Write Off Flight School Expenses??

You could go set up and file a DBA (doing business as) at the county clerks office, then open a business checking account, have some business cards made up that say Loadmaster's flight services, and viola, you are in the business. Obtain a ledger book and record all expenses, including your flight training costs. You are only required by the IRS to show that you have a reasonable plan to show a profit in the future, but you may operate at a loss for at least the first few years. You will file a schedule C with your return. Any competent accountant could guide you through the steps, but it's not necessary.
 
So apparently my AOPA account isnt working.... Can you perhaps post what AOPA has to say about this issue. As I've spent nearly 30k last year and am now flying as a career it'd be great to see what they have as far as tips.
 
mcdavi02 said:
You could go set up and file a DBA (doing business as) at the county clerks office, then open a business checking account, have some business cards made up that say Loadmaster's flight services, and viola, you are in the business. Obtain a ledger book and record all expenses, including your flight training costs. You are only required by the IRS to show that you have a reasonable plan to show a profit in the future, but you may operate at a loss for at least the first few years. You will file a schedule C with your return. Any competent accountant could guide you through the steps, but it's not necessary.
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Ummm . . . no.
 
meyers9163 said:
So apparently my AOPA account isnt working.... Can you perhaps post what AOPA has to say about this issue. As I've spent nearly 30k last year and am now flying as a career it'd be great to see what they have as far as tips.
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I would not feel like I was supporting AOPA bv publicly displaying all the info. I'll see what I can do to get it to you in private.
 
Minnesota_Flyer said:
Ummm . . . no.
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Listen to the lawyer, folks.

However - since you've chosen to chime in...

Are you aware of ANY methods that might allow us to deduct some of the flight training expenses?

I know that there are a couple of deductions you can take on the educational side if, and only if, very specific criteria are met.

And Loadmaster - I know that training your employer requires of you that you pay out of pocket is tax-deductible. So if your employer was telling you, in writing, 'Loadmaster, we need you to be a certificated commercial pilot, but you have to pay for it,' then I suppose you might have some wiggle room. Depends on how they feel about something like that. On one hand, they're a logistics company and it would make sense. On the other hand, they're into Christian Values and it's not exactly an...honest...thing they'd be doing.

But listen to the lawyer. And a tax professional.

The IRS is to be feared and respected. Trust me.
 
So really we can conclude that none of your ratings are able to be written off even if you are a professional pilot? I was reading in there and made it clear obviously your Private/commercial/CFI Initial cannot. It is pretty clear about that. However it does mention something about "bettering" and left room for IFR/Multi add on/CFII/MEI as long as they are added to your instructor. I dunno really confusing more so then anything :(. I almost rather not bother and suck it up as a loss.
 
There basically are two possible ways to deduct training costs as an individual:

1) Educational deductions/credits (i.e., Hope credit, lifetime learning, student loan interest deduction etc.). These are generally "above-the-line" deductions, but are subject to a number of conditions, such as limitations on the types of institutions which qualify. I do not know whether flight training expenses at a university or at a Pt. 141 school would qualify. I would guess that training expenses at a Pt. 61 school would not, although I don't know. All you ever hoped to know about tax benefits for education can be found here: http://www.irs.gov/pub/irs-pdf/p970.pdf

2) As an unreimbursed business expense. These are "below-the-line", meaning that you can only take them if you itemize deductions and to the extent that the costs exceed 2% of your income. These deductions are available if you are incurring expenses for eduction which is necessary to maintain or advance your current career. You may not deduct expenses incurred to become qualified for a new career. So, PPL, IR and CPL and initial CFI training would not generally be deductible because it is training to qualify for a new career. Once you are working as a pilot or flight instructor, however, training for additional rating in that career should be deductible. Best example is the cost to a working CFI of getting a CFI-I or MEI add-on should be deductible as an unreimbursed business expense.

(NOTE: If you have some other business in which being able to fly would enhance your efficiency (i.e., traveling saleman, managing a network of C-stores), it is possible that you could justify the PPL and IR as a legitimate business expense. As always, your mileage may vary; consult with your own tax professional for guidance; do not try this at home; do not taunt HappyFunBall.)

