US Tax question

[mngmt mole]

Apparently, CX has determined that the pilots and flight attendants will now have to calculate and pay (and submit a US tax return) if they fly into the USA. Today I did a bit of unofficial research. I contacted friends in the following airlines: BA / LH / AF / EK / VS / QF. They all (every one) stated that they had no such requirement from their companies. Had not even heard of it. Even though this no longer affects me, I suggest that the AOA immediately confront the company and ask why only CX crew seem to have this burden? I suspect that once again a rogue and incompetent employee has incorrectly interpreted something, and now thousands of employees will pay the price (remember the onshoring debacle!). Frustrations seemingly never end at CX . Glad i'm now gone. Good luck. (oh, btw, BA just voted the worlds best airline. Anyone believe that CX will ever again have that honour?).

[oriental flyer]

If you don’t live in the USA and do not hold a USA passport or green card you are not required to file USA tax returns or pay tax . Aircrew and boat crew are exempt .
i may be wrong , but that is my understanding

[Apple Tree Yard]

Not according to the geniuses at CX admin.

[Spooky 2]

I am not a tax expert, nor an accountant but I would be very very careful before you do anything like this. The IRS is like cancer and will hound you for years with requests for documentation etc. I have never heard of anything to support this requirement. Tread lightly with these folks.

[Slasher1]

Although it sometimes does investigations outside of this, most of the information the IRS garners is from information ‘voluntarily’ reported (but required by law). For some reason CX has chosen to do this for non-US nationals not residing in the US — regardless of whether or not they actually incur a real tax liability in the US. So no matter what you are on their radar where you otherwise might not have been.

Many people don’t file at all. Now the bad news is that if you have tax liability the IRS eventually catches up with you and can tack on a whole bunch of penalties and interest (there is a whole industry of lawyers in the US to help people get out of this hole — usually caused by not filing and the overwhelming majority of money owed being penalties and interest which the lawyers mitigate for a quick payment deal). They also can just freeze and take assets in the US — bank accounts, property, etc.

So I guess the real impact comes from one’s exposure to assets held in the US or under US control. If it’s none, this is more of an annoyance. If it’s a lot I’d suggest they get competent tax advice pronto. US tax law is one of the most complex and conflicting things on the planet and even tax experts often disagree. Quantum physics is easy and more straightforward by comparison.

As usual, CX has decided simply to ‘1099’ people and dump it on to the individual to sort out.

[Asturias56]

If you don’t live in the USA and do not hold a USA passport or green card you are not required to file USA tax returns or pay tax . Aircrew and boat crew are exempt .
i may be wrong , but that is my understanding

sorry - you are responsible for paying US income tax on any earnings you have there - but quite how CX admin see that applying to crew coming and going is beyond me - unless you are based there

As a Non-resident Alien without a US work visa I don't think you qualify - it's only if you have a work visa you have to pay - like being a tourist

You should ask for a full explanation - and remember you are the one who has to submit a return not CX - so if you don't they'll never know

https://www.irs.gov/publications/p519 is your first stop
https://www.irs.gov/publications/p519#en_US_2018_publink1000222135
Here's something about State taxes in Mass.

https://www.mass.gov/directive/directive-08-2-taxation-of-non-resident-flight-crew-members

A. Taxation of non-resident flight crew members who are subject to federal rules limiting state taxation of air carrier employees.

For purposes of this Directive, "flight crew member" is a generic term that applies to all individuals who are engaged in providing services on aircraft during flight, such as pilots and flight attendants. Federal rules limit a state's ability to tax a subset of this group, namely "air carrier" employees. The term "air carrier" refers to those operators who because of their commercial flight activities or the size of their aircraft are required to obtain an air carrier certificate as set forth in 49 USC §§ 41101 - 41112. See 49 U.S.C. § 41101(a)(1). The federal statutes allow a state to tax a non-resident air carrier employee only if the employee earns more than 50% of his or her pay in the state. 49 U.S.C. § 40116(f)(2). An employee is deemed to have earned 50% of his or her pay in a state in which the scheduled flight time of the employee in the state is more than 50% of the total scheduled flight time of the employee when employed during the calendar year. [1] If the employee meets this threshold, the amount of his or her income that is taxable in Massachusetts is determined in accordance with Directive 2.

