Updated Tax Court Hearing on Flight Crew Expenses

By Jason Watson (Google+)

The Tax Court has recently ruled on a case that was filed in April of 2010. In that trial, a Flight Attendant for Continental Airlines was deducting several expenses on her tax returns as business or job-related expenses in accordance with common practices. The Tax Court ruled against her on several items. While we believe the outcome might have been different had she retained legal representation (she was pro se), in the meantime we are nonetheless obligated to adjust our policies and procedures for deducting flight crew expenses. We hope other tax accountants preparing flight crew tax returns do the same.

Highlights- Uniform items such as nylons, shoes, scarfs, hats, etc. were denied. Yes, they were only used at work yet since these items are easily convertible to everyday use the Court said No. Cell phone and internet charges were denied since they are considered utilities like electricity (we continue to disagree with this since the internal IRS guidelines are being updated at glacial speeds to recognize the evolving business environment). Van driver tips were also denied since the Court considered them incidentals and included as part of the per diem deduction. Haircuts, make-up and manicures were denied since they are personal in nature.

We were always reluctant to deduct van driver tips and personal hygiene items since the tax code held some ambiguity and allowed latitude in interpretation.

Please visit our Flight Crew homepage for more information. Or read the entire Tax Court ruling– it is a good read.