State Tax for commuters
 

Sort of confused on how state taxes work for commuting airline pilots.

Say you live in New York, your airline is headquartered in Texas, and your base is in Illinois.

Which of the 3 states do you end up having to pay state taxes in?

Say you maintain an apartment and car in Illinois at your base as a home-away-from-home for reserve but do not claim residency there. Does this change anything?

Wherever your permanent residence is.... In this case it would be NY

New York...but Illinois could make a case that you should be paying them state income taxes as well by having a domicile (apartment) and vehicle in their state. You'd have to check with the state of Illinois to determine their tax-residency test.

I live in Washington state (no income tax) right across the river from my Portland, OR base (income tax -- you bet!). I've heard stories of Oregon going after some of our Washington-residing pilots who do a "majority" of their flying within the borders of Oregon.

And everything else is a business expense.

Just be sure the state you claim is where you really live (ie reside more than 50%)...and can prove it. Better yet if that state has no income tax. Do otherwise could invite some very nasty attention...as a few past co workers found out.

States have been getting smarter on this issue so document your non rev travel. If a state calls you in to audit where you reside they are going to ask for your non rev travel records, credit card records and cell phone records. Remember your cell phone always knows where you are on any given day.

Also keep in mind its a income tax. If you do more then 50 percent of your actual work in one state you owe taxes in that state. Many Delta pilots found that out the hard way while working in the training department in Atlanta.

Keep good records if you have a car or lease in the base state.

You might want to read IRS Publication 463.

I agree it specificly states that commuting expenses are not deductable. Temporary, of less than one year assignments can be partially deducted at a percentage of total. Be careful, My best friend is a criminal investigator with the IRS. And they love to hunt pilots. We are seen as one of the largest tax evading groups in the country.

Not true. I've been audited twice in my career. I learned this the hard way and it took me many years to pay back the IRS (back taxes, penalties, and interest) :(

After the first audit, I started using a tax preparer who specialized in airline employees. Second audit went off without a hitch. :)

Be very careful here.