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While airline pilots and flight attendants may take advantage of many tax deductions for flight crewmembers, not all of the expenses that flight crews incur for their airline employment are tax deductible. The following are some examples of expenses that flight crewmembers cannot deduct.  The list may surprise you.

Personal expenses

Getting nails done, paying for haircuts, and buying shaving cream are examples of nondeductible expenses that many flight crewmembers might think are deductible. The common argument is that employers have certain appearance standards, and those expenses are necessary to meet those standards. The issue is that those are considered personal expenses, which are expenses that you would get even if you did not have the job. This of course leads to the inevitable argument that if it weren’t for the airline job, you would let yourself go and settle for an appearance that rivals that of the uni-bomber. While we would love to see people be able to write off these items, unfortunately it isn’t something that a tax auditor is likely allow.

Wristwatches

One of the items that pilots and flight attendants often attempt to write off is the expense of a wristwatch. Unfortunately, this is not allowed anymore because IRS Publication 529 of the tax code specifically says that wristwatches cannot be deducted for any reason.

Commuting Expenses

Under normal circumstances, commuting expenses are nondeductible. This includes parking fees, tolls, subways, trolleys, and vehicle expenses. As a crewmember, if you drive to the airport, park your car, and work out of that airport, your commuting expenses are definitely nondeductible. If you drive (or take a bus, subway, or trolley) to the airport, then fly from that airport to another city to work out of that city (also called your tax home), that is also nondeductible. There is generally only one circumstance that allows you to deduct commuting expenses, and that is if you get displaced or receive a temporary duty assignment (TDY). Under this condition, you could deduct commuting expenses if the displacement or TDY is temporary and not indefinite. Temporary is defined as realistically expected to last (and does in fact last) less than one year. If it is not temporary, it is indefinite, and therefore nondeductible.

Vehicle Expenses

Vehicle expenses are usually nondeductible as well. They are similar in nature to commuting expenses, and generally follow the same rules. If your commuting expenses are deductible, then your vehicle expenses are deductible. If your commuting expenses are nondeductible, then neither are your vehicle expenses.

What happens if I deduct an expense that is non deductible?

Perhaps you have written off these expenses in the past. Most likely nothing will happen if you did, but if you are ever audited, the expenses could be removed and you may owe a penalty and interest for the difference. It is unlikely that a few errors like those mentioned would trigger a red-flag with the IRS, so the best thing you can do is just make sure you do it correctly in the future. If you did it wrong in the past, you could seek the advice of a tax preparer, should you deem it necessary, though most would probably tell you not to worry about it.

Conclusion

These are a just a few of the expenses that professional flight crewmembers attempt to deduct when they shouldn’t. For the most complete, comprehensive list of expenses that are deductible, visit EZPerDiem.com, login, and search the Expense Processor. There you will find all sorts of items that professional flight crewmembers may deduct.

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Few people enjoy thinking about taxes, especially during the off-season, but a little bit of thought in the off-season can save you a lot of time and money come next tax season.  EZPerDiem.com wants to give you a little “food for thought” with regard to next year’s taxes.Flight crewmembers have all of the normal tax-related issues that ordinary taxpayers have, with one added component, employee business expenses.  In order to get the most money back, these simple tips will help:

TIP #1:  If you have the option, try to fly multiple-day-trips rather than day-trips.  When you fly a day-trip, you are not only spending more of your own money getting to and from the airport, but you are missing out on one of the biggest deductions that airline pilots are entitled to receive - the per diem deduction.  The per diem deduction refers to writing off M&IE expenses while on work-related overnight travel.  If you only fly day-trips without layovers, you are not meeting the IRS’s rest requirements that are necessary to deduct your meals.  In other words, you are giving up a significant amount of money in the form of a tax refund when you elect to fly day-trips.  This only applies if you itemize.

TIP #2:  Log your overnights in EZPerDiem.com during the year.  Each time you fly a trip, you can store the overnights into the per diem calculator as they occur rather than waiting until tax season is upon you.  You don’t have to pay for this either.  Payment is only required when you are ready for the calculations, and that data isn’t available until tax season.  Entering your airports early will help make next tax season simpler.

TIP #3:  Record your other unreimbursed aviation-related expenses.  Your union dues, the business portion of your cell phone bill, uniform expenses, and even van-driver tips are employee business expenses that also end up on IRS Form 2106 along with your M&IE.  Proper record-keeping today will save a lot of aggravation later.

TIP #4:  Buy a house.  Houses are cheaper than ever, so if you are in the market for one, the mortgage interest is an itemized deduction, and it is necessary to itemize in order to benefit from the per diem deduction or any other employee business expenses. Of course it is never a good idea to buy a home for tax reasons, but the tax benefits are at least an added perk to home-ownership.

These tips combined with good practices for your other tax-related circumstances should help next tax season be a breeze.

