What is IRS Tax Form 2106 | EZPERDIEM.COM

Probably the most important tax form for airline pilots and flight attendants is IRS form 2106. IRS form 2106 is the form that reports a pilot or flight attendant's aviation-related, tax deductible business expenses. In other words, IRS form 2106 is the form that will help pilots and flight attendants greatly reduce their tax liability or increase their tax refunds.

You’ve probably heard of it in conversations with other airline pilots or flight attendants. Perhaps your tax preparer mentioned it. But, what is IRS form 2106?

Form 2106 is titled “Employee Business Expenses,” and is made up of two parts. The first part is the Employee Business Expenses and Reimbursements, and the second part is vehicle expenses. Let’s discuss Part 1 first.

Part 1 of IRS form 2106 is composed of three steps with two columns labeled column A and column B. Column A is titled “Other than Meals and Entertainment,” and column B is titled “Meals and Entertainment.” The first step has you enter amounts you spent during the year for such items as vehicle expenses (discussed later in Part 2), parking fees, tolls, transportation, travel expenses while away from home overnight, business expenses not included in the previous items, and meals and entertainment. Included in these expenses are all the aviation-related tax deductible expenses that are listed in the EZPERDIEM.COM Expense Processor^TM.

At the bottom of step 1 you add up the total of all the expenses in both column A and B. Step 2 is where you enter reimbursements that you received from your employer for the expenses that you listed in step 1. An airline pilot's or flight attendant's per diem reimbursement is typically found on W-2, box 12 under code “L.”

Step 3 has you subtract your employer reimbursements from your expenses. For column A expenses, that figure is final. For column B expenses, you must multiply the meals and entertainment by 75% for the year 2007. However, this percentage is scheduled to increase to 80% for the year 2008 and beyond. Once both columns are figured, you add them together for one final number. This is your aviation employee business expenses deduction. The form directs to you enter this final number on Schedule A of form 1040.

Now what about Part 2 of the form 2106? This is the vehicle expenses part. This section generally does not apply to pilots and flight attendants because crewmembers usually don’t have vehicle expenses that they can legally deduct. Remember, commuting to work is not deductible, and most of pilots and flight attendants have a one way commute.

There are a few rare instances that vehicle expenses could apply; such situations as a temporary duty assignment, travel for union business, travel away from your home base (tax home) for training, etc. Part 2 is broken down into 4 sections labeled A, B, C, and D. Section A is general information about the vehicle. Section B is used to compute vehicle expenses using the standard mileage rate method. The rate changes every year, and sometimes changes within the year. Section C is used to compute vehicle expenses using the actual expense method. This method requires you to list out your actual expenses, such as gas, oil, repairs, etc. You can only fill out Section B or C, but not both. Section D deals with the depreciation of vehicles. This section is completed in conjunction with Section C. Once Part 2 is completed, the final number from line 22 or line 29 is entered on line 1 of step 1 of Part 1. So all of Part 2 of the 2106 only applies to one section of Part 1. As stated before, vehicle expenses are usually not deductible for airline crews.