Commuting Pilots - State Income Tax

[Hand_Grenade_Pilot]

I was recently told that pilots residing out of state are exempt from Louisiana income tax. Is this true? If so, what is the justification / legal source? Any one ever had to deal with a state audit regarding this?

 

It has been my understanding that pilots whom reside out of state from where they are based are still obligated to pay state income tax in the state they are based, if >50% of their income is obtained in that state.

 

For example, a pilot lives in CO but is primarily based in LA. During the year they are also based in TX for two months. At the the end of the year, the pilot is obligated to file tax returns (and pay state income tax) with CO and LA, but not TX. If the pilot resides in a state such as WY (no state income tax), then they are only obligated to file with LA.

 

I would certainly love to pay less in taxes, but don't want to find out 8 years down the road that I owe a huge sum in back taxes, interest and penalties. Any insight into the matter is greatly appreciated.

 

[kona4breakfast]

https://www.irs.gov/pub/irs-pdf/p463.pdf

 

Tax home, page 3. Regular place of duty. I don't think you need to pay CO income tax since you don't earn your money in CO.

 

For state income taxes, this might help: https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2013/12/12/road-warrior-state-income-tax-laws-vary-widely

[helonorth]

There is a form you can fill out that states you do not anticipate having to pay any Louisiana state tax and they will then will not withhold it. You fill out the form and give it to your HR/payroll department. It has held up that since you earned your money outside of Louisiana coastal waters, you do not have to pay LA state income tax. I did it for several years.

 

If you live in another state, you may have to pay their state income tax, though. It's a grey area. I moved to Florida (no income tax) and have not paid any state income tax, even when working in states that have it. The last company I worked for (that was out of state) said they would not withhold as I my residence was Florida. I didn't argue.

 

As far as your home state coming after you to collect, Minnesota said I owed back taxes from LA. I was, at the time, paying to LA and applied this to the tax Minnesota said I owed. It was a fraction of what they originally wanted, but there were no penalties or interest and they never bothered me again.

 

On a side note, on the federal, I used to deduct all my travel, mileage, tolls parking, gas and also took the federal per diem when I went out of state. It was a huge deduction. The new tax bill eliminated it. I ended up with a sizable tax increase last year.

 

Call 5 people and you will get 5 different answers on all this, though. The federal deductions are gone, though, at least through 2025 or so.

Edited April 9, 2019 by helonorth

[WolftalonID]

Yep coastal waters exemption from LA tax. Paid ID state income only to be safe.

[supergokougt]

I live in NY but work in both NJ and NY and end up have to pay both state taxes. I would hire a accountant this year and set the basis for the years going forward. The professional might even find some items others would have missed offsetting his cost. I am sure CO wants state taxes since you use their stuff. But every state is different.

[Fred0311]

I never had a problem not paying taxes in Louisiana. Company was based in Texas and I lived in Florida. The one that got me was working for a company with an office in Virginia. I lived in Florida and flew in every state except Virginia. I only spent about a week there for training and I still had to pay income tax in Virginia.

Edited April 10, 2019 by Fred0311

[Hand_Grenade_Pilot]

Thanks for the feedback. In talking with other colleagues they also all agreed that operating offshore exempts you from LA state tax. Hopefully can get the money back by filing amendments for the past few years.