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EZPerDiem.com gives pilots and flight attendants a tax tool that can instantaneously calculate their M&IE expenses. Using EZPerDiem.com greatly speeds up and simplifies the tax preparation process for pilots and flight attendants, and also gives pilots and flight attendants who itemize significantly more money back in their taxes.  But, there is more to computing a pilot or flight attendant’s per diem deduction than just using EZPerDiem.com.  Unless you know what to do with the EZPerDiem.com calculations, the M&IE calculation is not going to help much.  This article addresses how to use the M&IE calculation, and more specifically how to enter the per diem data into tax software, such as TurboTax, TaxCut, or TaxAct.  After reading this article, we hope that you will be able to ascertain that the per diem deduction is properly calculated and IRS Form 2106 is filled out correctly via whatever tax software package you are using.

Many pilots and flight attendants use tax software to prepare their taxes.  Tax software simplifies the complicated tax preparation process by guiding taxpayers through the myriad of tax situations they might encounter.  With regard to the per diem deduction, tax software needs to know three important pieces of information.  Those three pieces of information are:

1. Whether or not you are subject to DOT Hours of Service Limits
2. The M&IE expenses that you incurred
3. How much non-taxable per diem you were reimbursed

All of the per diem deduction questions should be found in the tax software packages under a category that addresses tax deductions for employee expenses.  The employee expense section of a tax software package is what is used to generate an IRS 2106 form, which is also the form that is used to enter the meals and incidentals expenses, as well as other employee expenses you might incur.

It is important to note that each tax software package has own way of extracting the per diem deduction information.  Furthermore, the questions they use to get the correct information change from year-to-year and service-to-service.  Below are some general guidelines you can look for when you are entering your per diem deduction information into tax software.

Part 1.  DOT Hours of Service Limits

Civilian pilots and flight attendants are subject to DOT Hours of Service Limits.  This is important because it entitles pilots and flight attendants to a higher tax deduction for the nonreimbursed M&IE expenses than if they were not.  As you enter your information into the employee deduction expenses related to your job as a flight crewmember, you might come across a question similar to:

Were you subject to DOT Hours of Service Limits?

For a civilian pilot or flight attendant, the answer to this question would be yes.  By answering yes to this question, the tax software package you are using will know that you should get a higher percentage of the per diem deduction than a typical taxpayer.

Note:  It is also possible that you might never be asked about DOT Hours of Service Limits.  In 2008, TurboTax simply asked for you to enter:

Meal Expenses Covered by Department of Transportation Rules

Next to that question you can enter the M&IE number generated by EZPerDiem.com.  That question lets TurboTax know two pieces of information via one question.  It tells TurboTax that you were subject to DOT Hours of Service Limits and what your M&IE expenses were, simultaneously.

Part 2.  M&IE Expenses

The M&IE Expenses are what EZPerDiem.com calculates.  This number uses federal CONUS and OCONUS per diem rates to calculate the amount that the IRS says you should have spent on meals and incidentals expenses while you traveled for your aviation employment.  Using EZPerDiem.com to calculate your M&IE expenses alleviates you of the responsibility of keeping receipts for those items, and with EZPerDiem.com, the calculation is as simple as entering your layovers into our online software.

When using tax software packages such as TurboTax, TaxCut, or TaxAct, it is important to know how they may ask for the M&IE data.  Often they will ask one question for meals and entertainment and another for incidentals.  This is a bit different than what we might expect.  Remember that M&IE stands for meals and incidentals, not meals and entertainment.  Incidentals and entertainment are two entirely different things.  Incidentals refers to tips to porters and bellhops, hotel maids, etc.  Entertainment refers to taking someone out on the town for business purposes.  Pilots and flight attendants will almost never have any entertainment expenses, but they generally do have incidentals, which are part of M&IE.

There are two ways to handle this when you are asked about these expenses in your tax software package.  You can enter the M&IE number where you are asked for meals and entertainment, and then leave the incidentals question with a $0, or you can split the M&IE number into its components (meals only and incidentals only) and enter each number in its respective spot in the tax software package.  It shouldn’t matter as long as you aren’t entering M&IE for meals and entertainment and then also entering a number for incidentals because then you are double-dipping on the incidentals part since M&IE includes incidentals.

We recommend that you enter the EZPerDiem.com M&IE number if it asks for meals and entertainment and then if it asks for incidentals, leave the incidentals at $0.

Part 3.  The non-taxable per diem reimbursement

Basically, the amount of M&IE expenses that you are entitled to write off on your taxes are the non-reimbursed M&IE expenses that you incur while on work-related trips that involve overnight travel.  Of course, most pilots and flight attendants get paid per diem from their employer.  The reason you benefit from the per diem deduction is simply because the per diem reimbursement from your employer is less than the M&IE expenses you incur.  In other words, the IRS sees that you spent more on M&IE expenses than your employer paid you in non-taxable per diem.

