Lets talk deductions
02-12-2008, 02:31 AM
#11
Moderator
Joined APC: May 2006
Position: ATP, CFI etc.
Posts: 6,056
CPAs
Thanks Vagabond, great advice.
I have always paid CPAs to do my taxes, and they hardly charge more than tax preparers and they make you look good if you submit a tax return signed by them. You may think a CPA would charge too much to do household taxes but I never pay more than $100 for it. I have noticed a great difference in the exemptions they find; some get thousands back while others can't find a thing. I am never a repeat customer of the latter.
Here's a tip no one mentioned. If you have a similar spending pattern from year to year, get a CPA to do it one year and just emulate what he did on subsequent returns. Works pretty well unless your spending/income patterns change. One thing though if you do this, make sure to check if any applicable tax laws that your CPA used has changed. Just look through the instruction booklet that comes with your taxes. Disclaimer: as a random internet guy, guarantees not expressed or implied.
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I have always paid CPAs to do my taxes, and they hardly charge more than tax preparers and they make you look good if you submit a tax return signed by them. You may think a CPA would charge too much to do household taxes but I never pay more than $100 for it. I have noticed a great difference in the exemptions they find; some get thousands back while others can't find a thing. I am never a repeat customer of the latter.
Here's a tip no one mentioned. If you have a similar spending pattern from year to year, get a CPA to do it one year and just emulate what he did on subsequent returns. Works pretty well unless your spending/income patterns change. One thing though if you do this, make sure to check if any applicable tax laws that your CPA used has changed. Just look through the instruction booklet that comes with your taxes. Disclaimer: as a random internet guy, guarantees not expressed or implied.
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Last edited by Cubdriver; 02-12-2008 at 07:52 AM.
02-13-2008, 04:52 PM
#12
Gets Weekends Off
Joined APC: Sep 2007
Position: 777 Captain in Training
Posts: 1,457
Originally Posted by ToiletDuck
I did some digging and you're right! I asked my accountant and was told I was able to because I had/have my own business and the truck I purchased was for that. I also have an Amex I use for all my business related purchases which is what I deducted any interest off. Thanks for speaking up. As I said I'm not an accountant so I'm sure there are holes. If anyone finds anymore let me know and I'll patch them up.
02-13-2008, 05:34 PM
#13
New boss = Old boss
Joined APC: Mar 2005
Position: Ca B737
Posts: 2,762
He's right about the difference you get for an overnight and the max the govt. allows without receipts. http://www.pro-diem.com/ is a great way to maximize this deduction.
02-13-2008, 07:09 PM
#14
Careful w/that axe Eugene
Joined APC: Feb 2007
Position: HOTAS...and a SWA gear lever
Posts: 369
T-Bone & Vagabond: Good words. I'd advise everyone to read and heed (including you TD).
FWIW: My good buddy in the ANG has a brother and dad that are IRS agents (investigate fraud, etc). I spoke with them re: my haircuts. My point was I had hair to the middle of my back in High School and would not have cut it but for the regulations of my employers (USAF, ANG, & now SWA). They grinned, nodded their heads, and said "nice try."
FWIW: My good buddy in the ANG has a brother and dad that are IRS agents (investigate fraud, etc). I spoke with them re: my haircuts. My point was I had hair to the middle of my back in High School and would not have cut it but for the regulations of my employers (USAF, ANG, & now SWA). They grinned, nodded their heads, and said "nice try."
02-13-2008, 08:49 PM
#15
Che Guevara
Thread Starter
Joined APC: Aug 2005
Posts: 6,408
Originally Posted by HIFLYR
If you really want to save money you should not pay interest on any credit cards. Pay your bill in full every month no matter how painful. Per my CPA's advice I do not sometimes claim every "allowable" dollar or deduction on my tax return but I probably will not get audited. Believe the Country Lawyers advice you do not want to get audited it is not worth pressing your luck. The IRS makes the FAA look like girl scouts.
If I'm wrong on some things then I'm wrong. Like I said I'm not accountant and if it were as easy then everyone would be doing it. I've done my best to check on most items, however, some sources say yes while others say no. If there are other things inaccurate then lets have at it. I'd rather not fill in something completely wrong. I have my statements checked for flags though prior to shipping out and they didn't seem to find any last year.
Another Question. If I have stock in Company A and B. In company A I sell and make 10k. In B I sell and lose 10K. Do I owe anything? Do I pay on A and simply not pay on B or do they cancel each other out as a total investment outcome tax?
Also must I pay tax on dividends? If I received $3k in dividends but had them rolled over back into the stock do I still have the pay tax on the $3k?
