Airline Pilot Forums

Airline Pilot Forums was designed to be a community where working airline pilots can share ideas and information about the aviation field. In the forum you will find information about major and regional airline carriers, career training, interview and job seeker help, finance, and living the airline pilot lifestyle.




View Full Version : Tax


Ingrmiddlet
09-19-2017, 01:04 AM
I was just hired and heard a few senior captains have a way to claim residency in Florida and avoid Hawaii State Income Tax. (Despite not even setting foot there). One guy uses an old roommates address that isn't even current. Is this legal?


Riverside
09-19-2017, 05:59 AM
I was just hired and heard a few senior captains have a way to claim residency in Florida and avoid Hawaii State Income Tax. (Despite not even setting foot there). One guy uses an old roommates address that isn't even current. Is this legal?

Search function does wonders.

https://www.airlinepilotforums.com/money-talk/94323-state-income-taxes.html

tomgoodman
09-19-2017, 06:21 AM
There are many roads leading to bankruptcy or jail, and each of them has been followed at least once. :rolleyes:


sailingfun
09-19-2017, 07:22 AM
I was just hired and heard a few senior captains have a way to claim residency in Florida and avoid Hawaii State Income Tax. (Despite not even setting foot there). One guy uses an old roommates address that isn't even current. Is this legal?

It's called Felony tax evasion by most if not all states. Do you feel lucky?

ShyGuy
09-19-2017, 08:41 AM
I was just hired and heard a few senior captains have a way to claim residency in Florida and avoid Hawaii State Income Tax. (Despite not even setting foot there). One guy uses an old roommates address that isn't even current. Is this legal?

Hahaha

US Air pilot living in Charlotte with a Texas address for tax purposes:

https://www.justice.gov/opa/pr/former-us-airways-pilot-sentenced-north-carolina-10-years-prison-tax-fraud

At least 3 guys at Northwest:

Third Northwest pilot convicted of tax evasion | Peninsula Clarion (http://peninsulaclarion.com/stories/022103/ala_022103ala0080001.shtml)

Fedex guy:

http://wnws.com/news/17806-former-fedex-pilot-sentenced-for-tax-evasion




Some pilots think they have it figured out and can show a residential address in Texas, Florida, or any other state with no state income tax. It's outright fraud if you don't physically live there, and a felony tax evasion.

Good luck though, it's a bold move cotton lets see if it pays off :rolleyes:

Otterbox
09-19-2017, 09:07 AM
I was just hired and heard a few senior captains have a way to claim residency in Florida and avoid Hawaii State Income Tax. (Despite not even setting foot there). One guy uses an old roommates address that isn't even current. Is this legal?

It's usually a benefit used by members of the Military (maintaining residency in a state elsewhere from the state you occupy while on military duty). The waters get very murky if do it a civilian...

say again
09-19-2017, 09:34 AM
I was just hired and heard a few senior captains have a way to claim residency in Florida and avoid Hawaii State Income Tax. (Despite not even setting foot there). One guy uses an old roommates address that isn't even current. Is this legal?

Do you really have to ask if it's legal? Common sense would tell you that it's not...

WindWalker999
09-20-2017, 05:34 AM
Most people that do things like this are legitimate Washington residents who were formerly part of HAL's now-defunct Seattle base. Since the vast majority of their flight time is overwater / not technically in any state at all, they file tax in the state they live rather than the state they are based in. There are also a few that do this in Nevada and live in Vegas. These guys are also technically legit for the same reason, as they actually do live in Vegas and spend their layovers at home.

The excuse is "state tax is filed where you work, not where you live, and most of the work is not in any state so I'll file where I live".

Legal? Don't know. Sounds legit enough. I mean state tax in Hawaii is so high if you really don't live here, why would you want to pay it? But the dude that claim Florida and fly 737s out of Newark or something.... prison sucks.

sailingfun
09-20-2017, 06:23 AM
Most people that do things like this are legitimate Washington residents who were formerly part of HAL's now-defunct Seattle base. Since the vast majority of their flight time is overwater / not technically in any state at all, they file tax in the state they live rather than the state they are based in. There are also a few that do this in Nevada and live in Vegas. These guys are also technically legit for the same reason, as they actually do live in Vegas and spend their layovers at home.