Non-taxable per diem is a number that should be present on your W-2, Box 12, Code L.  If it is not there, we wrote an FAQ titled, “What do I do if Box Code L is blank on my W-2?“  Assuming that the number is present, you will enter it in tax software when you are asked about your meal reimbursement.  In 2008, TurboTax asked for:

Reimbursements for DOT Meals and Entertainment

Again, there is no entertainment reimbursement, but the meals reimbursement is your non-taxable per diem.

IMPORTANT:  You are not going to calculate the difference between your M&IE expenses and the non-taxable per diem.  The tax software calculates the difference when you enter each number corresponding to their respective question.

While this article may seem to contain a lot of information, entering the per diem deduction into tax software is actually fairly simple once you grasp a few fundamental concepts:

1. The M&IE expenses are calculated by EZPerDiem.com and are used in lieu of keeping receipts for actual M&IE expenses
2. Civilian pilots and flight attendants are subject to DOT Hours of Service Limits, which increases this deduction
3. Generally, non-taxable per diem only partially reimburses you for M&IE expenses

Understanding those simple facts should ensure that your per diem deduction is done correctly.

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When we began EZPerDiem.com, our first goal was to develop a web-based software program that could easily compute the per diem deduction for pilots and flight attendants, thus creating a simple way for flight crew employees to get bigger tax re

funds.  But, as EZPerDiem.com grew, so did the requirements that our customers wanted us to provide.  Believe it or not, the most important part of this website is no

t its ability to prepare a per diem calculation in less than 30 minutes.  It isn’t even that a flight crew employee can calculate their employee business expenses with ease and have the computer describe where all those numbers go on their tax forms or in TurboTax or TaxCut.  Rather, the most important

part of the EZPerDiem.com network is flight crew tax education.  Teaching f

ellow flight crewmembers about their personal tax situations is, by far, the biggest challenge we have.   Why?  Because understanding flight crew taxes is not intuitive. The tax code is complicated, boring, frustrating, and downright miserable to sift through.  Despite that, it is important to understand the basics about flight crew taxes.

The following paraphrased excerpt from a flight crew employee was posted on an online forum, and it illustrates why it is so important that we make education about flight crew deductions our top priority.  It is from an anonymous poster who advised someone against using EZPerDiem.com.  This is what that poster said (paraphrased):

While easy, EZPerDiem.com is very limited because it only allows you to input your base city and where you had a layover.  If there was no layover, EZPerDiem.com does not include those days to be counted towards the M&IE expenses, and furthermore, you can’t input more than a departure and arrival city per day.  That means you do not get credit for the per diem amounts of multiple cities flown in one day.

The poster, in this case, is exactly the reason EZPerDiem.com publishes articles, why we created AviationTaxGlossary.com, why we strive to provide pertinent FAQs, and why we give detailed replies to emails.  We know it is easy to misinterpret the tax code, as this gentleman did, and because we want you to learn more about the rules of the per diem deduction, we will now point out the two big errors in this gentleman’s comment.

Error #1:  If there was no layover, EZPerDiem.com does not include those days to be counted towards the M&IE expenses.

The issue here is that the IRS only allows M&IE expenses to be counted when you are on a work-related trip that involves a rest period (typically a layover).  The IRS describes this rest period as not being satisfied by merely napping in your car.  For flight crew employees, this means a typical sit at an outstation is NOT considered a rest period.  Pilots and flight attendants get their rest periods via a layover.  On a day-trip, pilots and flight attendants are ineligible for the M&IE deduction according to IRS Publication 463 because their is no rest period.  That also means their per diem for day-trips should be taxable per diem rather than non-taxable per diem.

The irony is that the gentleman who posted was complaining about us not allowing day-trips to be entered, but when we built the EZPerDiem.com Per Diem Calculator, we didn’t leave out day-trips by accident.  Day trips intentionally cannot be entered because they are not supposed to be according to the IRS.

Error #2: …you do not get credit for the per diem amounts of multiple cities flown in one day.

The error the poster is making here is that you cannot legally write-off per diem rates for several cities per day, as he suggests.  He is very, very wrong.  The only cities that matter for the per diem deduction are the rest cities (i.e. layovers).  If a flight crew employee flies four or five legs in a day, he or she cannot get credit for every stop.  Only the stops with a layover count toward the M&IE expenses.

EZPerDiem.com is designed be user-friendly, but it is also designed to protect flight crewmembers from making the big errors that this poster tried to make.  The gentleman who posted above likely got frustrated because EZPerDiem.com did not compute the per diem deduction the way he wanted.  But, you should be relieved that EZPerDiem.com computes the per diem deduction the way the IRS wants it.

