TaxCut Guide for EZPerDiem Airline Crew Tax Software
What is the TaxCut Guide?
This guide is intended to be used by airline pilots, corporate pilots, fractional pilots, and flight attendants who pay U.S. Income Taxes and use TaxCut for their tax returns and EZPerDiem for their flight crewmember tax deductions. This guide is not intended to be used by armed forces members because the method in which armed forces members enter their tax information is somewhat different than it is for civilian employees. If you are a pilot who flew part time as a reservist and also flew professionally as a civilian airline pilot, you need to separate your expenses from those two jobs and only use this guide for the civilian pilot component. To enter the military expenses into TaxCut, we recommend that you use the guidance supplied by TaxCut, applicable IRS Publications, or seek a qualified aviation tax preparation service like EZCrewTax. Also, TaxCut is not affiliated with EZPerDiem. EZPerDiem simply provides this guide as an unofficial feature that might help flight crewmembers enter their data from EZPerDiem into TaxCut. The fact that this guide is unofficial means that any instructions contained within it should not be taken as tax advice or substituted for IRS publications or the knowledge of a professional tax preparer.
This guide is intended to help EZPerDiem users enter the flight crew tax data generated by the EZPerDiem website into TaxCut 2009. As you may already know, EZPerDiem is a simple, fast website that quickly helps pilots and flight attendants compute their employee business expenses and the lucrative per diem deduction. EZPerDiem has two very useful tools that help flight crews quickly organize their taxes:
- The Per Diem Calculator
- The Expense Processor
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Did you know? You no longer have to go to the store to buy TaxCut. TaxCut Online saves you the trouble of installing software on your computer and it also saves you the time of going out and buying software. Because most of TaxCut is self-explanatory and beyond the scope of this guide, we are going to skim through generic tax topics until we get to the focus of this guide, which is Employee Business Expenses. |
The EZPerDiem Numbers...How do I use them in TaxCut?
This guide contains a lot of information, much of it general. You may only want to know where the EZPerDiem numbers go into TaxCut, and do not need all of the information contained within this guide. The EZPerDiem Numbers that we are referring to are:
- The M&IE Calculation (This is the total that displays on the bottom of your Calculations Page in EZPerDiem after all of your layovers for a given tax year are finished)
- The Employee Business Expense Numbers (These are the totals from the printer-friendly version of the Expense Processor)
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Did you know? You should probably begin with the free version of TaxCut. This is for more basic tax returns, but it may suffice for some pilots and flight attendants. If you end up needing a more powerful version of TaxCut, you can easily upgrade when it is necessary. |
Begin TaxCut for EZPerDiem Users
We chose to prepare a federal return because that is the return that addresses the employee business expenses that affect pilots and flight attendants. Initially you will be asked about your filing status. Note: If your spouse was also a flight crewmember and you are filing joint, you will need to complete two employee business expense forms in TaxCut (i.e. IRS Form 2106). TaxCut will generate the 2106 form for you, but you need to make sure yours and your spouses expenses are kept separate when you fill out the employee expense questions in TaxCut.
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Entering Income
Moving on, you will be ask a series of personal info questions, Enter applicable data. The last page in this series of questions will bring you to "Income." You will have enter your income sources before TaxCut will let you enter deductions. As you enter your W-2 data into TaxCut, pay close attention to Box 12. Box 12, Code L is the amount you were reimbursed by your employer for employee business expenses that you incurred. For most, this will be your non-taxable per diem.
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Employee Expenses
Think of the combined employee expenses is one big itemized tax deduction. Flight crewmembers cannot take advantage of any of the employee expenses without itemizing. If you do not own a house and pay a mortage, there is a good chance that you will not be itemizing because your itemized tax deductions might not exceed the standard deduction.
TaxCut ScreenShot Showing Where to Click to Enter employee expenses
Note that in the above screenshot, you will click the link that pertains to employee expenses so you can begin entering the data from EZPerDiem.
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Add Expenses
You need to click the "add expense" link to begin entering all of the expenses related to you job as a flight crewmember.
TaxCut ScreenShot Showing Add Expense Link to Enter Flight Crew employee expenses
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Did you know? Your employee expenses include a lot more than the per diem deduction. Union dues, van driver tips, and even part of your internet and cell phone bill can be included as employee expenses if done properly. |
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Standard Deduction vs. Itemized Deductions
One ussue with TaxCut that you could run into is that they might block you from entering employee expenses if your itemized deductions do not exceed the standard deduction. If you run into this issue, make sure you enter other itemzied deductions like your mortgage interest first.
TaxCut ScreenShot Showing Standard Deduction vs. Itemized Deductions
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TaxCut will print out an IRS Form 2106 for you, but you have to enter the appropriate information.
TaxCut ScreenShot Showing Options for Your Job.