The excuse is "state tax is filed where you work, not where you live, and most of the work is not in any state so I'll file where I live".

Legal? Don't know. Sounds legit enough. I mean state tax in Hawaii is so high if you really don't live here, why would you want to pay it? But the dude that claim Florida and fly 737s out of Newark or something.... prison sucks.

It's entirely legal to do what you post. Transportation workers have a exemption to normal tax law. If you can't determine a state where you perform 51% of your work you may fall back on your state of residence and pay taxes under that states laws. If you actually live in Nevada or Washington you are 100% legal. On the other hand if you don't live in the state you claim you are committing tax fraud.

full of luv
09-21-2017, 01:58 AM
Search function does wonders.

https://www.airlinepilotforums.com/money-talk/94323-state-income-taxes.html

That thread is nearly worthless..... and rightfully closed.

I especially get a kick out of how several posters claim that FL has very high property taxes.

I pay far less property tax in FL (for a much nicer house) than I do for a rental house in CA (for far better services as well) and the actual dollars paid is less than in GA or many other states with income tax.

jagbn
09-21-2017, 06:46 AM
Posted yet again, since this issue comes up over and over and over and over and over and over again.


49 U.S. Code § 40116 - State taxation


Specifically subsection (f). Here it is. Read it in all its black and white glory. Look it up yourself if you don't trust an internet message board. If you don't understand what this means, consult your attorney or your tax professional.

(f)Pay of Air Carrier Employees.—

(1) In this subsection— (A) “pay” means money received by an employee for services.
(B) “State” means a State of the United States, the District of Columbia, and a territory or possession of the United States.
(C) an employee is deemed to have earned 50 percent of the employee’s pay in a State or political subdivision of a State in which the scheduled flight time of the employee in the State or subdivision is more than 50 percent of the total scheduled flight time of the employee when employed during the calendar year.


(2) The pay of an employee of an air carrier having regularly assigned duties on aircraft in at least 2 States is subject to the income tax laws of only the following:
(A) the State or political subdivision of the State that is the residence of the employee.
(B) the State or political subdivision of the State in which the employee earns more than 50 percent of the pay received by the employee from the carrier.



(3) Compensation paid by an air carrier to an employee described in subsection (a) in connection with such employee’s authorized leave or other authorized absence from regular duties on the carrier’s aircraft in order to perform services on behalf of the employee’s airline union shall be subject to the income tax laws of only the following: (A) The State or political subdivision of the State that is the residence of the employee.
(B) The State or political subdivision of the State in which the employee’s scheduled flight time would have been more than 50 percent of the employee’s total scheduled flight time for the calendar year had the employee been engaged full time in the performance of regularly assigned duties on the carrier’s aircraft.

https://www.law.cornell.edu/uscode/text/49/40116

Name User
09-21-2017, 07:08 AM
Hahaha

US Air pilot living in Charlotte with a Texas address for tax purposes:

https://www.justice.gov/opa/pr/former-us-airways-pilot-sentenced-north-carolina-10-years-prison-tax-fraud

At least 3 guys at Northwest:

Third Northwest pilot convicted of tax evasion | Peninsula Clarion (http://peninsulaclarion.com/stories/022103/ala_022103ala0080001.shtml)

Fedex guy:

http://wnws.com/news/17806-former-fedex-pilot-sentenced-for-tax-evasion




Some pilots think they have it figured out and can show a residential address in Texas, Florida, or any other state with no state income tax. It's outright fraud if you don't physically live there, and a felony tax evasion.

Good luck though, it's a bold move cotton lets see if it pays off :rolleyes:
First link was a federal case, guy didn't pay federal income tax for like 30 years. How he got away with it that long I won't ever know. Not applicable to the OP.

Second one was NWA guys having a 'cabin' as their primary address despite sending their kids to another state's public schools, having homes there, DL there, being registered to vote etc.

If you do this correctly, don't have any kids, and have your mail and tax returns sent to your state of residence there is nothing wrong with it. It's one advantage we have as pilots.

