IRS Flight Training and Taxes

Keebler

Keebler

New Member
Is it possible to claim expenses paid towards a commercial certificate for purposes of a new career on your personal income taxes. At what point if any can you calim this time as "vocational training". I'm trying to search the IRS web page right now, but it might be best to visit a tax consultant. Anyone have any experience here?
 
Last year I claimed the money I spent on flight training as educational expenses. My fiance's father who is an accoutant was the one who gave me the idea. It legit...actually got a big chunck of change back to :)
 
Keebler said:
Is it possible to claim expenses paid towards a commercial certificate for purposes of a new career on your personal income taxes. At what point if any can you calim this time as "vocational training". I'm trying to search the IRS web page right now, but it might be best to visit a tax consultant. Anyone have any experience here?
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There has been some discussion (not sure where) about this. I believe it's anything above your commercial license, because everything prior to that isn't really looked at as additional education. For example, getting licenses that let you become more employable are deductible - like the CFI, MEI, etc. But don't take my word for it.

EDIT: here's one CPA's opinion:
You can't write off training as an education expense. As stated, it's considered a leisure activity until you're actually working as a pilot. You can, however, write off costs such as charts, and more advanced instructor ratings once you become a CFI because they are business expenses. I've discussed this with a CPA and this is the conclusion they came to.
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Still nothing official though. Might want to hit up H&R Block or something.
 
wheelsup said:
There has been some discussion (not sure where) about this. I believe it's anything above your commercial license, because everything prior to that isn't really looked at as additional education. For example, getting licenses that let you become more employable are deductible - like the CFI, MEI, etc. But don't take my word for it.

EDIT: here's one CPA's opinion:


Still nothing official though. Might want to hit up H&R Block or something.
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This is interesting. FAR says that you have to have at least Comm rating to get to paid to fly. And since job=getting paid to fly, you could probably make the argument for voc training. Is there anything in the FARs that says you can get a Comm rating without getting the PPL and IR first? Because, if you're training to get the Comm and you have to have the PPL and IR, then at the very least you could get pro-rated tax credit (for the Comm amount) or possibly qualify the entire amount for deduction because Comm is dependent on the other two?

If you're a working professional (non-aviation) and training on the side, this could be a major boon because of the tax advantages - especially if you own a home and are already getting the deductions for state and local property taxes, depending on where you live. The tax breaks (or refunds) could then be ported back into training.

Sidenote: I do know that you can pull cash from an IRA and avoid the 10% early disbursement penalty to pay for education, and that flying would qualify.

My stepfather is a CFO/CPA guy. I'll ask him about this when he comes back from vacation in a couple of weeks.
 
Follow-up...

There is some good stuff on the IRS.Gov website - publication 970 seems to address both educational credits and IRA distributions for education as well. From what I read (about 15-20 pages of an 82-page document) there are both tax credits and deductions you can take, but you can only do one or the other. The deduction seems to be $4,000 per year if your AGI is lower than $65,000 per year. So if you're a CFI and working on advanced ratings, a big chunk of what you spend for those could be offset a little. That $4K deduction could make a real difference when you're making $16-$24K per year, I would think. The real question would be determining EXACTLY what qualifies and where - degreed programs most likely would, academies, maybe not - unless you were getting joint credit somewhere - like maybe ATP's relationship with UVSC or what White Air is thinking about doing with Neosho College.

Anyway. None of this is totally definitive, but maybe it will help someone.
 
I'm currently investigating the "lifetime learing credit" and "Hope Credit" as a viable means for claiming some of my expenses. The max credit is $2000.00. This is great because it's not a deduction, it's a tax credit. If my adjusted gross income nets me 2K in taxes I pay nothing. I'm reading here now http://www.irs.gov/publications/p970/ch02.html. Since I'm enrolled in a 141 VA approved school I don't see how I couldn't make this apply. I'll have to read more.

Are all pilots frugal ass bastards or is it just me???
 
Keebler said:
I'm currently investigating the "lifetime learing credit" and "Hope Credit" as a viable means for claiming some of my expenses. The max credit is $2000.00. This is great because it's not a deduction, it's a tax credit. If my adjusted gross income nets me 2K in taxes I pay nothing. I'm reading here now http://www.irs.gov/publications/p970/ch02.html. Since I'm enrolled in a 141 VA approved school I don't see how I couldn't make this apply. I'll have to read more.

Are all pilots frugal ass bastards or is it just me???
Click to expand...

For these credits it might need to be a title IV approved school, not just 141. (Title IV meaning that you can get federally backed student loans for them)
 
From my prior research a while back... Anything that qualifies you for a new career.........You cannot not deduct as a business related expense..... However, there are certain education deductions on interest that you can deduct if you have taken out a loan....(Must be an FAA approved school Part 141). Once you get your commercial, you can deduct all expenses as long as you are employed as a professional pilot, getting paid by your employer, and are legitimately furthering your career by taking said course.

My accountant told me that unless I was receiving a pay check, I would be hard pressed to win a claim in an audit...(and that is what matters....)...

Also, this cannot be a secondary job..... Primary source of income only, otherwise it is a hobby and there are certain hobby expense limit issues (but I am not an expert on that) Check state and federal statutes with your local accountant....though like the different FSDO's, they will all have a different interpretation of the tax codes.... Good luck...
 
I was told, and have done the following:

Claim training to increase current educated knowledge. You cannot deduct for change in career. This is true for not just aviation. Industrial shows to learn about the new products in Engineering is a deduction. Getting hi performance, complex and IFR are increasing knowledge and deductable. Attending networking meetings in VEGAS :nana2: :nana2: :nana2:

guess what, that is deductable too!!!

Recurrent training and medical is deductable to keep license.
 
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