None of the radio button options pertain to being a flight crewmember, so choose "None of these apply" and enter the occupation in the textbox (i.e. pilot or flight attendant). Click next to continue to the following TaxCut page.
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Travel Expenses
Pilots and flight attendants incur many employee expenses that are categorized as travel expenses.
TaxCut ScreenShot Describing Travel Expenses.
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Did you know? You do not need a receipt for travel expenses less than $75 each. You do however have to provide a record of the expense in a log or journal, including the date, amount, purpose, description, and business nature of each expense. |
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Meals and Entertainment
Meals and Incidentals are often incurred by flight crewmembers. Entertainment expenses are not. EZPerDiem calculates your meals and indentals expenses (M&IE). You can enter that number into this TaxCut page for meals, but leave the entertainment field at $0.
It is also important that for civilian flight crewmembers to check that they are subject to DOT hours of service limits. Airline pilots and flight attendants get to take a bigger deduction by checking this option.
Meals and Entertainment Entry
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Did you know? Your EZPerDiem calculation that is calculated from entering all of those layover is your meals. In other words, instead of keeping all of those receipts for every meal you have while on work-related overnight travel, you can simply spend about 30 minutes entering your overnights into EZPerDiem and not have to keep a single meal receipt. You also generally get a much higher deduction this way, too. |
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Other employee expenses
The so called per diem deductions is only part of your combined employee expenses that go on IRS Form 2106. You are also eligible to write off many other flight-related expenses. To write off a work-related expense, it must:
You can learn more in the following article:
How to Write Off Flight Crew Expenses from Pilot or Flight Attendant Tax Returns
Other Expenses
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Did you know? Some of the most common mistakes that flight crewmembers make when wrting off their employee expenses are wrting off expenses they are not supposed to and missing expenses they are allowed to write off. Some surprising expenses that pilots and flight attendants cannot deduct include commuting expenses and crashpads, haircuts, socks, getting nails done, and wristwatches. Some of the commonly missed expenses for flight crewmembers that can be deducted include the business portion of a cell phone bill, the business portion of a crewmember's internet costs, van driver tips, job searching expenses even if you did not get the aviation job, and shoe shines |
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Entering Other Job Related Expenses
Use the EZPerDiem EZPerDiem Expenses Processor to help you calculate these expenses. You will be surprised at some of the expenses you are and are not allowed to deduct. Just make sure that you keep track of the numbers from the Expense Processor in a record that allows you substantiate the expenses. The Expense Processor is not designed to substantiate the expenses. Keep a journal or record to show the details of each expense, even ones for which a receipt is not necessary.
Entering Other Job-Related Expenses
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Did you know? There is a fine line between what is personal and what is work-related when it comes to clothing and appearance expenses. Just because an employer has a certain uniform standard, does not mean the expense is an automatically deductible. For example, male flight crewmembers might have to be clean shaven and have short hair. That does not entitle them to write off shaving cream, razors, or haircuts because these are considered personal expenses. The same standard applies to socks and underwear. If it is suitable to be worn outside of work, it is probably not deductible. |
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Employer Reimbursements
Flight crewmembers are often reimbursed for some of their aviation-related expenses. The most common reimbursement that almost all flight crewmembers receive is per diem (non-taxable per diem to be specific). Non-taxable per diem should be on you W-2 under box 12, code L. Other reimbursements might include uniform reimbursements, taxi cab reimbursements, and the like.
Employer Reimbursements
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Did you know? There is a big difference between taxable per diem and non-taxable per diem. Taxable per diem is income and should be included on the W-2 form under Box 1 as part of a pilot or flight attendant's salary. Nontaxable per diem is not income. Non taxable per diem is a reimbursment for the money that a flight crewmember spends on meals and incidentals (M&IE). Only the nontaxable per diem needs to be entered here. |
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Reimbursements for Meals
What gets entered next to Employer Reimbursed Meals is the number on your W-2, Box 12, Code L. This is your non-taxable per diem.
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Did you know? The number in Box 12, Code L should be the amount of money you were given in the form of per diem from your employer on trips that had layovers. For day-trips, you do not have layovers, which means you do not get to write off the meals for the day and you do not get reimbursed per diem. This might cause a lot of flight crewmembers to question this because most flight crewmember contracts do pay per diem when working, whether it involves overnight travel or not. The per diem you receive on a day-trip should be paid as taxable per diem and should be lumped into the number in Box 1 of a flight crewmember's W-2. |
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Vehicle, Home Office, & Depreciation
It is unlikley that a flight crewmember will have any expenses here.
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Did you know? Flight crewmembers can almost never justify writing off their personal computer. The IRS is cracking down on people that do. Basically to write off a computer, the employer has to specifically require its use, and force you to buy it. This is unfortunate because so much is done on the computer for airline work. That being said, crewmembers are still able to write off part of their internet bill to cover the percentage used for work-related purposes. |
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