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Downloads
2009 TAX ORGANIZER - Download the 2009 Tax Organizer in PDF format or in Microsoft Excel format, fill it out and mail/fax it back to TWTS.
RENTAL ORGANIZER - Download the Rental Organizer in PDF format or in Microsoft Excel format, fill it out and mail/fax it back to TWTS.
SELF EMPLOYED BUSINESS ORGANIZER - Download the Self Employed Business Organizer in PDF format or in Microsoft Excel format, fill it out and mail/fax it back to TWTS.
Merchant Marine Job Expenses
Merchant Marine Job Expenses in PDF format
Costly surprise amendments, hassle of audits, not to mention potential shortfalls
as a result of invalid deductions, panic and concern over frivolous tax return notices...
all of which will have you question, 'are job expense deductions valid'?
Unfortunately many mariners either encountered the above scenario or heard horror
stories from other shipmates who have. Recognize that by taking advantage of the
legitimate deductions, within IRS guidelines, you may be able to reduce your tax
liability by thousands. The following information will point out the common mariner
deductions and include links to IRS internal manuals, IRS Revenue Procedures, tax
court cases, IRS Publications, and tax code that substantiates the validity of each
line item.
The IRS was put into place to ensure you are compliant to our very complex tax code,
however, most revenue agents are not familiar with your unique industry. Many are not
aware that in order for you to get your next assignment it requires you to be physically
present at the hall; many still mistake you for part of the US Armed Forces. We are
hoping the below links and information will help you in determining whether you should
include your legitimate deductions on your return. Realize if you are overly concerned
about our national debt, the U.S. Treasury Department accepts gifts, payable to the Bureau
of the Public Debt. Just mail them to the attention of Department G, Post Office Box 2188,
Parkersburg, West Virginia, 26106-2188. Make a note in the memo section that it is a gift
to reduce the debt held by the public. Yes, really. It's all on the Treasury's website,
at the end of the list of frequently asked questions.
http://www.treasurydirect.gov/govt/resources/faq/faq_publicdebt.htm
Last year many concerned citizens donated over $3 million! Unfortunately your
contribution is not tax deductible.
The following is directly from IRS Publication 529, the only modification was
eliminating line items that are not pertinent to you as a merchant mariner.
Click HERE for the actual complete version.
Unreimbursed Employee Expenses
You can deduct only unreimbursed employee expenses that are:
- Paid or incurred during the tax year
- For carrying on your trade or business of being an employee, and
- Ordinary and necessary.
An expense is ordinary if it is common and accepted in your trade, business,
or profession. An expense is necessary if it is appropriate and helpful
to your business. An expense does not have to be required to be considered necessary.
You may be able to deduct the following items as unreimbursed employee expenses.
- Depreciation on a computer or cell phone your employer requires you to use in your work
- Job search expenses in your present occupation
- Licenses and regulatory fees
- Passport for a business trip
- Subscriptions to professional journals and trade magazines related to your work
- Travel, transportation, meals, entertainment, gifts, and local lodging related to your work
- Union Dues and expenses
- Work clothes and uniforms if required and not suitable for everyday use
- Work-related education
Substantiation Required for Incidental Expenses
Our January 2010 newsletter is directly from an Internal Revenue Service Manual
addressing Maritime Claims. Please note: TP stands for taxpayer.
4.19.16.1.5.1.1 (11-02-2007)
Issue 1: Per Diem Incidental Expenses
- Merchant mariners who file claims for incidental expenses while temporarily
traveling away from home, (meals and lodging furnished by their employers) will be
allowed at the daily amount equal to the "Incidental Expense" portion of the federal
Meal and Incidental Expense per diem rates in the Federal Travel Regulations.
- Rates for localities in the Continental United States (CONUS) are $3 per day.
Rates for localities outside the Continental United States (OCONUS) and non-foreign
localities are published in the Per Diem Supplement to the Standardized Regulations,
which can be found at www.policyworks.gov/perdiem. These areas include Alaska, Hawaii,
Puerto Rico, and other possessions of the United States
Note:
We will only address the "foreign" rate if TP initiates and has a copy of the ship's log
or a contemporaneous record of the ship's movement.
The claims may cite the following:
- Revenue Procedures: 2000-39 for 10/1/2000 - 9/30/2000, 2001-47 for 10/1/2001 -
9/30/2002, 2002-63 for travel after 10/1/2002) or
- Court Cases: Johnson v. Commissioner or Westling v. Commissioner
Based on the above, stemming directly from Internal Revenue Service Manual, it is apparent
that the IRS will allow incidental deductions as long as a vessel schedule is included along
with the valid Revenue Procedure and Court Cases.
