm not sure there are many places that would hire you as a BGI without your CFI, but who knows?

Blue skies.

 

[bobbysamd]

CFI training deduction

I like that. Very creative, but it does push the envelope. People really should discuss it with their tax advisors; in particular they should ask their advisors if there are any Private Letter Rulings on these subjects.

 

[norskman2]

Here's AOPA's take on it, a well-researched and written piece:

http://www.aopa.org/members/files/guides/income.html

Check with a tax advisor. I know the name of a good one who specializes in pilots - drop me private message and I can send you the contact information.

 

[bobbysamd]

Excellent post. Should answer a lot of questions.