The Difference Between Standard and Itemized Tax Deductions

As a pilot or flight attendant, you may have heard others talk about using a standard deduction or using itemized deductions, and wondered what they meant. Well, the answer is relatively simple.

The standard deduction is a predetermined amount the IRS sets each year. The figure is calculated to give you a certain set amount based on what the IRS determines to be reasonable for the current year. The deduction encompasses many cost of living expenses and other expenses that are common or reasonable to everyone. There are three general categories for the standard deduction:

1. Single or married filing separately
2. Married filing jointly or qualifying widow
3. Head of household.
   

Depending on which category you file in will determine the amount of your standard deduction.

The itemized deduction is the deduction that usually applies to pilots and flight attendants. By itemizing, you or your tax preparer lists out your expenses that you accrued for the year individually. You can deduct your job expenses, home mortgage interest, medical and dental expenses, gifts to charities, and so on. By itemizing, you can usually exceed the standard deduction by a large amount. Because of this, it is usually more beneficial for pilots and flight attendants to itemize their deductions.

What can airline pilots deduct from their income taxes?

There are a slew of tax deductions available to airline pilots. Some of these are simple to identify, while others are somewhat obscure. To determine whether an expense can be properly written off, you should see if the expense can pass four important tests.

1. The "Ordinary Test": An expense passes the "ordinary test" if it common and accepted in your trade or business.
2. The "Necessary Test": An expense passes the "necessary test" if it is helpful and appropriate for your business. Expenses do not have to be required to be considered necessary
3. The "Personal Test": An expense passes the "personal test" it it is a business expense rather than a personal one. Some items fall into a gray area. Socks and haircuts for example. They are personal expenses and not deductible even though they are ordinary and necessary. The reason they are not deductible is that the fail the "personal test." The key question to ask yourself if an expense is personal or not is, "Would the expense be incurred if you did NOT have the job." Because you would still likely wear socks and get a haircut, they are considered personal.
4. The "other test": This is a bit of a cop out, but it is important to mention. The IRS specifically lists certain expenses as nondeductible, even if they pass the three tests above. For example, a wristwatch. Many airline pilots have attempted to deduct their wristwatch with valid reasoning why it passes all three of the tests above. So, the IRS specifically mentions that wristwatches are NOT deductible.

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