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EZPerDiem.com is a website that helps pilots and and flight attendants quickly calculate one of the most lucrative, yet misunderstood tax deductions that flight crewmembers are eligible for.  This article will not only clarify what “the number” is that EZPerDiem.com helps you calculate, but it will also provide you guidance so you use it properly in your tax returns.

What is “the number” that EZPerDiem.com calculates?

“The number” that we keep referring to is the one displayed at the bottom of the EZPerDiem.com Calculations Page.

“The number“varies in amounts.  For some people, “the number” is a few thousand dollars.  For others, “the number” is over $20,000.  A lot of variables affect just how high “the number” is.  But first, let’s stop calling that number, “the number.”  Let’s call it its true name.  The M&IE Calculation.  M&IE refers to two different values:

1. Meals
2. Incidental Expenses

Obviously, flight crews travel as a part of there job.  While they travel for their job, they incur travel expenses, of which meals and incidentals (M&IE) are just one example.  Those meals that flight crewmembers eat while on the job (except for day-trips) are tax deductible.  Because it is so difficult for flight crewmembers (or anyone else who travels) to keep every receipt for the meal expenses while they travel, the IRS allows another way of accounting for the amount that pilots and flight attendants spend on them.  And, that is where EZPerDiem.com comes in.

Essentially, the IRS allows taxpayers who travel for their work to use the CONUS and OCONUS per diem rates to determine their M&IE expenses.  Flight crewmembers can do that if they have a record of where they had their layovers.  IRS Publication 463 explains how the so called “per diem deduction” should be calculated in detail, but in a nutshell, the per diem deduction is determined by recording every location and date that you had a layover, then looking it up in the per diem tables provided by the GSA, the Department of State, or via IRS Publication 1542.  Once that is done, you apply the rules contained in IRS Publication 463, then you put the result on your tax forms.  Whew!

EZPerDiem.com alleviates all of the steps in the above paragraph.  Because EZPerDiem.com has linked virtually every airport in the world to the respective CONUS or OCONUS per diem rates, all the flight crewmember has to do is enter where they stayed into the EZPerDiem.com web-software, and the M&IE expenses are calculated instantly online, saving you hours and hours of frustration.

Okay, what then?

You’ve done that, but now you are asking yourself, “What do I do with the M&IE calculation that EZPerDiem.com calculated?”  The answer to that question depends on how you are preparing your taxes.  Here are the possibilities:

1. You are using TurboTax, TaxCut, TaxAct, or something similar
2. You are having a tax preparer prepare your taxes
3. You are doing your taxes by hand.  I.E. manually working with IRS Form 1040 and IRS Form 2106.

Most people fall into options 1 and 2.  Not too many people do their taxes by hand anymore, but if you are, the EZPerDiem.com printouts will tell you where on IRS Form 2106 the numbers should go.

Personal Tax Software Users:

If you are using personal tax software such as TurboTax or TaxCut, we have reviewed them and prepared guides detailing where the M&IE calculations (among other airline-related employee business expenses) go.  TaxAct is another personal tax software package that has become popular, and you will likely see a review for that, too.  As of the time of this writing, though, the following tax software guides are available:

• The EZPerDiem.com TurboTax Guide
• The EZPerDiem.com TaxCut Guide

They are both free for you to use, though the content is unofficial.  In other words, the guidance in those two guides is simply meant to aid you, not replace professional tax advice.

Pilots and Flight Attendants Using Their Own Tax Preparer:

One of the biggest benefits that EZPerDiem.com offers pilots and flight attendants is that it allows them to still use their current local tax preparer, and ensure that the aviation-component of their tax returns is prepared properly.  The printouts that EZPerDiem.com generates are designed to easily instruct your tax preparer on how to insert the calculations.  Notice we use the plural (”calculations” rather that “calculation”).  That is because EZPerDiem.com does more than just calculate the per diem deduction.  The Expense Processor calculates your other aviation-related employee business expenses.  The Expense Processor is very simple-to-use calculating checklist of the Ordinary (often deductible) expenses that flight crewmembers generally incur.  Using the printouts that EZPerDiem.com provides from the bother the Per Diem Calculator and the Expense Processor, a tax preparer should be able to quickly understand your aviation-related-expenses.

Also, for anyone wanting a little extra service, the EZPremium option might be just what you are looking for.  It does everything that the EZStandard service does, but it also provides a completed 2106 Form that you can bring straight to your tax preparer.  The benefit of this is that the tax preparer doesn’t need to do anything with your aviation-expenses.  He or she simply uses the IRS Form 2106 that we prepare and send to you to include in your tax returns.

EZPerDiem.com is the fastest growing, most popular per diem calculation and aviation-tax-preparation website around.  But, our success is only measured on how well we help flight crewmembers with their aviation-related-taxes.  This article and the many other articles we have written are all geared to helping you get more money back in your taxes, year-after-year.