If you rent a place in HI but own a place in FL this is perfectly legit, you could even own a place in HI too just don't have your mail or tax returns sent there. The federal government and states talk and share that info.

FlyingMaryJane
09-21-2017, 05:15 PM
First link was a federal case, guy didn't pay federal income tax for like 30 years. How he got away with it that long I won't ever know. Not applicable to the OP.

Second one was NWA guys having a 'cabin' as their primary address despite sending their kids to another state's public schools, having homes there, DL there, being registered to vote etc.

If you do this correctly, don't have any kids, and have your mail and tax returns sent to your state of residence there is nothing wrong with it. It's one advantage we have as pilots.

If you rent a place in HI but own a place in FL this is perfectly legit, you could even own a place in HI too just don't have your mail or tax returns sent there. The federal government and states talk and share that info.

^^^^^^^ You hit it on the head... If you own property in let's say TX and have that as your primary residence for your tax returns and then you "commute" to HI and let's say buy a "vacation home" or rent a condo on the beach and use that as a secondary home or "crashpad" then you are a resident of TX. Your drivers license is TX, your tax returns are sent to TX then you are no different than a FL commuter based out of EWR that has a "vacation home" on the jersey shore to hangout at a few nights month before your trip starts. I will only recommend it if you OWN a property in those no-income states and list it as your primary and not make up any address to do this. Also beneficial to keep the driver's license of that state as well. But, the key is to have a "secondary, vacation, crashpad in HI. Gotta be smart about it.

sailingfun
09-21-2017, 05:55 PM
First link was a federal case, guy didn't pay federal income tax for like 30 years. How he got away with it that long I won't ever know. Not applicable to the OP.

Second one was NWA guys having a 'cabin' as their primary address despite sending their kids to another state's public schools, having homes there, DL there, being registered to vote etc.

If you do this correctly, don't have any kids, and have your mail and tax returns sent to your state of residence there is nothing wrong with it. It's one advantage we have as pilots.

If you rent a place in HI but own a place in FL this is perfectly legit, you could even own a place in HI too just don't have your mail or tax returns sent there. The federal government and states talk and share that info.

It does not matter if you rent or own. The only thing from a legal standpoint is where you actually reside. If you're residing in Hawaii you owe taxes there regardless of property in FL. What you post is not legit it's simply a way to try and circumvent the law without getting caught.

sailingfun
09-21-2017, 05:59 PM
^^^^^^^ You hit it on the head... If you own property in let's say TX and have that as your primary residence for your tax returns and then you "commute" to HI and let's say buy a "vacation home" or rent a condo on the beach and use that as a secondary home or "crashpad" then you are a resident of TX. Your drivers license is TX, your tax returns are sent to TX then you are no different than a FL commuter based out of EWR that has a "vacation home" on the jersey shore to hangout at a few nights month before your trip starts. I will only recommend it if you OWN a property in those no-income states and list it as your primary and not make up any address to do this. Also beneficial to keep the driver's license of that state as well. But, the key is to have a "secondary, vacation, crashpad in HI. Gotta be smart about it.

States are getting smarter also. They will ask for your travel records, credit card bills and cellphone records to substantiate which state you actually reside in. A group of Delta pilots purchased basic homes in Wyoming and claimed it as their residence rather than Park City UT. It did not work out well for them even though they did all that you suggest.

ShyGuy
09-21-2017, 08:08 PM
^^^^^^^ You hit it on the head... If you own property in let's say TX and have that as your primary residence for your tax returns and then you "commute" to HI and let's say buy a "vacation home" or rent a condo on the beach and use that as a secondary home or "crashpad" then you are a resident of TX. Your drivers license is TX, your tax returns are sent to TX then you are no different than a FL commuter based out of EWR that has a "vacation home" on the jersey shore to hangout at a few nights month before your trip starts. I will only recommend it if you OWN a property in those no-income states and list it as your primary and not make up any address to do this. Also beneficial to keep the driver's license of that state as well. But, the key is to have a "secondary, vacation, crashpad in HI. Gotta be smart about it.

If you're living in that second vacation home after you finish your trips at HNL, you're residing in Hawaii. As the poster above said, States are wising up. They'll audit you and get to the bottom of just exactly where you reside.

