Tax returns for airline pilots

[FEDUKE404]

Does anyone have any "real world" experience with how to handle tax returns, especially the state tax returns, for airline pilots?

This is for a new client, who maintains a home (parents' address!) in a western state. For some time, his "base" has been an east coast state.

The kicker is that during 2010 a home will perhaps be purchased in the same east coast state, but his base will later be moved to an adjacent east coast state.

I generally take the approach that a "tax home" is where you work, separate from any domicile rules.

The employer is a national airline. Do they routinely track the "appropriate" state and show the correct income for the state(s) involved, or is everything just shown as income for the single "home" state?? What about the upcoming situation where the guy lives in state x but is "based" in adjacent state y?? Is it possible that ALL income can be from the western state, and ZERO income taxable to any other states??

I made an inquiry re whether in the past the west coast state tax return had shown the east coast state wages, but no answer is yet forthcoming. I also foresee some "discussions" re deductible travel expenses et al...... It is my understanding that the airlines know quite well the rules for reimbursing expenses for layovers and that type of thing, so it might perhaps be tough for an employee to argue any additional "travel" expenses?

Suggestions????

FE

[JON]

Check with airline!!

You can have your house, residence in a different state from your tax home state. You get taxed at the tax home and get it as credit on your residency state if different. Most airlines have been through this and guidelines have been set for pilots. Some Norwest Airlines' pilots located here in Mpls I believe even got to do some time making license plates here in Minnesota and the airline was trying to get better info to the clients after that. Airline will usual give you the LIST that will help you decide. Union also has some info.

The states need money. Califonia is becoming one of the best. They are taking up where New York gave up in the 90s.

[JohnH]

This might help with your research. although it isn't dated. I doubt the pilot will be able to claim any unreimbursed business expenses because most major airlines do handle layover expenses, etc properly. Keep in mind that his ALPA dues might help get him over the 2% threshhold for other items in the line 21-27 category, such as tax prep fees, safe deposit box, investment expenses, etc.

http://www.mkappcpa.com/www.sailortax.com/pdf/Sailortax%20RIA%20-Interstate%20Taxing%20of%20Sailors.pdf

[S T]

Caution

Be cautious about utilizing all of Kapp CPA info

He has been under DOJ and IRS scrutiny for about the last 5 years on deductions for mariner's,firefighters, pilots, etc and other employee related deductions

There was a permanet Injunction entered in August 2007, but I am not sure if it has been reversed - the last post I found was here http://www.irstaxattorney.com/blog/2...t-cpa-was.html and http://www.certifiedtaxconsultants.c...x-preparer.htm

The fact that his website is now up an accessible seems like he might have been granted some relief. I was following a couple of years ago - as I had a FAA Air Traffic Controller. Several of his colleagues were taking meal deductions, etc, that I did not feel were appropriate, and my client provided me with "Kapps" info.

Sandy

[JohnH]

Sandy: I didn't know that about Kapp - thanks for the heads up. I posted the link because the page appeared to be taken from RIA, although I don't know for sure that it is. I was posting it as a starting point for finding out about the tax home issue and how aircrew earnings are taxed by states, but of course even that needs more verification.

[Zee]

I haven't worked with an airline pilot or airline personnel's tax return for some time. I believe others have answered your question on home base. So, here's some additional information that might help you on the Per Diem used by airline pilots.

As I recall, they use the Transportation workers Per Diem rates...that's the primary difference for expenses, and the rate differences can be substantial for those with International destinations.

There are firms that offer software that calculates the per diem amounts based on Pilot logs, and those who specialize in airline employee taxes. I would guess that Pilots are provided an electronic version of their travel logs (or create one themselves). Since the destinations can be voluminous and there are different rates for each city, etc., calculating the Per Diem can be time-consuming.

I was surprised to learn H&R Block seems to have purchased one, or more of these speciality firms(or they're just setting up websites),http://www.pilot-tax.com/, and http://www.flightax.com/. There are others. I also found an organizer for pilots online that might help you making sure you take all the other eligible deductions, but it won't help with the perdiem (although they offer that service).

As I recall, I used to suggest using a Per diem service to most pilots before bringing the tax return to me. The cost years ago was minimal (maybe $35). Here's a link to a firm that offers this service;

Here's a link to the organizer and an article , I hope this information helps:

http://www.alpa.org/portals/alpa/magazine/2009/Feb2009_TravelExpenses.pdf

http://ezcrewtax.com/ezcrewtax_full_service_organizer.pdf