Tax Question, help!

[Jolly Roger]

does anyone out there know if the following are deductible when itemizing?:
- commuting expenses (for example ID 90 travel to/from base)
- commuting expenses to/from Navy Reserve job (I heard rumor these expenses might soon become deductible even when not itemizing)
- 737 Type Rating (under business education expense, I presume)
- parking terminal fees

Thanks for any help!

 

[ryjacks]

I am by far not a tax expert, but for your commuting expenses I don't think that is allowed. You can't deduct a crashpad, the IRS says it is your choice to live elsewhere.

I may be wrong.

 

[Low Timer]

Meal Expense

Does anyone know if we can deduct meals and tips or does the per diem we receive kill that deduction? What if the per diem is taxed?

Thanks.

 

[80/20]

I know many pilots who have written off such expenses.
Type ratings, shoe shines, company required haircuts, beeper, answering machine, flashlight, batteries.... it adds up.

CPAs that know our industry often have worksheets to help identify deductable expenses. A good CPA can be worth the cost.

 

[bobbysamd]

Type rating and other deductions

Absolutely your 737 type is fully tax-deductable as a business expense. I deducted my $3K Citation type.

I believe the problem with deducting crashpad expenses lies with it not being your tax residence. Your proposed tax residence has to meet several tests which crashpads don't meet.

The items that 80/20 mentioned are all tax deductable. Uniforms and their upkeep are tax deductable. Don't forget professional magazines. I would also deduct Kit Darby membership dues, unreimbursed lodging for initial and upgrade training, and cellphones, to the extent you require them for your job.

 

[80/20]

How about a little brain storming on deductible items?
Let me start with this list which was given to me by a CPA 15 years ago.
I know many pilots and F/As that have used it successfully for years. Please add items that are missing!! The goal is to identify all the real expenses that we have but often forget. IRS codes and budgets are based on the assumption that we know our rights and claim what we have used - if we don't then we end up paying too much tax. This is not a suggestion to claim expenses that you have not had. Just a list to use when you try to identify what you actually have used.

Airline related computer hardware & software costs
Airplane cockpit & jet bridge keys
Bid service & bid trading fees
Cellular phone charges while on service
Company mandated flashlight & batteries
Company mandated hear expenses
Company mandated training related expenses
Company manual replacement
Crew tags, name tag & wings
Dual time zone watch & battery
Emergency cab fares
Hotel expenses at work (away from home base not covered by company)
In-flight sun glasses
Interview preparation and job hunting expenses
Log book/business day planner for travel expenses
Luggage
Passports & photos
Portable alarm clock
Professional publications
Required Medical Exams
Telephone answering machine/service
Tips for limo driver & concierge on layover
Travel expenses to union meetings
Type ratings
Uniform cleaning (washing and/or dry-cleaning)
Uniform shoes & boots
Uniform socks
Uniform sweaters
Uniforms
Union dues from paycheck or paid directly
Voltage converter/currency converter

 

[bobbysamd]

More tax-deductable expenses

80/20 put up a great list above.

How 'bout CFI refresher courses, including meals and lodging.

ATP/FEX weekend schools, including meals and lodging.

I've heard of some pilots deducting cable TV so they can watch the Weather Channel. I'd be careful of that one, though.

CAP and AOPA membership dues. You might be able to deduct the former as a charitable contribution.

Away-from-domicile lodging not covered by per diem or expense allowances.

There's plenty - just put on your thinking caps.

 

[AV8700]

The IRS also publishes a list of per diem rates for cities across the US, even if you recieve per diem from your company the difference is deductible. Also, even if you just spent the night and came home in the morning you still get per diem for a good percentage of that day. I can't remember what that percent is but you can check their website.

 

[Cadillac]

Itemizing or Standard?

It seems like lots of pilots are talking about itemizing various expenses during the year.
But as a single person, I think the standard deduction of about 4700 far outweighs any cellphone bills or logbooks I've purchased during the year. Is there something I'm missing? I'll have to add it up.
I can see where a type rating would work, or if you made/spent a LOT of money.

 

[bobbysamd]

Itemizing

It seems like lots of pilots are talking about itemizing various expenses during the year.
But as a single person, I think the standard deduction of about 4700 far outweighs any cellphone bills or logbooks I've purchased during the year. Is there something I'm missing? I'll have to add it up.
I can see where a type rating would work, or if you made/spent a LOT of money.

That's very true. Sometimes you do better with the standard deduction than with itemizing. You, or your tax person, should calculate your return both ways.

 

[80/20]

Itemized or standard deduction?
Good valid question Cadillac.
Warning, this is just my un-educated understanding - take it for what it's worth I am not a tax professional!

Pilots often have factors that might make itemized exceed standard deductions:
Married flight crew filing joint?
Other large expenses? Training costs, travel to interview and work required moving expenses. (Moving has pushed me up several times).

Keep in mind that the industry average for our business expenses is actually a lot higher that we often realize. It is not only businessmen and woman with high income that should be allowed to use the tax code as intended.

INFORMATION GIVEN BY A NEW YORK CPA:
Cleaning uniforms, shirts, etc:
"Every Flight Attendant/Pilot has to wash and/or dry clean their uniform items. Think of all the specific parts of your uniform as separate pieces- pants, jackets, blouses, ties, scarf's, dresses, raincoats, overcoats, etc."