Pilots. Can make 200k+ but some will try to skirt and break the law so they can cheap skate their way out of ~ 3-4% total income tax on average. You realize poor people making minimum wage pay state income tax. But some prima dona making 200k with 16 days off has issues paying state income tax.

Name User
09-22-2017, 07:51 AM
If you're living in that second vacation home after you finish your trips at HNL, you're residing in Hawaii. As the poster above said, States are wising up. They'll audit you and get to the bottom of just exactly where you reside.

Pilots. Can make 200k+ but some will try to skirt and break the law so they can cheap skate their way out of ~ 3-4% total income tax on average. You realize poor people making minimum wage pay state income tax. But some prima dona making 200k with 16 days off has issues paying state income tax.
HI income tax is >10%. This isn't being cheap. Companies take advantage of tax loopholes all the time. This is just being fiscally smart. Most states only require 6 months + 1 day to be a resident. Small price to pay to save hundreds of thousands over the course of ones career. IMO.

Plenty of guys at my CO own crash pads in places they are based but actually live in FL. This isn't an abnormal lifestyle for people like us.

sailingfun
09-22-2017, 09:13 AM
HI income tax is >10%. This isn't being cheap. Companies take advantage of tax loopholes all the time. This is just being fiscally smart. Most states only require 6 months + 1 day to be a resident. Small price to pay to save hundreds of thousands over the course of ones career. IMO.

Plenty of guys at my CO own crash pads in places they are based but actually live in FL. This isn't an abnormal lifestyle for people like us.

I doubt to many pilots for HA live in FL. If you actually live in a tax free state it's not a loophole. It is the law, if you reside there and don't do 51% of your work in any single state you pay state taxes based on where you reside. If on the other hand you claim to reside in a tax free state but actually reside in another state your not exploiting a loophole you are committing tax fraud.

galaxy flyer
09-22-2017, 09:20 AM
As HI taxes are in the 10% range, they will find it useful to spend the time getting their due and making sure you are an example. Today, every move you make is recorded somewhere, so the trail is easy to follow. Even something as simple as consistently using your credit card at a deli for lunch on a non workday in HI will tag you.

If you don't want to pay HI tax, simple, live, really live, somewhere else.

GF

tomgoodman
09-22-2017, 09:43 AM
...you could even own a place in HI too just don't have your mail or tax returns sent there. The federal government and states talk and share that info.

Any tax strategy which depends on avoiding a paper trail is too risky. Better to just fly airplanes and pay your taxes. :)

ShyGuy
09-22-2017, 11:29 AM
HI income tax is >10%. This isn't being cheap. Companies take advantage of tax loopholes all the time. This is just being fiscally smart. Most states only require 6 months + 1 day to be a resident. Small price to pay to save hundreds of thousands over the course of ones career. IMO.

Plenty of guys at my CO own crash pads in places they are based but actually live in FL. This isn't an abnormal lifestyle for people like us.

Ok and if hey live in Florida, commute to HNL, stay in a crashpad before/after a trip and then commute back to Florida, that's perfectly legal. Now continue living in that "crashpad" full time, don't reside in Florida, and only have your mail sent there and keep a FL license, filing a FL state return, while you continue to reside in HNL in your crashpad, that's tax fraud.

Don't want to pay 10% state income tax in Hawaii? Don't live in Hawaii. It's really that simple. You should know that before taking a job at HAL.

And this isn't a company taking a tax loophole. This is outright tax evasion and fraud.

Name User
09-22-2017, 11:57 AM
Ok and if hey live in Florida, commute to HNL, stay in a crashpad before/after a trip and then commute back to Florida, that's perfectly legal. Now continue living in that "crashpad" full time, don't reside in Florida, and only have your mail sent there and keep a FL license, filing a FL state return, while you continue to reside in HNL in your crashpad, that's tax fraud.

Don't want to pay 10% state income tax in Hawaii? Don't live in Hawaii. It's really that simple. You should know that before taking a job at HAL.

And this isn't a company taking a tax loophole. This is outright tax evasion and fraud.

