IRS: International waters question
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IRS: International waters question
Guys, I've looked through most of the threads on the ridiculous IRS 2555 requirements and still have a couple of questions. The IRS is hounding me about my 2013 tax returns.
1. How do you calculate the time spent over international waters? Do you use an estimate?
2. Do you keep copies of all your flight plans? Unfortunately I didn't keep any flight plans from 2013 and now the !@#$%^&* "auditor" wants them.
3. Per diem: WTF is a per-diem audit report? Since we get a meal allowance in cash, how do you quantify that?
1. How do you calculate the time spent over international waters? Do you use an estimate?
2. Do you keep copies of all your flight plans? Unfortunately I didn't keep any flight plans from 2013 and now the !@#$%^&* "auditor" wants them.
3. Per diem: WTF is a per-diem audit report? Since we get a meal allowance in cash, how do you quantify that?
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Below is the best I could find. You technically would need to find the likeliest route using today's flight plans and estimate what is interntional waters and work from there - yes a nightmare.
Anyway see below, good luck I feel your pain.
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"Foreign Earned Income and International waters
Earned income is wages, salaries, professional fees, and other amounts received as compensation for personal services. To qualify for the foreign earned income exclusion, the income must be earned in a foreign country. The place where the services are performed determines whether the income is foreign, not the location of the employer or place of payment. For example, if you are a U.S. citizen flight crew member, living and working abroad, receiving wages for services performed in China, those wages qualify as foreign earned income even if you are working for a U.S. airline who deposits your paycheck in a U.S. bank account. As mentioned above, the term "foreign country" includes its airspace and territorial waters, but does not include airspace over international waters, the United States, U.S. territories, or Antarctica. As a result, income earned for performing services as a flight crew member may need to be apportioned to the actual time spent performing services in a foreign country in order to properly determine the amount of foreign earned income.
If you are a flight crew member performing services on international flights, your earned income will need to be apportioned between the:
Income earned in a foreign country (or countries), including the country's airspace and territorial waters, and Income earned in other than a foreign country.
Only the portion of income earned for services provided in or over a foreign country is eligible for the foreign earned income exclusion.
Example: A U.S. citizen flight crew member based at an airport in France mostly works roundtrip flights from France to the United States. When working these roundtrip flights, the aircraft flight path generally crosses France, Spain, and Portugal before crossing international waters and entering U.S. airspace. Income earned for providing services in France prior to departure and while flying in French, Spanish and Portuguese airspace is foreign earned income. Income earned for services provided while the aircraft is flying over international waters, in U.S. airspace, and on the ground in the United States is not foreign earned income.
Computing the Amount of Foreign Earned Income
A flight crew member's earned income is based, in large part, on the services performed from the time the aircraft starts moving away from the gate for departure ("block out" time) until the time the aircraft stops at the gate upon arrival ("block "
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Anyway see below, good luck I feel your pain.
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"Foreign Earned Income and International waters
Earned income is wages, salaries, professional fees, and other amounts received as compensation for personal services. To qualify for the foreign earned income exclusion, the income must be earned in a foreign country. The place where the services are performed determines whether the income is foreign, not the location of the employer or place of payment. For example, if you are a U.S. citizen flight crew member, living and working abroad, receiving wages for services performed in China, those wages qualify as foreign earned income even if you are working for a U.S. airline who deposits your paycheck in a U.S. bank account. As mentioned above, the term "foreign country" includes its airspace and territorial waters, but does not include airspace over international waters, the United States, U.S. territories, or Antarctica. As a result, income earned for performing services as a flight crew member may need to be apportioned to the actual time spent performing services in a foreign country in order to properly determine the amount of foreign earned income.
If you are a flight crew member performing services on international flights, your earned income will need to be apportioned between the:
Income earned in a foreign country (or countries), including the country's airspace and territorial waters, and Income earned in other than a foreign country.
Only the portion of income earned for services provided in or over a foreign country is eligible for the foreign earned income exclusion.
Example: A U.S. citizen flight crew member based at an airport in France mostly works roundtrip flights from France to the United States. When working these roundtrip flights, the aircraft flight path generally crosses France, Spain, and Portugal before crossing international waters and entering U.S. airspace. Income earned for providing services in France prior to departure and while flying in French, Spanish and Portuguese airspace is foreign earned income. Income earned for services provided while the aircraft is flying over international waters, in U.S. airspace, and on the ground in the United States is not foreign earned income.
Computing the Amount of Foreign Earned Income
A flight crew member's earned income is based, in large part, on the services performed from the time the aircraft starts moving away from the gate for departure ("block out" time) until the time the aircraft stops at the gate upon arrival ("block "
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Royal. I've spoken to a couple of Americans that have been audited and they contend that only their flight pay is to be taxed while over international water. They say that their basic pay is what they would receive whether they were flying or not (aka office duty or ground duties) and therefore the flight pay is the only part of their income received for flight hours while over international water.
