Originally Posted by
Typhoonpilot
It's not a claim. I know three pilots personally who have had that specific audit from the IRS.
Any pilot who files for the foreign earned income exclusion would be well advised to keep thorough records of all their flights (including any flight path maps) to be able to record, to the minute, their percentage of time in/over international waters. The IRS will want proof and they place the burden on you, the taxpayer, to prove your exact percentage of work time in international airspace. When you include ground duties, etc the actual percentage can be quite small.
As a result of those ongoing audits I actively bid to fly trips that kept me over land most of the time and kept all the flight path maps to prove it.
Typhoonpilot
I worked with about 30 american pilots at 2 different foreign airlines from 2008-2012. As far as I know, only a couple of us DIDN'T get audited. Several of us, including me, have been audited twice.
We had to provide copies of our logbooks, and calculate the overwater time for each leg. Luckily, there were only a few legs, and they were always the same amount.
Most of us also got hit with a claim that we were contractors and not employees, and owed self-employment tax. As far as I know, all of us won this as well. I am fighting this one for the second time. I should win as well this time
A few had their "bonifide residence" claim challenged, and they had to provide proof of apartment lease, drivers license, etc, to prove they passed that test.
Apparently the IRS doesn't like expat pilots. Here is the painful part. They don't audit you right away. They wait 3 years. Then, they apply a penalty starting 3 years ago, and charge 40% interest per year on the tax and penalty. Your bill gets really big, really quick.