John M. lledblom
Vice President
Human Resources Policy
and Development
October 21, 2003
Dear US Airways Furloughee:
When you left US Airways, the company was pleased to offer you travel privileges for a defined period of time as part of your furlough package. However, due to tax law, we are required to begin to tax the value of your space available travel. Therefore, beginning November 1, 2()03, for travel occurring after October 31, 2003, we will impute taxable income for space available travel by all involuntarily furloughed employees (and eligible family members) who have been on involuntary furlough status for more than one year and continue to have travel privileges.
How Does Imputed Income Work?
As required by the Internal Revenue Code, Section 6 1(aX I), you will be deemed to have received taxable income on the fair market value of any travel occurring after October 31, 2003. The current fair market value is considered to be 10% of the highest, unrestricted US Airways coach class fare available for sale on the date of travel. This is consistent with our valuation for companion passes, the domestic partner program and other programs.
As an example, if you were to travel from Washington, D.C. to Los Angeles through Pittsburgh, the imputed income on your travel would be calculated as follows:
DCA-PIT Y-8 fare is $400 and 10% of that fare is PIT LAX Y-8 fare is $800 and 10% of that fare is
Total Imputed Income
Total Tax Liability at 28% rate
$ 40.00
$ 80.00
$120.00
$ 33.60*
* This example assumes a tax rate of 28%, but the federal and state income taxes on this amount of imputed income will vary depending on your tax bracket, and your rate will ultimately determine the amount of tax you will be responsible for. The fares in this example are approximate and for illustrative purposes only.
In January of each year, if the value of your total travel exceeds $600, you will receive a Form 1099 from the Company that will reflect the taxable income to you for the travel by you and your eligible family members in the prior year. If the value is under $600, you will receive an information statement showing the taxable value. You must report this taxable income to the Internal Revenue Service on your individual income tax return.
If you have questions regarding the imputed income, a Q & A is available on theHub. Sincerely,
John M. Hedblom
So there you have it ...for those who misinterpreted the new policy, here it is in black and white, it is not a 10pct tax on fair mkt value as 330 Jet Stew alluded to in his/her attempt to set the record straight as did PITBULL who stated this in error as well. The Y8 fare per seg flown is computed at 10pct, and added up every calendar tax year to create additional income for your tax return.Then you are subject to whatever tax your personal state in life treats you to. For me personally it ends up about 15-20percent based on several decent sized deductions for house,PP etc... So if I fly a thousand dollars worth of imputed travel benefits next year(unlikely, since I only flew 5 times in 2003 for approximate 600.00 in imputed value, i.e. 6000.00 dollars worth of Y8 travel), I will be taxed about 150-200 dollars for my tax bracket for 2004. Yes it sucks and I hope perhaps somehow it will be reversed or found illegal/improper/unfair to enforce.
Vice President
Human Resources Policy
and Development
October 21, 2003
Dear US Airways Furloughee:
When you left US Airways, the company was pleased to offer you travel privileges for a defined period of time as part of your furlough package. However, due to tax law, we are required to begin to tax the value of your space available travel. Therefore, beginning November 1, 2()03, for travel occurring after October 31, 2003, we will impute taxable income for space available travel by all involuntarily furloughed employees (and eligible family members) who have been on involuntary furlough status for more than one year and continue to have travel privileges.
How Does Imputed Income Work?
As required by the Internal Revenue Code, Section 6 1(aX I), you will be deemed to have received taxable income on the fair market value of any travel occurring after October 31, 2003. The current fair market value is considered to be 10% of the highest, unrestricted US Airways coach class fare available for sale on the date of travel. This is consistent with our valuation for companion passes, the domestic partner program and other programs.
As an example, if you were to travel from Washington, D.C. to Los Angeles through Pittsburgh, the imputed income on your travel would be calculated as follows:
DCA-PIT Y-8 fare is $400 and 10% of that fare is PIT LAX Y-8 fare is $800 and 10% of that fare is
Total Imputed Income
Total Tax Liability at 28% rate
$ 40.00
$ 80.00
$120.00
$ 33.60*
* This example assumes a tax rate of 28%, but the federal and state income taxes on this amount of imputed income will vary depending on your tax bracket, and your rate will ultimately determine the amount of tax you will be responsible for. The fares in this example are approximate and for illustrative purposes only.
In January of each year, if the value of your total travel exceeds $600, you will receive a Form 1099 from the Company that will reflect the taxable income to you for the travel by you and your eligible family members in the prior year. If the value is under $600, you will receive an information statement showing the taxable value. You must report this taxable income to the Internal Revenue Service on your individual income tax return.
If you have questions regarding the imputed income, a Q & A is available on theHub. Sincerely,
John M. Hedblom
So there you have it ...for those who misinterpreted the new policy, here it is in black and white, it is not a 10pct tax on fair mkt value as 330 Jet Stew alluded to in his/her attempt to set the record straight as did PITBULL who stated this in error as well. The Y8 fare per seg flown is computed at 10pct, and added up every calendar tax year to create additional income for your tax return.Then you are subject to whatever tax your personal state in life treats you to. For me personally it ends up about 15-20percent based on several decent sized deductions for house,PP etc... So if I fly a thousand dollars worth of imputed travel benefits next year(unlikely, since I only flew 5 times in 2003 for approximate 600.00 in imputed value, i.e. 6000.00 dollars worth of Y8 travel), I will be taxed about 150-200 dollars for my tax bracket for 2004. Yes it sucks and I hope perhaps somehow it will be reversed or found illegal/improper/unfair to enforce.
Yes it is not right that domestic partner status is different than "married"!! However you might be in luck for your travel, read closly, I believe it addresses INvoluntairly furloughed not VOLUNTARY>>> I hope this helps!!