Example (1): Dry cleaning- $20.00 per two weeks equals $520.00 per year

Example (2): Washing- consider the cost of the detergent, fabric softeners, spray starch, laundromat cost, etc. How often do you replenish detergent, fabric softener, etc? Do you go to a laundromat? If so, how often and how much do you spend?

Reminder: It is an IRS requirement that you keep an accurate log of all your employee expenses.

Conclusion: The industry average numbers that I have seen will get close to but normally not exceed standard deductions, but if you have had any other expenses, moves, training etc, than it might move above standard. So let's share items and add to the list to let those who can use them!

 

[midlifeflyer]

Re: Itemizing or Standard?

But as a single person, I think the standard deduction of about 4700 far outweighs any cellphone bills or logbooks I've purchased during the year. Is there something I'm missing? I'll have to add it up.

It depends on a lot of things. Like the job itself.

For example, does your job involve being an employee or an independent contractor? Pilots flying for a 135 or 121 operation are probably employees but a CFI might be either. The tax difference is that an employee is stuck with figuring out whether the standard deduction or itemizations is the way to go, and then what he can deduct. The independent is in her own business and can make legitimate deductions on a Schedule C whether she takes the personal standard deduction or not.

Then, of course, if you're an employee, it depends how good the job is in terms of covering expenses. Does that type rating get the better position =and= partial reimbursement for training costs if successful?

Everyone's situation is different. That's what tax specialists are for. The information in this thread is useful for general guidance, but even without discliamers, one should not look to online forums for tax advice.

 

[Speedtree]

Give to charity. I give my ten percent and it's enough to put me over the standard deduction and everything else just adds on.

There are plenty of charities worth giving to these days that could use the support.

 

[Speedtree]

also, to answer the original question. You can't deduct commuting expenses because you are going to work. The same reason you can't deduct the cost of driving to the office downtown. Travel while you are at work is another game.

 

[atpcliff]

Hi!

Note: I'm not a tax expert. I've done my own taxes for quite a while, and have talked to a large # of pilots and tax people about our situation. This is my best understanding

If you think you're getting ripped off by the IRS, pay a professional tax person to see what you legally can deduct.

Here's the deal on commuting/crashpad, etc.

If you read the IRS pubs, you can get the official party line.

Basically, it talks about your base with relation to transportation workers. If ALL of your trips start AND end at that base in the tax year, you can't deduct commuting expense between your base and your residence.

Many pilots in the above situation will NOT deduct commuting/crashpad expenses. Many pilots in the above situaion DO deduct those expenses. My wife asked a tax professional, and she said pilots can deduct EVERYTHING, in her opinion.

In my case, very few of our airlines' trips originate in our base, and very few start in our base (way below 50%), so I deduct my commuting/crashpad expenses.

Per Diem:

You can go to IRS.gov and find out the government allowable standard rates. THe standard rate is $30. WHen you click on a state, it will list all the cities that are >$30. If a city isn't on the list, it is $30. The rates are good from now 'til Oct 1 of 2003, and then the rates MAY change, so you have to check again for the costs in the fall.

WHen you leave or return to a place that you can claim per diem from your home you can claim 75% for that day. If you go from 1 per diem location to another in a day I do 50% for ea. location for that day. I track all travel and allowable per diem for each month. Then, when I get the monthly company check, I subtract what the co. paid me for per diem from my allowable per diem for the month, which gives me the amount I can deduct on my taxes. WHen your company pays you per diem, you can NOT deduct that amount, just the difference between the gov't allowable and what U received from your co.

Note: If you spend A LOT of money on food, your ACTUAL expenses may be more than that allowed by the Gov't. You can keep all your receipts and deduct your ACTUAL expenses, or use the gov't rate. Most pilots won't be spending $50+ for food per day, however. It's also a pain to keep all receipts.

Also: You can't deduct tips if your taking the per diem, becuase it is for food and incidental expenses, such as tips. If you have to pay for a hotel out of your pocket, the gov't has rates for per diem AND lodging combined together, which is a LOT higher than straight per diem. Once again, you can deduct ACTUAL receipts, or take the gov't rate.

Other stuff:
The lists above are very good for exquipment, etc. SInce I'm deducting my commuting/crashpad expenses, I'm also deducting equipment/furnishing for my crashpad.

Remember things like:
Laundry costs on the road
Jepps dividers
Headset covers/cushions/bags
Flight kits
Luggage
etc., etc.

I was at my airline for about 6 months of 2002, and had almost $7K of deductable expenses. Some of that is due to the fact that I was just starting and had a large amount of initial expenses for equipment, etc.

General Info:

If you are audited, and can justify your expenses, the IRS will allow them. My mom/dad were audited 2 years in a row (about 20 years ago). They kept excellent records.

The IRS found they hadn't taken all the deductions that they were entitled to, and they got MORE money back than they claimed. They were never audited again.

Lately, the IRS has not had a lot of money to spend on enforcement, and they were trying to catch people who were clearly trying to defraud the government. Just this year, they received a big increase in their auditing/enforcement budget, but it was to focus on those who were using offshore scams to hide income, other blatantlyl illegal tax shelters, and people illegally claiming the Earned Income Tax credit (people have been claiming 12 kids, for example, while only having 2, or none).

If you live in Minnesota (or some other state), own one or more homes there, have your vehicles registered there and your bank accounts there, don't try and claim FL as your residence to avoid state taxes. The STATE will come after you (nothing to do with the IRS/Federal gov't), as some NWA pilots found out.

Good luck

Cliff
GRB

www.irs.gov -->your starting point.