A Free Site Brought To You By

Tax Home

Why is a tax home important for an airline pilot or flight attendant per diem calculation?

Understanding the concept of a tax home is very important when determining an aircrew taxpayer's per diem deduction. A tax home is not necessarily where the taxpayer lives. The reason it is important in the per diem calculation (i.e. meal expense calculation) is because a taxpayer is only entitled to deduct meal expenses and incidental expenses when traveling away from their tax home.

How does the IRS define a tax home?

The IRS defines a taxpayer's tax home as follows: Quoted from IRS Publication 463: "Generally, your tax home is your regular place of business.....regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located." For most flight crewmembers this will be your domicile.

If my domicile changes or if I commute, what happens to my tax home?

If your domicile changes during the tax year, then generally your tax home changes with it. For commuters, the tax home is often questioned, but with very few exceptions, the commuter's tax home will still be their domicile.

Example 1

An airline pilot with a job change who commutes and goes through a training cycle in the tax year with training in base.

John is an airline pilot for American Eagle during the first part of the tax year. He gets a job with Southwest Airlines in the middle of the tax year. John lives in Phoenix, Arizona while working at both American Eagle and Southwest. The following are the details of John's job situation:

At American Eagle, John is based in DFW from beginning of year to March 14th.
Southwest Training in DAL from March 14th to April 23rd.
He is based in DAL for the remainder of the year.
In this example, John's tax homes would be:

DFW from Jan. 1 to Mar. 14
DAL from Mar. 14 to Dec. 31 (i.e. remainder of year)

In EZPerDiem John would enter DFW first, then
DAL on Mar. 14, then
Remained in DAL for rest of year

Notes and common questions:

Because John is based in DAL and also trains in DAL with Southwest, he will not get to deduct meal expenses during training with Southwest. If John were based somewhere other than DAL, the situation would be different.

The fact that John lives in Phoenix has no meaning because a person's tax home is the place where they conduct work, which may not necessarily be where they live.


Example 2

An airline pilot with a job change who commutes and goes through
a training cycle in the tax year with training out of base.

Sarah is an airline pilot for Mesa during the first part of the tax year. She gets a job with Continental Airlines in the middle of the tax year. Sarah lives in Phoenix, Arizona while working at both Mesa and Continental. The following are the details of Sarah's job situation:

At Mesa, Sarah is based in PHX from the beginning of the year to April 24th.
She is in Continental training in IAH from April 24th to May 29th.
Sarah is based in EWR with Continental.
In this example, Sarah's tax homes would be:

PHX from Jan. 1 to Apr. 24
EWR from Apr. 24 to Dec. 31 (i.e. remainder of year)

In EZPerDiem Sarah would enter DFW first, then
EWR on Apr. 24, then
Remained in EWR for rest of year

Notes and common questions:

Because Sarah did her training in IAH while domiciled in EWR, she would get to write off her meals while in training. On the days she went back home to Phoenix, she should remember that her tax home is EWR. That means she should enter EWR (not PHX) on the days she returned home.

The fact that Sarah lives in Phoenix is immaterial. Her tax home is the place she regularly works. So for all practical purposes, she should think of EWR as her home from April 24th on.

 

Example 3

Flight attendant with an occupation change that goes through
a training cycle in the tax year with training out of base.

Mike gets a job as a flight attendant for ExpressJet Airlines. Prior to ExpressJet, Mike worked as a tax preparer for a small company. Mike's flight attendant training was in Houston (IAH), but he was based in Cleveland (CLE). The following are the details of Mike's job situation:

Mike was hired at ExpressJet on June 12th.
He began training on June 24th in IAH.
He was CLE based for the entire year.
In this example, Mike's tax home would be:

CLE from Jun. 24 to Dec. 31

In EZPerDiem Mike would enter CLE first, then
answer that he remained in CLE for rest of year.

Notes and common questions:

Because Mike did his training in IAH while domiciled in CLE, he would get to write off his meals while in training. If he were based in IAH this would NOT be true.

 

Userful Links

User Agreement | Per Diem Deduction | Full Service Crew Taxes | Pilot Jobs
Copyright 2010 Aviation Tax Glossary. All Rights Reserved.
Sign In