B. Taxation of non-resident flight crew members who are not "air carrier" employees within meaning of the federal rules.

The federal limitation on state taxation does not extend to flight crew members of aircraft operators that do not have air carrier certificates. Such non-resident flight crew members are subject to the general rules of Massachusetts taxation for non-residents at G.L. c. 62, § 5A, and if subject to tax should allocate and apportion their income according to the provisions of Directive 2.

[172510]

Why would seamen be exempt and airmen be taxed?

Crew Members of Foreign Vessels Compensation for personal services paid to nonresident alien individuals who are temporarily present in the United States as regular crew members of a foreign vessel engaged in transportation between the United States and a foreign country, or a possession of the United States, shall not be subject to U.S. taxation.

https://www.irs.gov/individuals/international-taxpayers/nonresident-aliens-exclusions-from-income

[Natca]

sorry - you are responsible for paying US income tax on any earnings you have there - but quite how CX admin see that applying to crew coming and going is beyond me - unless you are based there

As a Non-resident Alien without a US work visa I don't think you qualify - it's only if you have a work visa you have to pay - like being a tourist

You should ask for a full explanation - and remember you are the one who has to submit a return not CX - so if you don't they'll never know

https://www.irs.gov/publications/p519 is your first stop
https://www.irs.gov/publications/p519#en_US_2018_publink1000222135
Here's something about State taxes in Mass.

https://www.mass.gov/directive/directive-08-2-taxation-of-non-resident-flight-crew-members

A. Taxation of non-resident flight crew members who are subject to federal rules limiting state taxation of air carrier employees.

For purposes of this Directive, "flight crew member" is a generic term that applies to all individuals who are engaged in providing services on aircraft during flight, such as pilots and flight attendants. Federal rules limit a state's ability to tax a subset of this group, namely "air carrier" employees. The term "air carrier" refers to those operators who because of their commercial flight activities or the size of their aircraft are required to obtain an air carrier certificate as set forth in 49 USC §§ 41101 - 41112. See 49 U.S.C. § 41101(a)(1). The federal statutes allow a state to tax a non-resident air carrier employee only if the employee earns more than 50% of his or her pay in the state. 49 U.S.C. § 40116(f)(2). An employee is deemed to have earned 50% of his or her pay in a state in which the scheduled flight time of the employee in the state is more than 50% of the total scheduled flight time of the employee when employed during the calendar year. [1] If the employee meets this threshold, the amount of his or her income that is taxable in Massachusetts is determined in accordance with Directive 2.

B. Taxation of non-resident flight crew members who are not "air carrier" employees within meaning of the federal rules.

The federal limitation on state taxation does not extend to flight crew members of aircraft operators that do not have air carrier certificates. Such non-resident flight crew members are subject to the general rules of Massachusetts taxation for non-residents at G.L. c. 62, § 5A, and if subject to tax should allocate and apportion their income according to the provisions of Directive 2.



However according to this the company does however have a FAR 129 foreign air carrier certificate. Also, the article refers to state tax vrs federal which are two separate issues.

The IRS exclusion is,

”Crew Members of Foreign VesselsCompensation for personal services paid to nonresident alien individuals who are temporarily present in the United States as regular crew members of a foreign vessel engaged in transportation between the United States and a foreign country, or a possession of the United States, shall not be subject to U.S. taxation.
“

As we are not flying any 5th freedom routes right now that should not apply. You might be able to make a argument about freighter flying but most of that is 3rd or 4th freedom flying as far as I know.

[oriental flyer]

There is of course one very simple solution write a legal letter to the company explaining that as you have no wish to become involved with IRS filing of tax returns . Thus if the company insists on this course of action you will no longer accept any flights to the USA . If everyone does this that will be the end of the matter .
As non resident foreign crew members paying taxation in HK we are not subject to usa taxation . This whole thing is bs and whoever decided this should be fired . Being CX they will be promoted .
Lufthansa , BA , Emirates , Qantas to the best of my knowledge do not file individually with the IRS so why are we any different

[ACMS]

Correct me if I’m wrong but if you take a look at your contract it says:

An Officer will serve the Company by operating any aircraft as listed in the

Company's Air Operator's Certificate in any part of the world ............etc etc..

