Tax time is upon us, and AOPA is reminding pilots that investing a few minutes of research might pay some nice dividends from their 2002 aircraft purchase records or their fuel receipts.
"AOPA gladly provides its members with a better understanding of taxation anytime of the year, especially before April 15," and the AOPA Pilot's Guide to Taxes is always available on the Web, said Rodney Martz, AOPA senior aviation technical specialist. But Martz is quick to remind pilots that "formal tax advice must still come from your qualified tax professional."
In addition to the points mentioned in the booklet, such as basic business expenses, training expense deductions, and sales and use taxes, Martz recommends that business aircraft owners (at least 50 percent business flight by hours) investigate the new "bonus" depreciation option for a new aircraft purchase or if a new engine or a new avionics package was installed in 2002.
The depreciation schedule was accelerated an additional 30 percent in the first year for new business aircraft or for major upgrades to a used aircraft by the March 2002 Job Creation and Worker Assistance Bill. This economic stimulus package is retroactive to Sept. 11, 2001, and runs through Sept. 11, 2004, with other in-service timing dates.
Calculations could now be the 30 percent of the purchase price, plus the standard 20 percent on the balance (20 percent depreciation of the 70 percent remaining value is 14 percent), thereby totaling the whopping 44 percent first-year rate advertised by manufacturers. (Note: See your accountant for appropriate in-service timing conventions, type of business-use adjustments, and Internal Revenue Code Section 179 new-business expensing options.) Profitability of the tax entity might determine the value of faster depreciation.
Pilots who bought avgas in Delaware, Maine, Indiana, and New Jersey can request refunds from 10 to 23 cents per gallon, depending upon the state, Martz said. These states have a refund either because of the amount of excise tax charged or the fact that they charged a sales tax in addition to the excise. Delaware, for instance, will refund the entire excise tax of 23 cents per gallon of avgas; pilots must submit a form and applicable fuel sales receipts within a year of the purchase in Delaware to receive the refund. Maine will refund 18 cents per gallon on avgas if the sales tax has already been paid. Indiana refunds 15 cents on avgas to resident users. New Jersey will return 10.5 cents on avgas to any purchaser.
An AOPA member Web page details fuel-tax exemptions in 20 additional states. The page includes tax-information phone numbers for the 24 states that have some type of state aviation fuel-tax exemptions or refunds. All pilots are urged to review the information to determine if they might be eligible for reimbursements.
Pilots should always seek the advice of a tax professional, but for general information and guidance to more resources for pilots, they may contact AOPA several different ways. The AOPA Pilot Information Center is 800/USA-AOPA, and e-mail is [email protected].