Tax Law Change for Transportation Industry Employees

[USA320Pilot]

Dear Colleague,

I recently completed my 2009 Federal Income Tax Return and I used the information from Bill Pollock's article published on the link below. Bill's information enabled me to save $1,500 on my 2009 taxes, and with my amended 2008 return, a refund of $1,500 for a total tax savings of $3,000!

This is real money and real savings for Transportation Industry employees.

I encourage each employee look at the document link below and to talk to your Tax Advisor to keep more of your hard earned dollars.

See Story

Regards,

USA320Pilot

 

[bigbusboy]

Thanks for posting. This will make a big difference for most flight attendants and pilots.

 

[BoeingBoy]

Thank God I haven't had to do employee expenses for three years, but even under the old rules anyone that showed more reimbursement of meal expenses than expenditures was doing something wrong. The IRS rules allowed enough leeway go get a sizable deduction on meal expenses.

Jim

 

[ua767fo]

Regards,

USA320Pilot

Thank you very much for making this known. My only question, where was ALPA to inform me?

Best wishes,

Denver, CO

 

[Poug Darker]

The 75% rule for days that start or end a trip is only applicable to DOT (federal government) workers. Read the examples in the publication: any 'reasonable' consistent method may be employed. And it does not say what that method must be.
Cheers.

 

[FWAAA]

The 75% rule for days that start or end a trip is only applicable to DOT (federal government) workers. Read the examples in the publication: any 'reasonable' consistent method may be employed. And it does not say what that method must be.
Cheers.

I'm not sure I agree. Federal workers have to use method 1 (75% proration) but it doesn't say others can't use that method.

 

[BoeingBoy]

Correct, FWAAA. I think what Poug was saying is that others didn't have to use that "standard" method and that is one area where there was room to get a substantial deduction under the old rules. I got a significant itemized deduction every year under the old rules. Of course, "transportation workers" were free to use the "standard" method if they chose and most likely end up with more reimbursement than deductible expenses (thus having a portion of their per diem become taxable income).

As I said before, anyone willing to take full legal advantage of the old rules will see no real change of significance.

Jim

 

[FWAAA]

BoeingBoy, you're right - I misunderstood Poug's post. Feds are limited to the 75% allocation, and all others can use any reasonable method, including the 75% method if they choose.

Perhaps someday the pilots at US (and some other airlines) can get back to salaries that put them in the range of the AMT, making large tax savings from per diem expense deductions a little less important. Always better to have larger income than trying to maximize deductions from too small an income.

 

[BoeingBoy]

Always better to have larger income than trying to maximize deductions from too small an income.

Absolutely, although the two are not mutually exclusive. Even before the various pay cuts I always took the lazy man's way out and used the loophole for "any method consistently applied that doesn't result in over double the standard IRS allowance" to claim a few thousand more in meal expenses than reimbursements. If one is willing to take the time to do it, entries for meal expenses in your standard pocket log are perfectly acceptable to the IRS and as long as no single item is over $25 (if it hasn't gone up since) no receipt required, so it's pretty easy to show $100 or more per day in expenses - generally double or more what any airline per diem is for domestic flying.

Jim

 

[Reed Richards]

I must simply attribute USA320's timely information as having come for the "hot tub time machine."

My accountant has been taking this into account for the better part of a decade...thanks for the heads up!!

Any publicity is good publicity..not. Give me a break. Hey..they have this new thing called approach charts…all printed up and all..check it out!!!

RR

 

[BoeingBoy]

I suspect that those or their tax preparers who didn't (or didn't know to) take advantage of the leeway provided by the old rules will see a difference from the new rules. I think US calculates the taxable and non-taxable portion of per diem using the standard method, at least it appeared that they did when I was working. Consequently my W-2 showed a portion of per diem as taxable income every year and I assume most other pilots/flight attendants saw the same. So anyone using the standard IRS rules would pay tax on part of their per diem while those who knew enough to take advantage of the leeway provided had non-reimbursed expenses to deduct.

Jim

 

[PHL]

Thank you very much for making this known. My only question, where was ALPA to inform me?

ALPA is not your tax advisor, and I suspect any kind of tax advice from them could be a liability risk (to them).