How do I enter domiciles if I was in training or started a new job?

A very common question about flight crew tax deductions pertains to airline pilots and flight attendants changing jobs and writing off expenses incurred during training. This article will delve into the the different considerations that affect writing off expenses during training at a new airline.

Expenses like M&IE (the per diem deduction), hotel stays, rental cars, or vehicle expenses incurred while driving to and from training at the new job might be deductible. But to determine whether or now they can be deducted requires determining what your tax home is during training. Commuting expenses are not deductible. So, to be able to write off expenses such as vehicle expenses and M&IE during training, those expense must not be considered a "commuting expense". This is where the question of your tax home comes in.

First, let’s define some possible expenses you might incur during training at a new airline. Some examples might be:

• Meals (eg. the per diem deduction)
• Lodging (if you paid for your own room)
• Vehicle expenses (if you drove your own vehicle to training)

To be able to write off any of the above expenses during training at the new job, there are a few scenarios to consider.

Scenario 1: The new employer only has one base, and the training location is at the same location as the base.

If the new employer only has one base, then you know your tax home as soon as you start training. If the training location and base are in the same city, then that is your tax home, and you would not be able to write off the work-related expenses during training. This also means that you would not be eligible to write off M&IE (the per diem deduction) for the training days because your training is at your new tax home. M&IE expense can only be incurred if you travel on a multiple-day-trip that has layovers away from your tax home. If your tax home is your training location, you are not leaving the tax home.

Scenario 2: The new employer only has one base, and the training location is not at the same location as the base.

If the new employer only has one base, but the training location is in a different city, then the training location is simply a temporary duty assignment. This means that you would be allowed to write off the work-related expenses that you incurred during training. You would also be eligible to write off M&IE (the per diem deduction) for the training days because your training is not at your new tax home.

Scenario 3: The new employer has multiple bases, and you get assigned a base other than the training location as the base.

If the new employer has more than one base, then you may not know your tax home when you start training. If your new base is different than the training location, then your training location would not be your tax home. It would just be a temporary duty assignment and the work-related expenses would be deductible between your home and the training location. You also would be eligible to write off M&IE (the per diem deduction) for the training days because your training is not at your new tax home.

Scenario 4: The new employer has multiple bases, and you get assigned a base that is in the same city as the training location.

If the new employer has more than one base, then you may not know your tax home when you start training. If you get based at a location that is the same as the training location, you probably are unable to write off the work-related expenses during training. This is because your tax home becomes the training location. This also means that you would not be eligible to write off M&IE (the per diem deduction) for the training days because your training is at your new tax home. M&IE expense can only be incurred if you travel on a multiple-day-trip that has layovers away from your tax home. If your tax home is your training location, you are not leaving the tax home.

A common argument related to Scenario 4:

The fourth scenario brings up another question. When do you know your new base? Some could make the argument that you don't know your new base until the end of training and therefore it does not become your tax home when you start training. However, if you look at the definition of a temporary duty assignment, IRS Publication 463 states:

Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in fact last) for 1 year or less.

Let’s use Denver as an example. If your training is in Denver and you claim that Denver was a temporary duty assignment, the only way that would be accurate is if you successfully traded to a new base (other than Denver) within 1 year of the date that you started training at your new company. In other words, you cannot not be based in Denver for a long period of time if you wish to write of the work-related expenses during training or take the per diem deduction during training.

What happens if I do trade to a new base with one year of starting training in scenario 4?

We will use Denver again for an example. If you do trade to a new base (other than Denver) within one year of starting training, then you would be allowed to write off the work-related expenses associated with getting to and from training. Additionally, Denver never becomes your tax home in this situation. Therefore you could also write off expenses associated with getting to and from Denver during that period of time that you were based in Denver, such as hotels, crash pads, etc. This is because, if you are legitimately able to make Denver a temporary duty assignment, the expenses associated with getting to Denver are not commuting expenses because Denver was never your tax home. Your tax home would likely be your actual home during that period of time.

The situations in this article are a bit complex, so we also need to advise you to ask your tax preparer about these questions as we are not allowed to give specific tax deduction advice. But hopefully this answer covered all of the possible scenarios you might be in and help you make an informed decision about how to handle expenses during training.