Hope that helps.
Hope that helps.
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Nick Romer
He's represented at least 3 EK pilots on this issue so he is pretty familiar with it.
Oh, and I timed it a few times going off the east coast. About 42 minutes from pushback until 12 miles off the coast. All that taxi time outbound needs to count so the percentage of time over international waters is much lower than the distance on the chart. Same is true for inbound holding at Bubin and Desdi.
Most guys are able to get the percentage of work time over international waters to around 3-7%.
Personally, I actively bid for flights over land and never once flew DXB-Australia non-stops after this became an issue.
Good luck.
TP
He's represented at least 3 EK pilots on this issue so he is pretty familiar with it.
Oh, and I timed it a few times going off the east coast. About 42 minutes from pushback until 12 miles off the coast. All that taxi time outbound needs to count so the percentage of time over international waters is much lower than the distance on the chart. Same is true for inbound holding at Bubin and Desdi.
Most guys are able to get the percentage of work time over international waters to around 3-7%.
Personally, I actively bid for flights over land and never once flew DXB-Australia non-stops after this became an issue.
Good luck.
TP
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Royal. I've spoken to a couple of Americans that have been audited and they contend that only their flight pay is to be taxed while over international water. They say that their basic pay is what they would receive whether they were flying or not (aka office duty or ground duties) and therefore the flight pay is the only part of their income received for flight hours while over international water.
Hope that helps.
Hope that helps.
You need the pay and allowances manual for that. And no you don't have access to it. If you need official data go see HR and ask for a print out.
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Royal
Follow this link http://www.marineregions.org/eezmapper.php for useful maps to determine where International Waters boundaries are.
Then use actual or typical flight plans and the chart for enroute winds that has the entire routing on one page to compare with.
Hope this helps and good luck!
Then use actual or typical flight plans and the chart for enroute winds that has the entire routing on one page to compare with.
Hope this helps and good luck!
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HI , I'm in contract with Nick Romer, he just hike up his rates to 200 usd/hr, sorry to say was not as helpful as I expected. Not much guidance on how to create the tables for int waters /Us airspace, or how to present documents for an audit . Our first contact with the IRS auditor was a detriment to my case, maybe the case was not presented properly maybe I was just unlucky .
Every e-mail , every time he reviews your case because he forgets who you are ,every phone call goes on the 200 usd/h rate.. Now in the process of appealing ,waiting for an answer. He has a history of success with other EK pilots, that is true. In my very personal opinion (take it with a pinch of salt) if you educate yourself and present a proper case is self manageable in most cases.
Every e-mail , every time he reviews your case because he forgets who you are ,every phone call goes on the 200 usd/h rate.. Now in the process of appealing ,waiting for an answer. He has a history of success with other EK pilots, that is true. In my very personal opinion (take it with a pinch of salt) if you educate yourself and present a proper case is self manageable in most cases.
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[QUOTE=icarux;9350157]HI , I'm in contract with Nick Romer, he just hike up his rates to 200 usd/hr, sorry to say was not as helpful as I expected. Not much guidance on how to create the tables for int waters /Us airspace, or how to present documents for an audit . Our first contact with the IRS auditor was a detriment to my case, maybe the case was not presented properly maybe I was just unlucky .
Every e-mail , every time he reviews your case because he forgets who you are ,every phone call goes on the 200 usd/h rate.. Now in the process of appealing ,waiting for an answer. He has a history of success with other EK pilots, that is true. In my very personal opinion (take it with a pinch of salt) if you educate yourself and present a proper case is self manageable in most cases.[/QUOTE
if your full exemptions is based on the number of days away from the states and they don't consider the exemption when over international water then should you logically and simply find out how many days you have spent over international waters in that year, substract it from the 330 and voila???
Every e-mail , every time he reviews your case because he forgets who you are ,every phone call goes on the 200 usd/h rate.. Now in the process of appealing ,waiting for an answer. He has a history of success with other EK pilots, that is true. In my very personal opinion (take it with a pinch of salt) if you educate yourself and present a proper case is self manageable in most cases.[/QUOTE
if your full exemptions is based on the number of days away from the states and they don't consider the exemption when over international water then should you logically and simply find out how many days you have spent over international waters in that year, substract it from the 330 and voila???
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if your full exemptions is based on the number of days away from the states and they don't consider the exemption when over international water then should you logically and simply find out how many days you have spent over international waters in that year, substract it from the 330 and voila???
That's not even close to how it is computed. It's percentage of work time over international waters.
TP
