jagbn

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

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

^^^^^^^ 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

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

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

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

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

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

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

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