Since it is “tax season” and the thoughts of many of us turn to filing our income tax returns, it is appropriate to briefly discuss an issue that is raised frequently by individual pilots. That is, may I deduct the cost of my flight training for income tax purposes? As with most tax questions, the answer is “sometimes.”
The tax code indicates that “There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business…” Sounds straight-forward. If my flight training expenses are “ordinary and necessary” and are incurred in “carrying on any trade or business,” I should be able to deduct them.
The tax regulations provide some clarity. They state that expenditures by an individual “for education … are deductible … if the education— (1) Maintains or improves skills required by the individual in his employment or other trade or business, or (2) Meets the express requirements of the individual’s employer, or the requirements of applicable law or regulations, imposed as a condition to the retention by the individual of an established employment relationship, status, or rate of compensation.”
However, the regulations go on to say that, in any event, educational expenses are not deductible if they are—(1) “required … to meet the minimum educational requirements for qualification in [your] employment or other trade or business,” or (2) “for education which is part of a program of study … which will lead to qualifying … in a new trade or business.”
So it probably would come as no surprise to hear that it is nearly impossible to deduct the cost of acquiring a private pilot certificate. Pilots are not singled out here. The IRS makes it clear to attorneys that they may not deduct the cost of acquiring a law degree either.
What about proficiency flying to maintain proficiency required by FAA, flight reviews and IFR currency for example? A person who is able to deduct the cost of his flying while carrying on a trade or business generally should be able to deduct the “ordinary and necessary” cost of proficiency flying as a business expense. If you fly both for business and for pleasure, then your proficiency flying should be able to be deducted in the proportion your business flying represents to the remainder of your total flying, not counting your proficiency flying. For example, let’s say you fly 50 hours on business, 50 hours personal, and 10 hours for proficiency. A 50-percent ((50 hours/100 hours) proration of your 10 hours “proficiency” time could be deducted along with the business flying for a total deduction of 55 hours or 50-percent of your flying expenses.
So if you think you might have some “ordinary and necessary” aviation educational expenses incurred in carrying on a trade or business, discuss it with your tax advisor. The fact that you love to fly doesn’t mean it can’t be tax-deductible.
To learn more about the program or to enroll, visit www.aopa.org/pps.