So, good luck avoiding US flights.....

[mothy1583]

Part of the problem is that CX now has us doing standby in some US ports. That means we are working in the country, not just recovering from the previous sector whilst waiting to operate our next sector out. Other operators don't do that.
CX should deal with any tax issue raised as a result of "working" at their behest while down route or get rid of the mid-pattern reserve. Hope the UK Tax man doesn't take a look at the Gatwick patterns.

[1_of_600]

Some things never change.....

Was several years ago when CX suddenly decided that they had been somewhat lax in dealing with the requirements surrounding US tax reporting.

Me: US citizen, not flight crew, HK PR, former CX ground staff.

Suddenly advised that CX would be providing a W-2 to report income and would have to withhold tax appropriately. It was pointed out to them, with references to a slew of US IRS documents, that the withholding choice is NOT up to the company, it is up to the individual, who bears all legal responsibility for the content of the tax return and any liability therefrom.

Could not help noticing that all this was coincident with the kerfuffle surrounding the NYC cabin crew base, for which the company was in some trouble. Also coincident with all US citizen CX employees in HKG being thrown out of the CX "retirement plan" which was determined (as part of the investigation of the crew base) to be non-compliant with US law.

So the W-2 was provided from that point forward. Every year involved several letters back and forth discussing and correcting the errors and omissions in that document. Curiously, it also showed that we were employed by Cathay Pacific with an address in Vancouver, regardless of what the employment contract says. Go figure....

Looks like the same geniuses are still slaving away in their cubicles at Kitty Citty, and still pumping out the wrong information.

[Asturias56]

This sort of thing often happens when a local (in this case a US citizen) gets shafted by the company - they then rat to the tax or immigration authorities who send a letter to the Company asking for facts - panic sets in and no-one does any research or thinking - it's a lot easier just to dump the issue on the poor bloody infantry and let them sort it out.

[1_of_600]

This sort of thing often happens when a local (in this case a US citizen) gets shafted by the company - they then rat to the tax or immigration authorities who send a letter to the Company asking for facts - panic sets in and no-one does any research or thinking - it's a lot easier just to dump the issue on the poor bloody infantry and let them sort it out.


Yeah that's kinda what I thought too.
But there wasn't any "shafting", TBH... Just lots of stupid mistakes and lots of time spent correcting them. No need to do any "ratting" at all, just make the fixes and back them with documentation of the stupid mistakes and the comms surrounding.

"Never attribute malice to that which can be explained by ignorance, incompetence and stupidity".

[Pearly White]

Are you being paid in the US, or into a US based bank account?

If not, I wouldn't worry.

[Natca]

Are you being paid in the US, or into a US based bank account?

If not, I wouldn't worry.


Well not quite true. Tax evasion is a federal offense.

[Asturias56]

well they have to know about it from someone to start with... TBH this sounds like HR panicking

And if they insist you can take your time - always write to the IRS (that way you have a record) - they'll write back asking for your (US) Social Security number and you write back saying you don't have one and then they write back..... eventually one of you dies

[havick]

Part of the problem is that CX now has us doing standby in some US ports. That means we are working in the country, not just recovering from the previous sector whilst waiting to operate our next sector out. Other operators don't do that.
CX should deal with any tax issue raised as a result of "working" at their behest while down route or get rid of the mid-pattern reserve. Hope the UK Tax man doesn't take a look at the Gatwick patterns.

Virgin Australia has some crew sitting reserve in LAX.

[swh]

As a Non-resident Alien without a US work visa I don't think you qualify - it's only if you have a work visa you have to pay - like being a tourist

Unless your Canadian, US Citizen, or green card holder you will have a crew visa which permits you to work in the US. Illegal not to have it.

