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Taxable Income

What is taxable income?

Taxable income is the amount of income a taxpayer uses to calculate tax liability.  Another way of phrasing it would be to say that taxable income is the portion of a taxpayer's income that is subject to taxation.  Not all of a pilot or flight attendant's gross income is taxed.  Various above-the-line deductions and below-the-line deductions affect gross income, thus making taxable income lower.  In the case of pilots and flight attendants, employee business expenses for airline crewmembers are helpful in lowering taxable income and tax liability.

How does taxable income affect a pilot or flight attendant's tax liablity?

Taxable income is the income amount used in determining tax liability via tax rate tables for a given tax bracket.  If taxable income is too low compared to gross income (meaning the taxpayer had many write-offs and itemized deductions), it is possible that the taxpayer could be subject to the AMT (Alternative Minimum Tax), which affects higher income individuals with many deductions.

Unless the AMT applies, taxable income is related to adjusted gross income as follows:

Adjusted Gross Income - Below-the-Line Deductions = Taxable Income

Is per diem part of a pilot or flight attendant's taxable income?

Airline flight crew members like pilots and flight attendants are often paid a per diem while at work.  It is important to know whether the per diem paid was taxable per diem or non-taxable per diem.  Essentially, taxable per diem, which is what should be paid while on day-trips or by employers with non-accountable plans will be included in Box 1 of a W-2 with salary.  Non-taxable per diem is different.  Non-taxable per diem is a reimbursement, and it is typically put on a W-2, Box 12, with Code L.  Non-taxable per diem is not taxable income while taxable per diem is.


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