MF
 
meyers9163 said:
So really we can conclude that none of your ratings are able to be written off even if you are a professional pilot? I was reading in there and made it clear obviously your Private/commercial/CFI Initial cannot. It is pretty clear about that. However it does mention something about "bettering" and left room for IFR/Multi add on/CFII/MEI as long as they are added to your instructor. I dunno really confusing more so then anything :(. I almost rather not bother and suck it up as a loss.
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I am no professional, but if you are a contractor (self-employed), you can write off training expenses that relate to your business. I was a self employed CFI, and I am going to write off my training expenses towards my CFII and MEI, under the guidelines here:

http://www.irs.gov/publications/p970/ch12.html#d0e12662
http://www.irs.gov/taxtopics/tc513.html

To be deductible, your expenses must be for education that maintains or improves your job performance or serves the purpose of your employer and is required by the employer or by law to keep your salary, status or job.
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If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. This reduces the amount of your income subject to both income tax and self-employment tax.
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Obviously, the CFII and MEI will improve your job performance, and will make you more marketable.
 
Minnesota_Flyer said:
(NOTE: If you have some other business in which being able to fly would enhance your efficiency (i.e., traveling saleman, managing a network of C-stores), it is possible that you could justify the PPL and IR as a legitimate business expense. As always, your mileage may vary; consult with your own tax professional for guidance; do not try this at home; do not taunt HappyFunBall.)

MF
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This is where I need to talk to a tax professional. As I travel a lot, often on very short notice, there would definitely be economic benefits to my employer and for me personally (as they relate to my customers) in having the PPL and IR tickets.

I will look into this. Thank you for pointing me in the right direction.
 
killbilly said:
This is where I need to talk to a tax professional. As I travel a lot, often on very short notice, there would definitely be economic benefits to my employer and for me personally (as they relate to my customers) in having the PPL and IR tickets.

I will look into this. Thank you for pointing me in the right direction.
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What happens if you are flying along from home to a business meeting, alone or with co-workers, and you CRASH AND DIE?? Scary, but what are the liabilities for the company itself? I had to drive to Alice, TX a month ago. Was going to fly and asked if I could still get the mileage reimbursement. Legal decided I could not fly if it was for business purposes.
 
LoadMasterC141 said:
What happens if you are flying along from home to a business meeting, alone or with co-workers, and you CRASH AND DIE?? Scary, but what are the liabilities for the company itself? I had to drive to Alice, TX a month ago. Was going to fly and asked if I could still get the mielage reimbursement. Legal decided I could not fly if it was for business purposes.
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Don't know yet. I need to ask the company about it - because you're right - they very likely won't cover me on an insurance basis if I'm flying myself on business. I suppose there would be a waiver I could sign, and I wouldn't mind because I'd be carrying my own insurance as well as being covered under the club's policy. Different issue from the tax situation, though.

I do know that we have had a number of employee/pilots who have done this, though. We had one software engineer who, after several years (and some very, very smart investing) decided to chuck the whole thing and went to work for Air Whisky...last I heard, he was now an FO at Midwest Express. In his cubicle at our Santa Clara, CA office, they left up all of his sectionals and stuff. This was before I joined the company last May, but his stuff is still there.
 
The Lifetime Learning Credit, secion 3, of the Tax Benefits for Education publication (Thank you Minnesota Flyer) states:

For purposes of the lifetime learning credit, qualified education expenses are tuition and certain related expenses required for enrollment in a course at an eligible educational institution. The course must be either part of a postsecondary degree program or taken by the student to acquire or improve job skills.

If I spend $30,000 for an instrument rating, comm and CFI, I am acquiring job skills. I dont see this as being any different than going to a technical school and becoming an SAE certified auto mechanic, which would qualify you for the Lifetime Learning Credit of up to $2,000. I just dont know where an FBO would fall into all of this.

The publication defines Eligible Educational Institutions as :

...any college, university, vocational school or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. It includes virtually all accredited public, nonprofit, and proprietary postsecondary institutions. The educational institution should be able to tell you if it is an eligible educational institution.

So it sounds to me like you just ask your FBO. It also seems like the ATP's, FSA's and other academies would likely apply under this definition, but again, just call and ask.

So i think in order to write off training as a "business expense", you must be employed as a pilot and be improving your skillset. However, the lifetime learning credit applies to anyone attempting to get into the field. Just my interpretation.
 
Minnesota_Flyer said:
2) As an unreimbursed business expense.
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How about this...

You start ground school for an "unnamed airline that's closing it's doors this coming April." This "unnamed airline" does not provide lodging during ground and you are commuting from across the country - can you write off a few weeks of hotel bills till you are able to get a crash pad/apartment? (along with all of your food bills for the time in training)
 
LoadMasterC141 said:
What happens if you are flying along from home to a business meeting, alone or with co-workers, and you CRASH AND DIE?? Scary, but what are the liabilities for the company itself? I had to drive to Alice, TX a month ago. Was going to fly and asked if I could still get the mileage reimbursement. Legal decided I could not fly if it was for business purposes.
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Most likely there will be some liability for them. My current company (big software, not flying related) will not let me fly myself when on company business much less allow someone else with me.
 
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