02-14-2008, 04:42 AM
#16
Sitting on the sidelines
Joined APC: Aug 2007
Posts: 436
Toilet Duck is UNINFORMED and DANGEROUS. Most of his advise is false, and other parts are misleading.
1. Per diem: The only shred of truth I saw. You can deduct the difference between the per diem received and the local per diem established by the government. However, this works both ways. If you receive $2/hr per diem and the government rate in Sioux Falls is $39/day, you must report the $9 difference as income if you want to be able to claim the deduction for nights spent in NYC. See also item #4 below.
2. Sales Tax: This will likely be a deduction only if you live in Florida, Texas, or another state that has no state income tax. When completing your Schedule A (Itemized deductions), you have to choose one or the other - not both. Also, the IRS gives you a table that gives you a sales tax amount based on the percentage tax and your income. You can add to that tax paid on cars, boats, etc. It is usually more generous than all those receipts with $.03 of tax.
3. Old computer deduction: You can tax a deduction when you donate used items, but it has to be reasonable. That means the price you can get on craigslist or e Bay - not some pie in the sky number that no one would pay.
4. Business expense deductions. First, your hair grows whether or not you have a job. Not deductible - even if you are in the military. Second, uniforms are deductible if required by your employer and NOT suitable for routine wear. Shoes, blue trousers, leather jacket...all suitable for routine wear and not deductible. Third, mileage. You cannot deduct any expenses related to commuting from your residence to your base. It makes no difference if you drive 3 miles or fly 3,000: commuting expenses are NOT deductible. If you have legit vehicle expenses (example: driving to your FAA required medical exam) you can claim actual expenses including interest - but only the percentage related to business travel. So, if you drove 10,000 miles during the year and 500 were business, you can take 5% of your interest expense. That's not much. Or, you can take the government rate ($.505 last year I believe) which is alot simpler. Fourth, the famous 2% rule. If you are married, these deductions have to exceed 2% of your COMBINED gross income to count for anything. Finally, if you itemize deductions you do not take the standard deduction, which was $5,500 last year for a single person and $10,000 for a married couple. You can take that much without even lifting a pencil. Unless you own your home and pay a ton in property taxes and interest, or give a huge amount to your house of worship you will probably save the money by just taking the standard deduction.
Those who say "I'm not an accountant" should not offer accounting advise!!!!
Oh, by the way. I was an accountant for twelve years, hold a Masters in Business Administration - and prepared tax returns for a "major national tax preparation firm" as recently as last year. PM if you have specific questions.
1. Per diem: The only shred of truth I saw. You can deduct the difference between the per diem received and the local per diem established by the government. However, this works both ways. If you receive $2/hr per diem and the government rate in Sioux Falls is $39/day, you must report the $9 difference as income if you want to be able to claim the deduction for nights spent in NYC. See also item #4 below.
2. Sales Tax: This will likely be a deduction only if you live in Florida, Texas, or another state that has no state income tax. When completing your Schedule A (Itemized deductions), you have to choose one or the other - not both. Also, the IRS gives you a table that gives you a sales tax amount based on the percentage tax and your income. You can add to that tax paid on cars, boats, etc. It is usually more generous than all those receipts with $.03 of tax.
3. Old computer deduction: You can tax a deduction when you donate used items, but it has to be reasonable. That means the price you can get on craigslist or e Bay - not some pie in the sky number that no one would pay.
4. Business expense deductions. First, your hair grows whether or not you have a job. Not deductible - even if you are in the military. Second, uniforms are deductible if required by your employer and NOT suitable for routine wear. Shoes, blue trousers, leather jacket...all suitable for routine wear and not deductible. Third, mileage. You cannot deduct any expenses related to commuting from your residence to your base. It makes no difference if you drive 3 miles or fly 3,000: commuting expenses are NOT deductible. If you have legit vehicle expenses (example: driving to your FAA required medical exam) you can claim actual expenses including interest - but only the percentage related to business travel. So, if you drove 10,000 miles during the year and 500 were business, you can take 5% of your interest expense. That's not much. Or, you can take the government rate ($.505 last year I believe) which is alot simpler. Fourth, the famous 2% rule. If you are married, these deductions have to exceed 2% of your COMBINED gross income to count for anything. Finally, if you itemize deductions you do not take the standard deduction, which was $5,500 last year for a single person and $10,000 for a married couple. You can take that much without even lifting a pencil. Unless you own your home and pay a ton in property taxes and interest, or give a huge amount to your house of worship you will probably save the money by just taking the standard deduction.
Those who say "I'm not an accountant" should not offer accounting advise!!!!
Oh, by the way. I was an accountant for twelve years, hold a Masters in Business Administration - and prepared tax returns for a "major national tax preparation firm" as recently as last year. PM if you have specific questions.
