How to eat like a regional pilot
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surreal1221
Well-Known Member
Now that I think about it, I may attempt to brown bag it. Maybe have my wife draw a little airplane on the bag with the text that says "My little Pilot husband" on it.
I wonder what the 150k a year making SWA CA would say to me then?
"Look man, I'm bringing in 25k a year. . . perhaps when I'm in your shoes I can wine and dine everynight. Sorry if you're offended, but I gotta live too my friend."
Nevertheless, the brown bag idea is really making my noggin spin with creative ideas how to dress it up.
I wonder what the 150k a year making SWA CA would say to me then?
"Look man, I'm bringing in 25k a year. . . perhaps when I'm in your shoes I can wine and dine everynight. Sorry if you're offended, but I gotta live too my friend."
Nevertheless, the brown bag idea is really making my noggin spin with creative ideas how to dress it up.
killbilly
Vocals, Lyrics, Triangle, Washboard, Kittens
surreal1221 said:Now that I think about it, I may attempt to brown bag it. Maybe have my wife draw a little airplane on the bag with the text that says "My little Pilot husband" on it.
I wonder what the 150k a year making SWA CA would say to me then?
"Look man, I'm bringing in 25k a year. . . perhaps when I'm in your shoes I can wine and dine everynight. Sorry if you're offended, but I gotta live too my friend."
Nevertheless, the brown bag idea is really making my noggin spin with creative ideas how to dress it up.
Ooooh! Oooooh! <waving hand frantically>
Lunchbox! From the movie 'Airplane'! You need a Lunchbox with stills from the movie!!
kellwolf
Piece of Trash
Heh, I had a Delta CA on an overnight the other night sit down with me and go over a bunch of stuff to take advantage of my taxes. He said "Hey, I was where you are right now not so very long ago. I know how it feels to not be able to even afford to super size it."
As far as the SWA guys, I know plenty of them that bring their own lunches, too. Just b/c you make more doesn't mean you have to spend it.
As far as the SWA guys, I know plenty of them that bring their own lunches, too. Just b/c you make more doesn't mean you have to spend it.
surreal1221
Well-Known Member
Touche. . . I only used SWA as an example as they are one of the two LLCs that are doing better financially than any of the legacy carriers.
kellwolf said:I wonder how much more profitable they'd be if the rampers stopped getting snack packs off the Grocery Store.....er, Provisiong Trucks. Not that I've ever done that.....
I thought the packs fell off the truck and busted open. You being the conscientous person you are, threw them away....Right......
. So sorry I won't "fit the look" in the terminal. Maybe if we had pensions still? 
wheelsup
Well-Known Member
kellwolf said:Heh, I had a Delta CA on an overnight the other night sit down with me and go over a bunch of stuff to take advantage of my taxes. He said "Hey, I was where you are right now not so very long ago. I know how it feels to not be able to even afford to super size it."
As far as the SWA guys, I know plenty of them that bring their own lunches, too. Just b/c you make more doesn't mean you have to spend it.
I hope he didn't mention establishing a post office box in FL or other such income tax free state
Would you mind giving a rundown? I'm sure we could all benefit!
kellwolf
Piece of Trash
Heh, if I wanted to do that, I could just use my aunt and uncles' address in TN.
Most of it had to do with paying cash for stuff instead of using credit cards (makes sense since you don't have to pay the stupid interest if you forget to pay it off at the end of the month) and some other minor issues. Basically, there's a tax glitch for pilots, FAs and air traffic controllers where you can deduct meals when you're away from your "tax home." I know of a couple of guys that did this as rampers at SWA, which is a no-no since they're not away from their tax home.
Most of it had to do with paying cash for stuff instead of using credit cards (makes sense since you don't have to pay the stupid interest if you forget to pay it off at the end of the month) and some other minor issues. Basically, there's a tax glitch for pilots, FAs and air traffic controllers where you can deduct meals when you're away from your "tax home." I know of a couple of guys that did this as rampers at SWA, which is a no-no since they're not away from their tax home.
wheelsup
Well-Known Member
kellwolf said:
pretty sure you can't deduct for things that you are reimbursed for, which is what per diem is for. but I could be wrong, wouldn't be the first.
There are cities where the governments 'meal rate' is more than our per diem amount so we can deduct more $$, but it's really not deducting for specific meals. There are some pilot specific tax services that deal with this stuff, even ALPA's web site has the list of city codes and how much they are "worth". One could do it by hand if you wanted to see how much it would save you without paying a tax expert. Not sure how much money it'll actually save us regional pilots though. I think dough mentioned saving quite a bundle in his tax bracket.
SpiraMirabilis
Possible Subversive
A per diem is not a reimbursement for food expenses. A per diem is compensation and has to be taxed as income. You can still write off food purchases even if you use your per diem to pay for them. Check with a CPA if you want to be 100% sure, but I am 95-97% sure.
It might be different if the per diem was limited to how much you spent on food, etc -- then it would be considered reimbursement.
It might be different if the per diem was limited to how much you spent on food, etc -- then it would be considered reimbursement.
wheelsup
Well-Known Member
SpiraMirabilis said:
while not directly reimbursement, that essentially is what it is for. Per diem in our industry is for M&IE - meals and incidental expenses. Per diem is not taxed unless you are doing a day trip and start and end in domicile that day. Then, and only then, it is taxed.
The 70% deduction only applies if you are paid below* the federally limited per diem rate for your locality. You can deduct 70% of the difference of the amount you were paid vs. what the city is "worth".
IE - You are paid $1.50/hr per diem and spend 24 hours (so $36 in per diem) in XX city worth $43. You can deduct $4.90 ($43-$36 = $7 x 70% = $4.90) without substantiating it.
