Cannot Deduct Shoes
01-15-2013 | 03:27 AM
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Cannot Deduct Shoes
Here is a sampling of important US Tax Court cases involving pilot and flight attendant tax deductions. You can deduct anything you want. Your audit rate is about 1%. Do the math. In the meantime check out some of these flight crew tax cases.
Continental FA Denied Everyday Deductions
Uniform items such as nylons, shoes, scarfs, hats, etc. were denied. Yes, they were only used at work yet since these items are easily convertible to everyday use the Court said No. Van driver tips were also denied since the Court considered them incidentals and included as part of the per diem deduction. Haircuts, make-up and manicures were denied since they are personal in nature. Internet expenses were also denied, but other court opinions allow them (see below). This opinion also has a great illustration of per diem calculation and deduction.
Tax Court Summary 2010-47
United Express Pilot Commuting Expenses Denied
Crashpads, lodging, travel and meals expenses associated with commuting are nondeductible personal expenses. Your domicile is your tax home, and expenses incurred traveling to or from your tax home are not deductible.
Tax Court Summary 2010-127
Substantial Rest Needed For Per Diem Deduction
In a defining case from 2006, the Tax Court explains why locals, turns or day-trips that do not involve substantial rest cannot be afforded a per diem deduction. In this case, a ship boat Captain named Marc Bissonnett did day trips, but purchased a hotel at his expense for a six hour rest period between segments. He was allowed a per diem deduction. Sleeping in a crew lounge on a local or a turn is not substantial rest. Sorry.
Tax Court Memo 127 Number 10
Sierra Academy Grad Denied Deduction
An aerospace engineer who took flight training lessons at Sierra Academy was denied his deduction as education since it could lead to a new trade or business. You can deduct expenses you have for education, even if the education may lead to a degree, if the education meets at least ONE of the following two tests: (a) it maintains or improves skills required in your current present work, or (b) it is required by your employer or the law to keep your salary, status, or job, and the requirement serves a business purpose of your employer.
Deducting your B737 type rating is OK as long as you do it to maintain or improve your current pilot skills, and not for opportunity of an interview. Mention Southwest to an auditor, and it will be denied.
Tax Court Memo 2007-174
New Hire Expenses Allowed
A Continental Express pilot was allowed to deduct new hire training expenses since they were a requirement for his employment. Hopefully the days of paying for your new hire training are long gone.
Tax Court Summary 2002-44
Internet Expenses Allowed
Internet expense are an allowed deduction if their business purpose can be demonstrated, and they further do not require strict substantiation (detailed connection involving date, amounts and business purpose) similar to other utility expenses. This is not a flight crew related tax court case, but it demonstrates the Court’s perspective on internet expenses.
Tax Court Memo 2012-272
Insomnia relief..
Jason
Continental FA Denied Everyday Deductions
Uniform items such as nylons, shoes, scarfs, hats, etc. were denied. Yes, they were only used at work yet since these items are easily convertible to everyday use the Court said No. Van driver tips were also denied since the Court considered them incidentals and included as part of the per diem deduction. Haircuts, make-up and manicures were denied since they are personal in nature. Internet expenses were also denied, but other court opinions allow them (see below). This opinion also has a great illustration of per diem calculation and deduction.
Tax Court Summary 2010-47
United Express Pilot Commuting Expenses Denied
Crashpads, lodging, travel and meals expenses associated with commuting are nondeductible personal expenses. Your domicile is your tax home, and expenses incurred traveling to or from your tax home are not deductible.
Tax Court Summary 2010-127
Substantial Rest Needed For Per Diem Deduction
In a defining case from 2006, the Tax Court explains why locals, turns or day-trips that do not involve substantial rest cannot be afforded a per diem deduction. In this case, a ship boat Captain named Marc Bissonnett did day trips, but purchased a hotel at his expense for a six hour rest period between segments. He was allowed a per diem deduction. Sleeping in a crew lounge on a local or a turn is not substantial rest. Sorry.
Tax Court Memo 127 Number 10
Sierra Academy Grad Denied Deduction
An aerospace engineer who took flight training lessons at Sierra Academy was denied his deduction as education since it could lead to a new trade or business. You can deduct expenses you have for education, even if the education may lead to a degree, if the education meets at least ONE of the following two tests: (a) it maintains or improves skills required in your current present work, or (b) it is required by your employer or the law to keep your salary, status, or job, and the requirement serves a business purpose of your employer.
Deducting your B737 type rating is OK as long as you do it to maintain or improve your current pilot skills, and not for opportunity of an interview. Mention Southwest to an auditor, and it will be denied.
Tax Court Memo 2007-174
New Hire Expenses Allowed
A Continental Express pilot was allowed to deduct new hire training expenses since they were a requirement for his employment. Hopefully the days of paying for your new hire training are long gone.
Tax Court Summary 2002-44
Internet Expenses Allowed
Internet expense are an allowed deduction if their business purpose can be demonstrated, and they further do not require strict substantiation (detailed connection involving date, amounts and business purpose) similar to other utility expenses. This is not a flight crew related tax court case, but it demonstrates the Court’s perspective on internet expenses.
Tax Court Memo 2012-272
Insomnia relief..
Jason
01-15-2013 | 03:49 AM
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01-17-2013 | 09:52 AM
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From: DL
I agree that it comes down to the number of itemized deductions and such. I've had a couple of friends get audited and they explained that it all comes down to how far from "standard" your deductions are. Everyone has deductions but if you have significantly more or unusual deductions that will definitely trigger a flag.
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