02-14-2008, 05:50 AM
#17
APC's Hired Help
Joined APC: Dec 2005
Posts: 1,231
Originally Posted by Navajo31
Those who say "I'm not an accountant" should not offer accounting advise!!!!
02-14-2008, 06:27 AM
#18
Gets Weekends Off
Joined APC: Nov 2005
Position: 757 Capt
Posts: 2,418
Btw, I'm not an accountant, but I did stay in a Holiday Inn Express.
There is one way that you can deduct your commuting expenses. First you have to realize that your residence and your "Tax Home" are two separate things to the IRS. Your Tax Home is generally the place you earn the most $$$. Commuting to/from your tax Home is generally not deductible.....but, nothing in the IRS would preclude you from having another job at your residence.....and commuting from your Tax Home for business reasons is a deductible expense.
At your Tax Home, you can't deduct any of the routine expenses you have there (crashpad rent as an example).....but, if you have 2 jobs, you can deduct the portion of your living expenses at your residence because you are away from your Tax Home for business reasons.
FWIW---my Uncle was a long time, Sr IRS guy. And his advice to me for any questionable deduction, was to take the deduction, just don't spend the $$ because it might get kicked back. And the fun thing with the IRS and tax law's, is that there are a bunch of gray areas, and depending upon which agent/region you are dealing with.....well, you might get different answers.
As to haircuts, if you deduct every haircut you are asking for trouble, if you are getting haircuts every 2-3 weeks to look "professional", and deducting half of them, might float w/ a flexible auditor. but it might not.
as to uniforms, no definition out there on what is not suitable for everyday wear, to me, wearing my blue uniform pants and white shirt is not suitable for every day wear. And I am going to deduct the cost and upkeep of those items.
See-
http://www.irs.gov/pub/irs-pdf/p463.pdf
http://www.irs.gov/publications/p529/ar02.html
For other routine deductions suggestions see
http://www.pilot-tax.com/pilot-tax_organizer_main.htm
There is one way that you can deduct your commuting expenses. First you have to realize that your residence and your "Tax Home" are two separate things to the IRS. Your Tax Home is generally the place you earn the most $$$. Commuting to/from your tax Home is generally not deductible.....but, nothing in the IRS would preclude you from having another job at your residence.....and commuting from your Tax Home for business reasons is a deductible expense.
At your Tax Home, you can't deduct any of the routine expenses you have there (crashpad rent as an example).....but, if you have 2 jobs, you can deduct the portion of your living expenses at your residence because you are away from your Tax Home for business reasons.
FWIW---my Uncle was a long time, Sr IRS guy. And his advice to me for any questionable deduction, was to take the deduction, just don't spend the $$ because it might get kicked back. And the fun thing with the IRS and tax law's, is that there are a bunch of gray areas, and depending upon which agent/region you are dealing with.....well, you might get different answers.
As to haircuts, if you deduct every haircut you are asking for trouble, if you are getting haircuts every 2-3 weeks to look "professional", and deducting half of them, might float w/ a flexible auditor. but it might not.
as to uniforms, no definition out there on what is not suitable for everyday wear, to me, wearing my blue uniform pants and white shirt is not suitable for every day wear. And I am going to deduct the cost and upkeep of those items.
See-
http://www.irs.gov/pub/irs-pdf/p463.pdf
http://www.irs.gov/publications/p529/ar02.html
For other routine deductions suggestions see
http://www.pilot-tax.com/pilot-tax_organizer_main.htm
02-14-2008, 06:29 AM
#19
New boss = Old boss
Joined APC: Mar 2005
Position: Ca B737
Posts: 2,762
Originally Posted by Navajo31
Those who say "I'm not an accountant" should not offer accounting advise!!!!
Originally Posted by Dog Breath
To go along with that, never seek financial advice from a pilot, especially from an anonymous internet message board.
And TD. Do some research on Airline Pilots going to jail for tax evasion. There is quite a history out there. The most recent I can recall is a few Northwest pilots claiming residence somewhere else and getting caught. This has always been a danger. If you live in California but fly out of Seattle you may be asking for trouble if you try to evade paying Ca taxes.
Last edited by mike734; 02-14-2008 at 07:22 AM.
02-14-2008, 07:54 AM
#20
Administrator
Joined APC: May 2006
Position: C-172
Posts: 8,024
Well, I was going to try and answer Duck's stock sale and dividend questions, but I am not an accountant or a pilot (yet). So, Duck, if you haven't already gotten an answer, email me and I'll see what I can do. We are swamped this tax season, but I always have time for my APC friends.
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