I only know one guy who works for Hawaiian and they live there. However the FL residence was just an example. Many snowbirds live in one state and spend winters in another, but they aren't a permanent residence of those states (example Phoenix, AZ).

I agree this isn't something you want to screw around with if you do actually live in said state. IE don't go out and buy a condo in NV as a "residence" and own a 4 bedroom house in HI. But use every tool at your disposal if you don't live in said state - there is no shame in taking full advantage of tax law.

full of luv
09-22-2017, 12:39 PM
I only know one guy who works for Hawaiian and they live there. However the FL residence was just an example. Many snowbirds live in one state and spend winters in another, but they aren't a permanent residence of those states (example Phoenix, AZ).

I agree this isn't something you want to screw around with if you do actually live in said state. IE don't go out and buy a condo in NV as a "residence" and own a 4 bedroom house in HI. But use every tool at your disposal if you don't live in said state - there is no shame in taking full advantage of tax law.

For the record, I know over a dozen HAL pilots and they all live in HI except for one who lives in Oregon which has even HIGHER income tax (but no sales tax).

Also many state sales tax laws say if you go to Oregon and by a high priced item you should report and pay applicable sales tax to your home state upon return. I have yet to hear of a pilot who complies though.:D

jagbn
09-23-2017, 06:32 AM
OK all you cockpit lawyers and residency experts, here's the actual Hawaii law on residency for tax purposes. Please feel free to look it up yourself, you shouldn't trust me, I'm just some guy on the internet.

First, Hawaii Revised Statutes §235-1, definitions. Found here: PART I (http://www.capitol.hawaii.gov/hrscurrent/Vol04_Ch0201-0257/HRS0235/HRS_0235-0001.htm)"Resident" means (1) every individual domiciled in the State, and (2) every other individual whether domiciled in the State or not, who resides in the State. To "reside" in the State means to be in the State for other than a temporary or transitory purpose. Every individual who is in the State more than two hundred days of the taxable year in the aggregate shall be presumed to be a resident of the State. This presumption may be overcome by evidence satisfactory to the department of taxation that the individual maintains a permanent place of abode outside of the State and is in the State for a temporary or transitory purpose. No person shall be deemed to have gained or lost a residence simply because of the person's presence or absence in compliance with military or naval orders of the United States, or while engaged in aviation or navigation, or while a student at any institution of learning.

Next up is the Hawaii Administrative Rules. There's a great pdf available here: http://files.hawaii.gov/tax/legal/har/har_235.pdf

It expands upon the statutory language and gives several examples applying Hawaiian law to different sets of facts. Here's an excerpt.§18-235-1.03
Establishing residency by domicile. (a) An individual who is domiciled in Hawaii is considered a resident.
(1) Domicile is the place of the individual’s true, fixed, permanent home.
(2) The domicile is the principal establishment to which the individual has the intention of returning whenever the individual is absent.
(3) An individual can have several residences or dwelling places in which he or she resides, but can have only one domicile, or permanent residence to which he or she intends to return.
(b) An individual’s domicile may change where there is a concurrence of:
(1) An abandonment of the old domicile with a specific intent to abandon the old domicile;
(2) An intent to acquire a specific new domicile; and
(3) An actual physical presence in the new domicile.
(c) The burden of proof as to a change of domicile is upon the individual asserting that a change in domicile has taken place. The individual must establish a change of domicile by clear and convincing evidence.
(d) An individual can acquire a domicile by birth, choice, or operation of law, as set forth in sections 18-235-1-04, 18-235-1-05, and 18-235-1-06, HAR, respectively. [Eff 2/16/82; am 9/3/94; am and ren §18-235-1.03 8/28/98] (Auth: HRS §§231-3(9), 235-118) (Imp: HRS §235-1)

So here's my challenge to those who insist pilots have a sure fire way of avoiding Hawaii state income tax. Be sure to discuss all facts and circumstances with specific citation to relevant statutes and rules, both Hawaii and federal law.

The example I'm really looking forward to hearing about is how a pilot can use his old roommate's Florida address, and he's totally not a Hawaii resident because his mail goes to FL and he votes there.

Take your time.

Kind regards,
JAGBN



Search Engine Optimization by vBSEO 3.6.1