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Red eye trips are flights where an airline crewmember departs late in the evening and lands early the following morning at a rest location.  International trips and trips with multiple-day layovers are similar when it comes to entering the trips into EZPerDiem.  For EZPerDiem.com per diem calculator entries, red-eyes can lead to a little bit of confusion, but once understood, they are fairly easy to enter.  EZPerDiem.com links CONUS and OCONUS per diem rates to layover cities so a proper M&IE calculation can be performed and a flight crewmember can quickly get their per diem deduction figured.

To understand how to enter red-eye layovers into EZPerDiem.com, first assume a normal trip (not a red-eye).

A Normal Trip:

Assume a pilot named John is based in CLE.  John leaves on May 2, 2008 for a trip where his first overnight is ORD.  He spends the night of May 2nd in ORD and takes off on May 3rd and flies a few legs, ending on a layover in DCA on day 2 (May 3rd, 2008).  On day 3 (May 4th, 2008) John flies a few more legs and ends up back home in CLE (John’s domicile or tax home).  In that case, John would enter:

This is fairly straightforward.  Each layover location is simply entered next to the date that the layover happened.  When the Calculations Page of the Per Diem Calculator for this trip is viewed, it will look like:

A Red-Eye Trip:

The red-eye trip is slightly different.  Assume Sarah, an international flight attendant, flies a red eye-trip beginning on late on May 2nd and ending on May 4th.  Assume Sarah is based in IAH, and she leaves IAH on May 2nd at 10:00 pm local time.  She is enroute all night and lands in LGW (London, Gatwick) at 8:00 a.m. Houston time (2:00 p.m. London time) on day 2 of her trip (May 3rd).  Sarah remains in LGW for most of the day on May 3rd.  Sarah leaves for home May 3rd at 11:00 p.m. Houston time (5:00 am London time) and arrives back in IAH on May 5th, at 10:00 am.

While this might seem a little confusing, the simplicity of how EZPerDiem.com works makes entering this trip extremely simple.  All Sarah has to do is look at this trip as a typical three-day-trip.  Sarah left IAH on May 2nd and returned on May 4th, so it is without a question a 3-day-trip.  The only part of this situation that can be a little confusing is where to enter the overnights.  Because Sarah was in the air at midnight when the trip began, her rest location will be the location she rested upon landing on May 3rd.  That would be LGW, so LGW gets entered on May 2nd.  Because Sarah didn’t leave until late on May 3rd and there were no other layovers on the trip that she incurred rest, the rest location for May 3rd will be LGW, as well.  Finally, on May 4th, Sarah finished her trip in IAH, so IAH is the location entered for May 4th.   This will look like:

 On the corresponding Calculations Page, it would look like:

Notice that the rate used ($181) is the same for all three days.  This makes sense because the rate on the last day of a trip uses the city on the previous day for the per diem calculation.  In other words, LGW is used to calculate the M&IE expenses on day 3 (May 4th, 2008) even though the actually location stayed was IAH.  This is exactly the way IRS Publication 463 guides taxpayayers who travel on how to calculate their M&IE expenses.

As you can see, entering a red-eye trip is not real difficult once you understand how EZPerDiem.com works.  Simply make sure the number of days gone for a given trip match the number of days that display on the Airport Code Entry Page, and ask yourself where your rest locations were.  Following those two simple rules will ensure that the per diem calculations work out properly.

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Most accountants generally don’t understand or just don’t bother giving airline crew employees one of the most important tax deductions they are entitled to get.  The so-called per diem deduction is a method that airline pilots and flight attendants can use to write off their meals and incidental expenses (M&IE) while they are traveling for their airline employment.  Unfortunately, most tax preparers don’t bother with it because calculating the M&IE expenses by hand is a time-consuming process.  That leads most tax preparers who haven’t heard of how simple EZPERDIEM.COM has made the per diem calculation process, to generate a simpler, less lucrative meal expense calculation (called the special rate for transportation workers) for pilots and flight attendants because it saves the tax preparer time.

Too many pilots and flight attendants are potentially giving up tens of thousands of dollars over the course of there careers because they are relying on a tax preparer to help them with their aviation-related taxes and IRS Form 2106 Deductions.  Airline pilot and flight attendant taxes can be complicated, and the per diem deduction is probably one of the most misunderstood, yet most lucrative airline employee business expense tax write-offs that a flight crewmember can have if they itemize.

Today, calculating a true city-by-city per diem deduction doesn’t have to take a lot of time.   EZPERDIEM.COM has gone though the trouble of linking 12,500 plus airports to their respective CONUS and OCONUS per diem rates so you can quickly generate your per diem deduction online, print the results, and hand them right to your tax preparer so he or she doesn’t have to bother with it.

