Should've looked at the Hub first (I hope it's more accurate here than with seats!) My only problem is that it says a letter has been sent....I know, it's still in the mail!
Imputed Income for Furloughee Travel
Beginning November 1, 2003, 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. A letter has been sent to all involuntary furloughees explaining this change.
Below are some common questions regarding this change.
When I was an active employee, this benefit was not taxed. Why is it taxed now?
Internal Revenue Code Section 132 provides an exclusion from taxing flight privileges for active employees and their qualifying family members. Retirees are also excluded. We interpret the tax code to provide that involuntarily furloughed employees who have been out more than a year can no longer qualify as active employees for this exclusion.
What about employees who have been on "voluntary" furlough for more than one year? Are they affected by this change?
Voluntary furloughees are not required to impute income. Voluntary furlough is considered a type of leave and is treated differently from involuntary furlough under the US Tax Code.
I have been on furlough for over one year. Will the Company look back at my past travel and charge me imputed income for those segments?
No. This takes effect on November 1, 2003, and is only applied to travel occurring after October 31, 2003.
If I return to active service, will I still have imputed income for my flights.
No, the Company will not impute income for flights you take while you are an active employee.
What if I list for a flight but don't go, or I go to another city, will I still have imputed income based on my listing?
US Airways’ system tracks actual segments flown, and so your imputed income calculation will be based on actual segments flown, not listed, calculated at 10% of the highest unrestricted US Airways coach class fare available for the date of sale. If you don’t get on the flight, you will not have income imputed simply because you listed for that flight.
Why is the Company determining the value based on the highest fares and not the lowest available fares?
The IRS requires the Company to compute the taxable amount based on the fair market value of the travel. This is the same requirement the Company faces for companion passes and domestic partner travel. Furloughed employee travel will be computed in the same manner as the others, using the highest, unrestricted coach class fare available on the day of travel.
Am I required to pay this valuation prior to my travel?
No. The valuation will be done after you travel, based on actual segments. You will not be required to pay additional fees to travel, however you will be required to report your travel as taxable income on your individual income tax return.
What documentation will I receive regarding my travel?
Those furloughees who have exceeded $600 in total travel value (including the furloughee and eligible family members) will receive a Form 1099. All other furloughees will receive an information statement showing the taxable value of their travel.
What do I do with the Form 1099?
The Form 1099 will be provided to you in January and will show the taxable value of all travel by you and your eligible family members in the prior year. You must report this taxable income to the IRS on your individual income tax return.
If I just get an information statement instead of a Form 1099, do I still have to report the imputed income?
Yes, you still have an obligation to report the amount of imputed income in your taxable income.
Can you give me an example of how imputed income will work?
Yes. 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 $ 40.00
PIT-LAX Y-8 fare is $800 and 10% of that fare is $ 80.00
Total Imputed Income $ 120.00
Total Tax Liability at 28% rate $ 33.60 *
If you were to travel from Washington, D.C. to Frankfort, Germany, 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 $ 40.00
PIT-FRA Y fare is $2,160 and 10% of that fare is $ 210.60
Total Imputed Income $ 250.60
Total Tax Liability at 28% rate $ 70.17 *
* 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.
January???? My letter came TODAY! And oh yeah, don't forget that FICA and of course state tax also...
Bummer.