*unless you are paid above it, and can substantiate your expenses with receits
Just deducting your meals, while receiving per diem, is 100% illegal. You can never deduct for expenses if you are reimbursed for them.
Please, seek the advice of a tax attorney in this case if you aren't 100% what you are doing. It could be worth it in the long run.
A good article with examples by ALPA
killbilly
Vocals, Lyrics, Triangle, Washboard, Kittens
wheelsup said:
The way other business expenses work (don't know if it's different for pilots) is that the un-reimbursed business expenses may be deducted (when filing a 1040 and the supplemental forms) if they exceed 2% of your Adjusted Gross Income. If they don't, they're usually ignored. This is something that most tax-prep software will run you through to check.
Per Diem may fall under a different set of income rules than regular business expenses, though - really don't know about that. Didn't someone here post as a financial planner specializing in helping pilots? Love for him to chime in here.
Point being as a pilot, especially a low-end FO making $20K per year - assuming that your your AGI is only...say...$18K - well, 2% of that is only $360. Not much. You can blow that out on a decent headset, so you could, theoretically, deduct darn near anything else related outside of the rules on Per Diem.
Theoretically. Good thing my stepfather's a CPA.
wheelsup
Well-Known Member
You are correct, as long as the company DOES NOT GIVE YOU A REIMBURSEMENT for your pilot 'stuff', you can deduct it. Things like flashlight batteries, dry cleaning, uniform items, logbooks, luggage bag, flight bag, passport fees, etc. can all be taken off the top (using the 2% rule as you described). Also keep in mind that if one is single, they must be able to itemize >$5,000 or just take the standard deduction. Generally, the standard deduction is higher than itemizing at our income level (unless you pay a mortage on a house, then it might be better to itemize).killbilly said:The way other business expenses work (don't know if it's different for pilots) is that the un-reimbursed business expenses may be deducted (when filing a 1040 and the supplemental forms) if they exceed 2% of your Adjusted Gross Income. If they don't, they're usually ignored. This is something that most tax-prep software will run you through to check.
Per Diem may fall under a different set of income rules than regular business expenses, though - really don't know about that. Didn't someone here post as a financial planner specializing in helping pilots? Love for him to chime in here.
Point being as a pilot, especially a low-end FO making $20K per year - assuming that your your AGI is only...say...$18K - well, 2% of that is only $360. Not much. You can blow that out on a decent headset, so you could, theoretically, deduct darn near anything else related outside of the rules on Per Diem.
Theoretically. Good thing my stepfather's a CPA.
Also, keep in mind, a headset is not the same as per diem - per diem is simply for meals and incidental expenses such as van tips.
The point I was trying to get across in my post, is this. If I went out and bought a flight bag for $250, and itemized the deduction that would be fine. If the company then reimbursed me for the expense later that year and I deducted it on my tax form that is not allowed. In essence, this is "double dipping".
The company can deduct the expense, but I cannot. In reality, it is no longer an "expense" to me because I was paid back for it.
killbilly
Vocals, Lyrics, Triangle, Washboard, Kittens
Absolutely true. The only thing I'm going to miss about my house is the massive deduction I get to take for taxes and interest.wheelsup said:
True. This is why I'm pretty sure that Per Diem is straight taxable income. What I'm curious about (and your pay stub will show it) is if they are taxing it like they tax your regular pay, or if they are NOT taxing it and requiring you to handle taxation on the per diem dollars on your own. If they're taxing it, then there's no real question. If they aren't, then you have some latitude with how it gets handled with the IRS. I recall you saying once that you're dumping that Per Diem into a 401K...is that pre or post-tax? Because it could have a major impact when you reach 59.5 years old and retire with disbursements.wheelsup said:Also, keep in mind, a headset is not the same as per diem - per diem is simply for meals and incidental expenses such as van tips.
The point I was trying to get across in my post, is this. If I went out and bought a flight bag for $250, and itemized the deduction that would be fine. If the company then reimbursed me for the expense later that year and I deducted it on my tax form that is not allowed. In essence, this is "double dipping".
True. I know that some companies will reimburse the following tax year, which just upsets everyone's apple cart. I wonder if there are any CPAs out there who specialize in taxes for pilots?wheelsup said:
wheelsup
Well-Known Member
Per diem is only taxed as "income" if you do a 'day' trip where you leave your domicile and come back the same day without overnighting. Go and read the article link that I posted earlier today and that explains a lot.killbilly said:
If you do the normal 2, 3, 4 day trips all the per diem you earn (amounts to about $120/4 day trip for me) is untaxed, and will forever be untaxed. It's the companies way of simplfying the reimbursement process. You will NEVER have to pay taxes on the amount you earn, unless it is MORE than the federal government's allowance for that city (similar to the $5000 standard deduction they allow singles every year), and in which case the company figures that out and put the 'overage' in the 'taxable' column.
When I said I put the money in my ROTH IRA (different than the 401k, which is pre tax money, the 401k money is essentially taken from my regular wages and IRA is after tax money done on my own accord) my final paycheck is a total amount, let's say $1400 after tax for two weeks (yes I'm embarassed too). By not spending my per diem on food on overnights, I have extra money at the end of the month to put into my ROTH IRA. It's all coming from the same "kitty", the paycheck, but that's just the way I look at it. They used to issue seperate per diem checks but now just include it in our mid-month paycheck.
To expand on this, my pay consists of my hours worked x hourly rate, minus deductions/taxes, plus per diem. So I might have $1000 in after tax income, add to that $400 in per diem, and you get a $1,400 pay check. Make sense?