[1_of_600]

Are you being paid in the US, or into a US based bank account?

If not, I wouldn't worry.

No, and no (in my case at least).

But US or US-based doesn't matter. If you're a US citizen then any bank account (or income) anywhere in the world is subject to the long arm of the US IRS. It's called FATCA, went into effect on 1st June 2010, (which coincidentally was the effective date of J. Slosar's citizenship being revised from American to Chinese) under which the requirements for reporting are heavy and the penalties for non-reporting are heavier.

It has become so bad that some banks will refuse to open accounts for US citizens simply because the overhead laid on the bank for reporting/record-keeping is large.

I learned a lot during the whole episode and in the time since which convinced me that CX HR / mgmt had little credibility when discussing the topic. Judging from the current thread it looks like they have not gotten any better. At the time I became convinced that CX did it as part of a deal struck with the IRS to get them out of the mess they made concerning the US crew bases. Sounds like they've repeated the same approach now.

[krismiler]

I would also pay attention to how much time you spend in the USA each year in total, one or two US flights a month together with an annual holiday could blip the radar for you having a significant presence there. Remember the US government is trillions of dollars in debt and will latch onto anything they think will get them some revenue. The IRS will send out tax returns on a "spray and pray" basis hoping some people will complete them and pay up. Even if you're not liable, the accountants and lawyers fees to prove this will likely exceed the tax due if you were liable.

[LGB]

Crew members. Compensation for services performed by a nonresident alien in connection with the individual's temporary presence in the United States as a regular crew member of a foreign vessel (for example, a boat or ship) engaged in transportation between the United States and a foreign country or U.S. possession is not U.S. source income and is exempt from U.S. tax. This exemption does not apply to compensation for services performed on foreign aircraft.


From http://myattorneyusa.com/storage/upload/files/matters/irs-tax-guide-for-aliens.pdf

Does any other non-US airline impose the same requirement, for their crews to file US taxes?

[krismiler]

2. You perform these services while you are a nonresident alien temporarily present in the United States for a period or periods of not more than a total of 90 days during the tax year.

So two US flights per month and a long holiday there could have you over 90 days so the exemption wouldn't apply, and it looks like it doesn't apply anyway to aircrew.

A day means a calendar day during any part of which you are physically present in the United States.

So arriving at 23:50 on Monday night and leaving at 00:10 on Wednesday morning is 3 days.

[Asturias56]

Yes and yes

The rules are really set to give clarity for people who are"tax resident" out of the US (or the UK or Australia) but who still like to visit home as much as they can - so there's a limit. And it has to be simple and clear to avoid endless argument about the definition of a "day"

The people this affects are normally well aware of the restrictions and carefully document their travels for this very reason - plus you avoid being dependent on a specific flight at 23:00 on day 90 in case of weather or cancellation issues.

[mr did]

You don't have to be a rocket scientist to imagine the fireworks when the press get hold of this.

If ever there was a time for a CX manager to step up and say "this was a mistake, please disregard". Now would be that time...

[Apple Tree Yard]

Well, in the last 25+ years of "mistakes", I have yet to see CX management "step up and admit" it was a mistake (in spite of all evidence to the contrary that is usually woefully apparent). Good luck with that. Some failed bank clerk now working for the CX taxation department has put his/her stamp on this misinterpretation and loss of face will prevent any reversal (well, until the inevitable resulting chaos becomes too much).

[BlunderBus]

C1/D visa crews are EXEMPT end of story.
I think they have much more to worry about regarding crews in the USA.
If the claim is now ON SHORE taxation then perhaps they’d like to reinstate social security and Medicare for all the cabin crew they shafted?!!

[BlunderBus]

C1/D visa crews are EXEMPT end of story.
I think they have much more to worry about regarding crews in the USA.
If the claim is now ON SHORE taxation then perhaps they’d like to reinstate social security and Medicare for all the cabin crew they shafted?!!
I’ll step up and now say that previous quote is incorrect.
the statute was revised 2018 and while seamen are not taxed non resident aircrew are.
but I think the intent is for once us resident alien crew who go overseas and become non resident aliens must still file.