Tax reform impact
 

I'm curious how the new tax laws are hitting your refund and overall take home pay compared to last year. Anybody care to share?

We wouldn’t know until the IRE reopens


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Plus per diem and overages don't come for most until tomorrow's paycheck. I do know one thing, those people who meticulously track all their expenses like it is their favorite hobby will be crying in their soup this tax year.

Did a calculator on taxslayer last week. Said my refund should double based on same amount earned....

Me too

#based

Just did a quick comparison side by side with turbotax, and I'm getting about $15 more using the standard deduction vs itemized from 2017.

I think "tax refund" comparison is incorrect thinking especially since the withholding formula changed this year. What we really need to do is compare how much we paid in taxes year over year...or run our current W2 through last year's tax software.

Sorry for the slight drift, can someone explain to me how a commuting pilot is taxed? Say I live in Texas but commute to LAX, which state am I filing tax returns in (or both?). I never really thought of it but why would any pilot live in a high tax state if they can make a short commute from a low cost state?

IF you live in TX but commute to another state domicile like LAX you are not obligated to pay California state taxes unless more then 50% of your flying (work) is in the state of CA. It will be up to you to prove this as the state of California will hound you for the duration you're based there and then some.
Many pilots "live" across the border in NV/AZ for tax reasons. Make sure it is legit as these days they check cell phone records and other databases to see where you really spend your time, pilots are big juicy apple for the state collectors.

The 50% rule is to protect flight crews from being taxed by multiple states. This could happen in the past because the different states all have various (and varied) thresholds for residence and taxation and it was possible to meet the threshold for more than one. It still is if you live and possibly work in two states (such as a telecommuter who splits time between two homes).

For the 50% flying in the state rule, CA is about the only place where this is likely to come up because it's possible to do a lot of north-south flying and never leave the state. If you reside elsewhere and don't want to pay CA taxes (you don't) you may need to track your flying and bid accordingly if you're flying too much in state. I don't know if they look at actual flight time in the state lines, ie count the part of an interstate flight which occurred over CA, or if they only count flights which both depart and arrive in CA.

For residence tax, that's basically where you live. That can get complicated if you bounce around a lot on days off and you need to be careful because you might get multiple states who think you're a resident and then you get to try to sort it out.

Address, lease/bills in your name at that address, drivers license and car registration are all good anchors. Avoid using any public services in other states, and that includes things like registering an airport car in a different state. If you bounce around a lot, you need to set some anchors in the state you want to claim and then also spend significant time there.

Don't try to fake it, everything is now in a database somewhere and they will start digging if they catch a whiff of a pilot evading taxes. Pilots go to jail for this all the time. Of if you do fake it you'd have to pretty much go off the grid...

Franchise Tax Board in California is like a Gila monster if it thinks it can tax you. It clamps its jaws into you and will not let go.

I parked a personal aircraft at a California airport for a year while I went to a one year civilian graduate school tour of duty ON AIR FORCE ORDERS out of Wright Patterson AFB. The USAF paid out of state tuition costs for me and after getting a Master's I moved on to my next assignment.

I got a total of five letters, the last three threatening wage garnishment AND a lien on the aircraft if I didn't pay them excise tax on the AC, despite each letter being answered by first the base JAG x2, the JAG at Wright-Patt, the JAG at my MAJCOM, and finally the HQ USAF legal people at Bolling citing chapter and verse of the Soldiers and Sailors Relief Act informing them that their claim on me was not consistent with federal law and that I owed them nothing and that under no circumstances would the Air Force permit them to garnish my wages and would in fact go to the FAA AND federal court if necessary on my behalf for relief if an attempt was made to put a lien on the aircraft in defiance of the Soldiers and Sailors Relief Act.

The whole process took about 18 months, almost twice as long as I had lived in California, and I never did receive any final acknowledgement that From the Franchise Tax board that I did not owe them money. The dunning letters just stopped.

If you get based in CA, I'd really suggest commuting.