Incidental deductions alone can reduce your tax liability by hundreds. At TWTS, maintaining
and developing our extensive database is Denise's main responsibility. Make sure your tax
preparer expels the expense required to maintain a database, otherwise you will be forced to
exclude these lucrative deductions from your tax return.
Substantiation Regarding Job Search Expenses
4.19.16.1.5.1.2 (11-02-2007)
Issue 2: Travel Expenses to Union Halls
- In order to be deductible, travel expenses to a union hall must be both away from home
and pursuant to the taxpayer's trade or business. (Travel to the local union hall is not deductible).
- In working claims where the TP claims meals and lodging expenses for travel to a
union hall, a number of issues must be addressed. 1) Were the expenses incurred while the
TP was searching for new employment in the same trade or business? 2) The reasonableness
of the need to obtain rest or sleep while traveling to the union hall. 3) The taxpayer's
"home" or regular place of business. 4) Were the trips to the union hall business or personal?
- 3. These claims are of fact-intensive character and will need to be worked following
sequential tests as outlined in the See LEM 4.19.
Many auditors not familiar with the maritime industry are not aware that a First Mate job may
not be available on the west coast, however, by flying to the east coast you can sail as a
First Mate instead of taking a Third's position. As mentioned above, as long as you are
deducting only job search expenses that are away from home, they are deductible. We need to
point out that meal expenses incurred for local union hall visits are not deductible.
Per U.S. v. Correll: to claim meal expenses, a taxpayer must be away from home. That means
it is reasonable for the taxpayer to stop for needed sleep or rest. A trip where the
taxpayer leaves and returns the same day is not travel and only the transportation costs
would be deductible.
In order to include the deductions on your return, you want to include various tax court
decisions. It is imperative for all employee business expense deductions that you keep a
log on a timely basis.
Travel Expenses to Meet the Ship
Many mariners are surprised to find out that their reimbursements for travel expenses to
meet the ship are included in their taxable wages. Did you know if you are in the 25%
tax bracket and are reimbursed $2,200 in travel expenses, you would pay an additional
$550 in taxes if you did not include these expenses on your Schedule A? Make sure you
keep your wage pay-off sheets for substantiation. If you are not reimbursed for the
expenses to meet the ship and include your out-of-pocket expenses, attach IRS Rev Rul
99-7 and various tax court decisions.
Baggage Expense
If you encounter baggage expense that is not reimbursed by your employer you may deduct
that. Again, if it is reimbursed as a taxable line item we can deduct that as well.
Union Dues
We have letters from the various unions highlighting how your union dues are calculated.
We still strongly suggest that you keep your Union Dues receipts. Recognize contributions
to the Political Action Fund are not deductible on your return as either charitable
deductions or union dues.
Uniform Expenses
You may have noticed we removed this line item from our organizer. Recognize that in order
to be deductible, uniforms must be a condition of your employment and not suitable for
everyday use. If a painter is required by his union to wear a white cap, white shirt, and
white bib overalls they are not considered distinctive in nature and therefore are not
deductible. Even full-time active duty armed force members can not deduct the cost of
their uniforms.
Protective Clothing
You can deduct the cost of protective clothing required in your work, such as safety shoes
or boots, safety glasses, hard hats, and work gloves.
Tools Used in Your Work
We recognize that for many of you, the expense for tools has gone up considerably with the
new airline regulations. If you are carrying on your bag, you are no longer allowed to have
anything that might resemble a weapon, essentially no tools are permitted. If you replenish
your tools upon arriving to your port you can deduct the amount you spend, this is in place
now because even if they are expected to last over a year we can take Section 179 into account
and write-off the full amount for tax year 2009.
Business Liability Insurance
You can deduct the insurance premiums you pay for protection against personal liability for
wrongful acts on the job.
Licenses and Regulatory Fees
You can deduct the amount you pay each year for licenses and fees.
DISCLAIMER:
Your preparer is not obligated to audit every return item. There has to be a level of trust
between the tax preparer and the taxpayer. The tax preparer must be provided accurate
information and have assurance that the tax payer can back it up. You are ultimately
responsible for the return. In the case of an audit, you (the tax payer) must have proof
of expenses and substantiation as may be required by the IRS.
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