Here is an easy way to tell if your tax preparer is calculating the more lucrative city-by-city deduction or gypping you:  If your tax preparer does not ask where and when you had layovers during the tax year, you are being ripped off, cheated, shorted; whatever you want to call it, the bottom line is you could be getting back significantly more money.  Why does this tell me I am being shorted, you ask?  Because to properly calculate the per diem deduction it is necessary to know where you stayed AND when you stayed their.  You can see an example of this by looking at the per diem rates for Toronto, Canada.  Notice that the seasonal start and seasonal end dates as well as the effective and expiration dates all have different rates associated with them.  In other words, the per diem rates change throughout the tax year.  If your tax preparer simply asks how many overnights you had during the tax year without needing to know when, you are not getting your money’s worth.

EZPERDIEM.COM is all about providing flight crewmembers with a simple way to accomplish something that once was complicated and time-consuming, at an affordable price.  When a flight crewmember uses EZPERDIEM.COM to calculate their M&IE deduction, both the city-by-city and special rate for transportation workers per diem deductions are calculated simultaneously so the flight crewmember gets the highest per diem deduction allowed.

When it comes to airline pilot taxes and flight attendant taxes, EZPERDIEM.COM is the best of both worlds; airline pilots and flight attendants can still use their favorite tax preparer that knows their financial situation inside and out, without sacrificing the lucrative benefits of the per diem deduction.

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Airline pilots and flight attendants sometimes wonder if commuting expenses or hotel expenses are tax deductible.  The answer to this question is dependent on the location of the flight crewmember’s tax home and some other factors related to their specific situation.

First, a taxpayer’s tax home is generally defined as their regular place of business or post of duty (i.e. a pilot or flight attendant’s domicile or base), regardless of where their family home is located.  This includes the entire city or general area in which their business or work (domicile) is located.

Example:  An airline pilot lives in Nashville, TN.  The pilot works out of CLE (Cleveland, OH).  In that case, Cleveland is the airline pilot’s tax home.  Also, that pilot’s commuting expenses and hotel expenses (including a crash pad), parking fees in Nashville, training days in Cleveland, and other associated costs are NOT tax deductible.

There are few exceptions to this situation.  The first exception would be a situation where a pilot or a flight attendant is temporarily assigned to another city different from their tax home.  This is typically called a temporary duty assignment, or TDY.  If a pilot or flight attendant is TDY’d to another city and the TDY is realistically expected to last (and does in fact last) for one year or less, then the crewmember can deduct the associated expenses from their tax return.  If the TDY is expected to realistically last for more than one year, whether or not it actually does last for more than one year, then the TDY is considered indefinite.  An indefinite assignment simply means that the TDY location becomes the crewmember’s new tax home.  This is the typical situation crewmembers who are base-transferred find themselves in where the commuting expenses associated with getting to a flight crewmember to their tax home are NOT deductible.

Example:  Assume a flight crewmember from Cleveland, OH (CLE) is TDY’d to Newark (EWR).  If the TDY is expected to last less than one year, then the crewmember can deduct the associated expenses associated with getting to and working out of EWR.  If the TDY is expected to last more than one year, Newark is now the crewmember’s new tax home, and the associated expenses cannot be deducted.

Other possible circumstances that you could deduct airline crewmember’s to deduct vehicle expenses would be training for work out of base or union duties and meetings that are out of base (i.e. away from the crewmember’s tax home).

Example:  Assume an airline pilot is required to report for simulator training away from his tax home, in another city.  In that case, if vehicle expenses are incurred, then they could be deducted.  If the training were in base (i.e. in the crewmember’s tax home), regardless if it is located away from the airport, those expenses are NOT tax deductible. 

As an airline pilot or flight attendant trying to maximize legitimate aviation-related tax deductions, it is important to keep in mind where your tax home is located in regards to your aviation-related employee business expenses.  You don’t want to deduct aviation-related expenses you are not entitled to, just as you don’t want to miss out on airline tax deductions you are entitled to.

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When we began EZPERDIEM.COM, we did so to simplify the tax preparation process for pilots and flight attendants. As time passed, it became clear that many flight crewmembers were only vaguely aware of the tax deductions they were eligible for, and convincing them to take the time to examine these deductions each year would become one of our biggest challenges. But, why do tax deductions potentially worth thousands of dollars get left out of airline crewmembers’ tax returns each year?

Below is a short list of the primary reasons we have discovered that many pilots and flight attendants are being shorted when it comes to their tax refunds:

No receipts – You should be aware that receipts are not always necessary. For travel expenses less than $75 (there are exceptions such as lodging), receipts are generally not required; you only need a record that substantiates the date, place, amount, and business nature of the expense. The following is quoted directly from IRS Publication 463:

You should keep the proof you need in an account book, diary, statement of expense, or similar record. You should also keep documentary evidence that, together with your record, will support each element of an expense.