Depends on how much you make. If you're a regional FO, you can probably scam the system for more benefits than you pay in taxes, especially if you have kids while there.

As they spool up taxation of higher income brackets, and everyone who can flees, they are getting ever more diligent about harvesting those who remain. Silicone Valley is the only thing keeping their welfare-state budget afloat... one big tech industry setback and they are screwed with a capital S. I'll have to flee at that point because they'll come looking to me to cover billions in red ink.

These days a single regional FO is going to be at the 9.3% marginal rate. While on probation their first year.

California - Single Tax Brackets
Tax Bracket Tax Rate
$0.00+ 1%
$8,015.00+ 2%
$19,001.00+ 4%
$29,989.00+ 6%
$41,629.00+ 8%
$52,612.00+ 9.3%
$268,750.00+ 10.3%
$322,499.00+ 11.3%
$537,498.00+ 12.3%
$1,000,000.00+ 13.3%
California - Married Filing Jointly Tax Brackets
Tax Bracket Tax Rate
$0.00+ 1%
$16,030.00+ 2%
$38,002.00+ 4%
$59,978.00+ 6%
$83,258.00+ 8%
$105,224.00+ 9.3%
$537,500.00+ 10.3%
$644,998.00+ 11.3%
$1,000,000.00+ 12.3%
$1,074,996.00+ 13.3%

Tax reform impact
 

Or just stay far away from California in general


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Well if you live in a smaller town in the west and commute to work, there are at least seven pilot bases in CA that I can think of off the top of my head, two of them quite large legacy bases.

You can easily be based in CA without paying any taxes (on jets), you just have to make sure you don't slip into any of the traps.

Three things
 

Three things to never ask a pilot for:
1) Legal advice
2) Career advice
3) Financial advice

Unless they had an overnight at a holiday inn express

OMG this. That's why we're so much smarter than mainline pilots.

I always tell people to call lawyer, But if it has to do with aviation there are people around here who can guess what the lawyer will say...

Yeah definitely don't ask a pilot about that. Call your lawyer instead :rolleyes:

If you get good career advice (probably from a pilot), then this will take care of itself, and you can afford a professional financial planner to fine tune things for you. Eventually he'll tell you that maxing out your 401k is a bad idea, but you'll learn about that later on.

You forgot marriage advice.

So what’s the best order?

- 401(k) match

- HSA Max

- Roth IRA Max

- 401(k) Max

?

What do you mean? I thought there was no substitute for experience? And I know a senior American Captain who is currently on marriage 5!

Does he take home less than a first year regional FO? I can’t imagine what 4 divorces would do to his bank account

Maybe he learned about pre-nups from the first one. Apparently didn't learn much else. Good God, why would anyone do that to themselves?

Depends entirely on your personal circumstances.

Generally if you have a match available, contribute what you need to get the max company match, otherwise you're leaving money on the table.

Majors tend to have a 15-16% direct contribution, not a match, so you don't have to contribute anything. You can contribute in addition to the company contribution but if you're going to end with a huge 401k at retirement, you will have unavoidable mandatory distributions starting at age 70, which could literally be larger than your annual income while working. That would put you in a very large tax bracket. For that reason sometimes it's better to do other things with your discretionary money than 401k contributions. Probably not an issue until you're at a major. It's hard math but CFPs know how to figure it out for you.

Soooo....

Has anyone that has basically the same income and circumstances as last year done a last year vs this year comparison?

My income this year was virtually identical to last year and I managed to keep an extra 1500 this year.

Thank you for the non political answer

Once folks start filing, I'd like to hear from someone whose income stayed the same and who owns a house that they bought at least two years ago.

Similar income, similar expenses... what's the result?

My effective tax rate for 2018 compared to 2017 is 10.8 vs 12.4 and when I ran my 2017 numbers through 2018’s new tax law brackets the difference is greater, 10.4 vs 12.4.

We will see, I won’t be able to write off the interest I paid this year.


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