Taxes

[spotty4]

Wooohoooo! TaxAct! That's the application I've used for the past 4 years to file my returns. Good to know others (especially experts ) like it! Btw, thanks for the email, Kathy!

[Eastbayk]

I used TaxAct two years ago and there was an error in the software when it came to calculating money paid to childcare providers but other than that it worked great.

LAST year we had an accountant do our taxes because they were so complicated- lived in two states, sold a house, student loans, moving expenses, flight instructing, child support, kid, getting married... it was a mess. And well worth letting someone else figure it all out.

THIS year, we'll probably be having someone else do them again b/c of all the per diem and other deductible expenses due to the pilot job. I changed my withholding on the advice of last years tax professional and ended up with a grand total of $17.XX withheld for federal taxes this year. Which I expect to get back. I know there is a (free) per diem calculator link on the XJET crackpipe that is rumored to be worth the time.

Kim

[katbuad]

The irs "sponsors" a free per diem calculator too, if you want to do the specific cities. . .
GSA - Domestic Per Diem Rates

Or you can just use the standard $52 per day (inside US) and make things a bit easier on everyone and could work out better if you are regional and spend more time in small cities rather than large cities. Publication 463 (2007), Travel, Entertainment, Gift, and Car Expenses (The information on Special Rate for Transportation Workers is about half way down the page, so keep scrolling.)

[katbuad]

Originally Posted by Eastbayk

I used TaxAct two years ago and there was an error in the software when it came to calculating money paid to childcare providers but other than that it worked great.

I didn't know that. I know the first year that the Hope and Lifetime Learning Credit was advailable, Turbo Tax did not calculate the credit properly. Makes for a good point though, if you are doing your taxes yourself, Turbo Tax or other program, it is the responsiblity of the filer to make sure everything is correct.

[christykay]

OMG! I am so confused.

We were told by DH's cousin (who is an undercover IRS agent, BTW) that we couldn't deduct travel charges because his company is paying him per diem. Am I missing something?

We have used the same accountant for 9 years now (and are paying him a fortune), but we have never deducted additional travel charges. Our accountant has never requested travel amounts and we never thought to ask considering the family IRS agent has told us otherwise.

Our taxes are ALWAYS confusing- having made 5 moves in 5 different states in the last 6 years I am sure our accountant is about to ring our neck. This year for instance we sold our rental home in AZ, sold our primary home in NC and moved to SC. So we have lived and paid taxes in 2 states this year. (sounds like a typical tax year for us!)

If someone could inform me a little more on what is allowed I would be very grateful. I don't think this is something that we would look into for this year, but definitey would be considering for the next tax year with receipts and all. Thank you in advance as I am very confused.

[katbuad]

Whoa, deep breath. Slowly inhale. Slowly exhale. Taxes are like hair color, different for everyone based on ten million other factors that could be different for everyone.

If you have had an accountant for 9 years go with them, not some thread you are reading on the internet by people you may have never met. Your personal accountant will know what is best for your situation. Maybe a better use of interent information is that it gives you questions to ask your accountant.

Each airline is differernt. There is different type of per diems. There is different amounts paid per diem. Even if you have per diems that you can deduct, you may chose not to use them based on what is going on with other areas on your tax return. General information is being discussed. What works for one, doesn't work for everyone.

And per diems are a very small peice of the whole puzzle. Per diems are subject to number of qualified days (not day trips), how much a company pays, how the company classifies the per diems, how much the employee spends. On top of all that, per diems deductions are allowable only on itemized returns (not standard deductions), are meal based and subject to a % multiplier (I believe it is 70% this year, NOT SURE), AND have to exceed 2% of adjusted gross income to even be usable.

IMO, when it comes to taxes accountants are a bit like drs. Folks go in a bit unprepared. Are intimadated to ask questions. Take the "pro's" word as gospel.

Prepare yourself. Make a list of questions. Take the time to ask, get answers, and understand the answers. And if you don't like what you hear or think you have a more unique condition, get a second opinion.

[katbuad]

I wanted to add some words of caution on seeking help with your federal income taxes. Almost everyone here is filing with a pilot, that in it's self can make things difficult. But in addition to that folks have rental property, are buying and selling houses, have childern with investments, going to school, ect. All of these add to the difficulity of accomplishing accurate and complete federal income tax returns.

If you have graduated from the 1040Ez, you need to seek professional assistance. If for no other reason than to create a good working pattern. Go to an accountant this year, nothing major changes in your life, next year use the return as a pattern to do your own taxes.

There are all different types of help. Personally I would not go to the "chain" tax assistance stores. When I was in college I worked tax seasons at one of these and the things that I saw happening there would curl your hair. No joke the person that set beside me durning training was a taxi driver as her day job. If you have an "easy" return these may be fine, but if you have an "easy" return I suggest educating yourself and doing it yourself.