Documentary evidence. You generally must have documentary evidence, such as receipts, canceled checks, or bills, to support your expenses.

Exception. Documentary evidence is not needed if any of the following conditions apply.

• • You have meals or lodging expenses while traveling away from home for which you account to your employer under an accountable plan, and you use a per diem allowance method that includes meals and/or lodging. (Accountable plans and per diem allowances are discussed in chapter 6.)
  • Your expense, other than lodging, is less than $75.
  • You have a transportation expense for which a receipt is not readily available.

For many airline pilots and flight attendants, the largest employee business expense that does not require a receipt is your meals while on work related trips as long as you use the methods that EZPERDIEM.COM uses to calculate your meal expenses and incidental expenses (M&IE). If you are not familiar, the EZPERDIEM.COM Per Diem Calculator prints out your full government meal allowance for you. This is used in lieu of actual meal expenses that you incur, which is why you do not need a receipt for your meals.

My accountant said it wasn’t deductible – Non-aviation tax preparers, CPAs, enrolled agents, etc. generally have an immense amount of “general” knowledge of the tax code. They routinely deal with clients all over the spectrum, from a vast and wide variety of backgrounds. As a result, while they have seen many tax issues in their time, there is simply is no way that they could know the details of every type of tax law for every type of profession. They are only human.

The unfortunate reality is that many non-aviation tax preparers simply do not include aviation-related tax write-offs for a wide variety of reasons. Some truly believe you can’t write off these expenses, while others just don’t want to spend the time figuring it out. No matter what the reason, many of them have cost airline crewmembers thousands of dollars by not investigating these deductions fully.

Our advice to you…If you itemize your taxes and cannot get your tax preparer to agree that you are eligible for these deductions, GET ANOTHER TAX PREPARER.

Falsely believing your tax preparer is taking care of it – “My accountant does all that,” is a common statement we hear from people.

We respond, “Does your accountant do a full city-by-city meal deduction?”

“I think so,” they answer.

In almost all situations, they don’t. Why? Because, if done properly, just doing a city-by-city meal deduction without the aid of EZPERDIEM.COM or a similar service, is going to take them several hours. Most accountants just do a simplified version of the meal deduction, if they do one at all. This typically costs the unknowing clients hundreds of dollars per year.

Not enough time – Going through the tax code isn’t fun, and it isn’t quick. Many pilots and flight attendants simply ignore aviation-related write-offs to save time. But honestly, it isn’t as complicated as you may think. One of our biggest aspirations is to use articles and newsletters to educate pilots and flight attendants about these tax issues so it isn’t so baffling every year.

Not enough understanding – It simply gets overwhelming for people to learn about these tax deductions. Not knowing where to start, people simply give up.

EZPERDIEM.COM is making it a goal to solve all of the issues above. By taking on this immense task, we hope to save airline pilots and flight attendants thousands and thousands of dollars over the course of their careers. One of our articles titled Crewmembers Can Save $200,000 in Tax Refunds shows how compounded interest can turn your annual tax savings turn into a big retirement fund.

Every year that goes by, EZPERDIEM.COM uses feedback to make the website faster, easier, and more useful so each tax season is better for our customers than the one before it. Why? Because we want the days of flight crewmembers throwing away tax money to become a thing of the past.

EZPERDIEM.COM
The Online Per Diem and Expense Calculator for Flight Crews

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If you are a flight crewmember, you’ve probably wondered at some point, “what airline-related expenses can I deduct from my taxes?” Properly deducting airline related employee business expenses each year can save you thousands of dollars in taxes, but researching the rules for deducting airline expenses can be time-consuming. To help you out, we decided to write this article to help you get started.

The IRS says airline flight crews are entitled to certain employee business expenses, and they provide certain tests that must be passed in order to determine if an expense is deductible. Most of this information can be found withing IRS Publication 463 or IRS Publication 529.  Knowing these tests is the best place to begin determining whether an expense can be deducted. The tests are as follows:

1. The expense must be ordinary. An ordinary expense is one that is common and accepted in your field of trade, business, or profession. Examples of ordinary expenses for pilots and flight attendants include items like calculators, a water bottle holder, an id holder, uniform expenses, etc.
2. The expense must be necessary. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be required to be considered necessary. If an expense passes the ordinary test, ask yourself is it necessary (i.e. helpful and appropriate for your business.) The four example expenses listed above are all helpful and appropriate, and they therefore pass the necessary test.
3. The expense must not be personal. A personal expense is one that you would likely have incurred even if you were not employed. If an expense would only have been incurred because of the job, it then passes the ordinary test. Examples that crewmembers often try to deduct, but fail the ordinary test are socks, underwear, haircuts, and wristwatches. None of these items can be deducted. Obviously they all pass the ordinary and necessary tests, but they all fail the personal test. You would incur the expense even if you weren’t employed. Wristwatches are specifically listed in the tax code as a non deductible item.
4. The expense must not be prohibited by the tax code.  Sometimes an employee business expense can pass all three of the tests above, yet still not be deductible.  Take a wristwatch for example.  A wristwatch can certainly be argued to be ordinary and necessary for airline pilot tax or flight attendant tax purposes.  Furthermore, a pilot or flight attendant could argue that a wristwatch is not personal because they only bought it because of their airline employment.  But unfortunately for all of the airline pilots and flight attendants with expensive wristwatches, IRS Publication 529 of the tax code specifically says that wristwatches cannot be deducted for any reason.

Usually determining whether an expense is deductible is pretty simple, but sometimes the answer is not so clear. Take cell phone expenses for example. For most crewmembers, they typically pass the ordinary and necessary tests. The difficulty comes from the personal test because a typical pilot uses one cell phone account for both personal and business-related phone calls. In situations like that, you must determine the amount that you consider business. That is the deductible amount. The excess personal portion is not deductible.

The EZPerDiem.com Expense Processor provides a simple way to calculate the deductible expenses. It is a checklist and a calculator all in one. It adds all of these expenses for you and then tells you where they go on IRS Form 2106. Items in the EZPerDiem.com Expense Processor are ones that most airline crew employees would consider “ordinary.” Whether they are necessary, personal, or non-deductible for some other reason depends on the expense and the unique situation of the person taking the deduction. The items that we include in the Expense Processor are provided below. Again, just because an item is on the list does not necessarily mean it is deductible. You must follow the tests given in this article to help you make that determination, and even then you may have to look more into the tax code for some items.

Only Noncommuting and Nonovernight Transportation Related Expenses

• Bus Fare
• Car Rental
• Parking Fee
• Taxi
• Toll
• Train Fare
• Trip Pass
• Other

Travel Expenses You Paid for While Away From Your Tax Home

• ATM Fees on Overnight
• Check Cashing Fee on Overnight
• Internet Access Fee on Overnight
• Tip for Van Driver (Airport/Hotel Transportation)
• Washing Clothes on Overnight
• Other

Job Searching Expenses in Your Present Line of Work

• Application Fee
• Car rental for interview
• Interview prep fee
• Lodging for interview
• Other interview realted costs
• Suit for interview
• Website subscription for job search
• Other

Type Rating Expenses

• Lodging for type-rating (receipt always required)
• Other type-rating related costs
• Rental car for type-rating
• Type rating fee
• Other

Other Training Related Expenses

• Books for training
• Lodging for training
• Other

Uniform Purchase Expenses

• Belt
• Blouse
• Boots
• Coat
• Dress
• Epaulets
• Gloves
• Hat
• Jacket
• Pants
• Scarf
• Serving Garment
• Shirts
• Shoes
• Skirt
• Wings
• Other

Uniform Upkeep

• Alterations
• Drycleaning
• Home Laundering
• Shoe Repair
• Shoe Shines
• Other

Equipment/supplies

• Alarm Clock
• Calculator
• Cockpit Keys
• Cockpit Supplies, Maps, etc.
• Company business cards
• Crew ID Holder
• Crew ID Tag
• Curling Iron
• Flashlight
• Flashlight Batteries
• Foreign Visa
• Hair Dryer
• Headset/Earpiece
• International Currency Converter
• International Voltage Converter
• Iron (Portable)
• Jepp Binders
• Jepp Inserts
• Jetbridge Keys
• Logbook software
• Logbooks, (red & black books)
• Luggage (rollerboards, suitcase, etc.)
• Manual Replacement
• Passport/photo/renewal
• Personal Organizer
• Portable Security Device
• Portable Smoke Detector
• Sunglasses
• Wheels for Luggage
• Other

Telephone

• Answering Machine
• Cell phone purchase
• Cell Phone Usage Fee (Monthly Bill)
• Company copy/fax costs
• Company phone/mailing costs
• Computer Printer Supplies
• Internet Fee (Monthly Bill)
• Other

Services

• Bid Service
• EZPERDIEM.COM Fee
• Logbook Service
• Other

Professional Publications

• Foreign Language Expense
• Profession-related magazine
• Profession-related website subscription
• Other

Profession-Related Fees

• Drug Testing Fees
• Dues for Professional Organizations
• FAA Medical Exam
• Loss of Licence Insurance (pre-tax only)
• Union Dues
• Union Intitiation Fees
• Other

FFDO Related Expenses

• Ammunition
• Carrying Case
• Clips
• Document Holder
• FFDO Lodgin Expenses
• FFDO Membersips
• FFDO Publications
• Holster
• Holster Belt
• Medical
• Range Fees
• Training Costs
• Weapon
• Other

EZPERDIEM.COM
The Online Per Diem and Expense Calculator for Flight Crews