If you have more complex return, seek out a CPA to assist you. Not just an accountant, but a CPA. CPA stand for Certified Public Accountant. They have worked hard to earn the designation, they pay lots of money to maintain the designation, and are required every year to take classes to keep their knowledge current. The CPA designation is certified by the state that this person meets the standard knowledge requirments. If they don't have their liscense hanging on the wall, ask to see it. Notice the experiation date. Notice what state granted the designation.

Not all CPA's are alike. We have areas of strengths and weakness. Taxes, banking, corporations, governments are some of the advailable fields. But even within the fields there are areas of specific knowledge. Corp taxes, S Corp taxes, partnership taxes, non profit taxes, individual taxes would all fall under Taxes, as an example. But even individual tax accountants have their own personal knowledge. Some who do individual taxes may have never done a pilot's tax return. It all depends on the client based. So ask. . . Have you ever done a airline pilot's tax return? A no doesn't mean they can't do it. It just may mean that YOU have to educate them a bit on the lifestyle and finances specific to this industry. Talk about the per diems, hubby's overnight trips, uniforms & luggage, union dues, licesnes, medical exams, airport parking, and ect. They will probably take notes and have to do some research. Research is good, it means you are getting the published, educated, correct answer, not just what someone pulled out of thin air to make a buck.

Professionals should inspire confidence and trust. They should be able to educate you. They should be able to tell you what is within the law and what is not (beware of an accountant that lets you dictate how the return will go, with no real input). Professionals can cost a bit of money too, but a good professional is more than worth it.

Good luck.

[katbuad]

Originally Posted by christykay

We were told by DH's cousin (who is an undercover IRS agent, BTW) that we couldn't deduct travel charges because his company is paying him per diem. Am I missing something?

Christykay, not to beat up on you here. . . as this this statement is typed it is not a correct statement. A true statement would be "we couldn't deduct travel charges because his company is reimbursing him." Reimbursing means hubby is turning in receipts to his company and they are paying him back dollar for dollar. Reimbursements net no income and no expense and have no tax effect.

Per diems, on the other hand, are flat amounts that are given for expected business expense. If my hubby gets $40 a day per diem but takes leftovers, he has income of $40. Or if hubby eats fancy restaurants that cost $60, he has additional business expense of $20. Income and expenses are what taxes are all about.

There are different type of per diems, taxable and non taxable, and excessive per diems. Per diems can be giving to cover lodging, meals, or other. Heck per diems are different for transporation workers than any other type of employee per diem. Because there is so many variations of per diems, you can't apply a general statement of "we couldn't deduct travel charges because his company is paying him per diem." I would suggest you dig deeper on this issue.

[lucky81698]

Originally Posted by christykay

OMG! I am so confused.

We were told by DH's cousin (who is an undercover IRS agent, BTW) that we couldn't deduct travel charges because his company is paying him per diem. Am I missing something?

We have used the same accountant for 9 years now (and are paying him a fortune), but we have never deducted additional travel charges. Our accountant has never requested travel amounts and we never thought to ask considering the family IRS agent has told us otherwise.

Our taxes are ALWAYS confusing- having made 5 moves in 5 different states in the last 6 years I am sure our accountant is about to ring our neck. This year for instance we sold our rental home in AZ, sold our primary home in NC and moved to SC. So we have lived and paid taxes in 2 states this year. (sounds like a typical tax year for us!)

If someone could inform me a little more on what is allowed I would be very grateful. I don't think this is something that we would look into for this year, but definitey would be considering for the next tax year with receipts and all. Thank you in advance as I am very confused.

Christy,

If you look on the W2 form in Box 12d if there is the the letter L and an amount, that is the amount your husband was paid per diem. If you use a service such as EZperdiem they will figure out the actual amount the IRS allows for each city your husband overnighted in. There are certain rules they use such as the 75% rule on the first and last day. That's way too complicated for me to waste my time doing, so I had a guy that does CAL/XJT crewmembers just by signing into the scheduling website. He charged $45. Also you can find tax organizers on websites such as Accounting, income taxes, state tax forms, tax deductions, irs refunds, CPA specialist in accounting, income taxes, state tax forms, tax deductions, irs refunds, CPA, PILOT-TAX! Tax Preparation and income taxes, state tax forms, tax deductions, irs r . They list most of the normal things you can use as a professional deduction. You can try turbotax for free and fill in all the information. It will specfically ask you if you work in the transportation industry because you are allowed more money if you do. You fill all that out on form 2106. It is really pretty easy. You can try filling out the organizer and having someone do the per diem for you, odds are you will get a significant deduction then you can give that info to your accountant. Oh and you don't need receipts for meals and stuff like that, only if you are claiming over $75 on each thing. I did some stuff a couple of years ago for a tax guy at XJT and learned alot from him. If you have any other questions, feel free to pm me.

Jan

[katbuad]

Originally Posted by lucky81698

If you look on the W2 form in Box 12d if there is the the letter L and an amount, that is the amount your husband was paid per diem.

True, but not complete. Box 12d code is L is Substantiated employee business expense reimbursements (nontaxable). These are per diems that exceed the M&IE rates.

Per diems can also be included in wages (taxable), especially those earned on day trips (no overnights).