Thanks for this advice! For the flight logs, I have a digital system through the club that tracks everything, but should I be keeping separate records specifically for tax purposes? And regarding the marketing agreement - it's fairly basic. Should I look into getting a more detailed contract drafted?

The digital logs from the club are a good start, but I recommend keeping your own backup records specifically focused on the business aspects. For tax purposes, you want to document not just who flew and when, but the specific business purpose of each flight. For instance, if it was a rental, note the customer and purpose. If it was maintenance-related, document what was being tested or verified. Regarding your marketing agreement - yes, absolutely get a more detailed contract. A basic agreement likely won't provide adequate protection in case of an audit. Have an aviation attorney review it to ensure it properly establishes your relationship with the club, ownership rights, maintenance responsibilities, insurance requirements, and how income/expenses are allocated. A proper contract not only protects your business relationship but also helps establish the legitimacy of your business operation to the IRS.

Not OP, but I have a Seminole on leaseback in Florida. Multi-engine aircraft typically follow the same 5-year MACRS depreciation schedule, but your operating costs will be substantially higher than a single engine. The real question is whether you'll generate enough rental income to offset the higher costs of operating a twin. For a Seminole, you're looking at roughly $280-350/hr rental rate depending on your market, but your insurance will be significantly higher than a single engine aircraft. As for state taxes, Florida doesn't have personal property tax on aircraft, but many states do. I know California, Texas, and Georgia all have some form of property tax on aircraft that can run 1-2% of the value annually.

1 That's a really good point I hadn't considered. If I amend 2021 to show the losses, would any unused losses potentially carry forward to the 2022 return? I'm trying to figure out the right sequence here.

3 Yes, exactly. Any disallowed passive losses from 2021 (amounts that exceed what you're allowed to deduct due to the income limitations) would carry forward to 2022. So first figure out your 2021 situation - how much loss you can actually claim after the Form 8582 calculations, then carry any remaining disallowed losses to 2022. Even if you can't deduct all the losses in either year due to the $150K phaseout, having them properly documented and carried forward is important because you can eventually claim them when you dispose of the property. That's why doing them in the right order matters.

10 I used TaxAct for a similar amendment last year. It was decent with Schedule E but the Form 8582 calculations were confusing. Had to basically understand the form myself to make sure it was done right. Not super user-friendly for rental property amendments.

Did OLT handle state returns for nonresidents too? I'm in California and I heard they have a special nonresident state form that's super complicated.

Yes, OLT does handle state returns for nonresidents including California's form 540NR which is indeed quite complicated. They have specific sections for California's unique rules regarding nonresident income allocation and deductions. The state portion did require a bit more manual input compared to the federal section, especially for segregating California-source income from non-California income. But they provide decent guidance along the way with popup explanations for the trickier parts of nonresident state filing.

I went with a specialized international tax CPA last year and it was expensive ($450) but worth it for my complicated situation. He found deductions I never would have known about and properly applied tax treaty benefits. If you have multiple income sources like you described, it might be worth the investment.

I actually asked about that last year, but my company said they can't do it because of how they control my schedule and work processes. Something about the IRS having specific tests for who qualifies as an independent contractor vs. employee. They also mentioned it would mean losing my benefits like health insurance and 401k matching.

That makes sense. The classification rules are pretty strict and the IRS looks at factors like behavioral control, financial control, and relationship factors. If the company controls when and how you work, provides tools/equipment, offers benefits, etc., they're probably correct that you should be classified as an employee. Be careful pushing for 1099 status just for tax deductions - if misclassified, it could create bigger headaches down the road for both you and the employer. The accountable plan route others suggested is probably your best option at this point.

This is what I did too. My company was resistant to dealing with expense reports, so they just increased my commission structure. Just make sure you do the math first - calculate what your annual mileage reimbursement would actually be (miles × IRS rate) and make sure the commission increase at least covers that amount.

I hadn't considered quarterly payments. Do you just divide your estimated annual interest tax by 4 and pay that amount each quarter? Are there specific deadlines I would need to remember? I'm worried I might forget and then end up with penalties anyway.

Yes, you can divide your estimated annual interest tax by 4 for equal payments. The deadlines are April 15, June 15, September 15, and January 15 of the following year. I just set calendar reminders. You don't necessarily have to make equal payments though - you can adjust each quarterly payment based on how much interest you've actually earned that quarter. This is especially helpful if your interest income is unpredictable. The IRS Form 1040-ES has worksheets to help you calculate this. The key is making sure you've paid enough throughout the year to avoid the underpayment penalty.

Not everyone can just move their money into tax-advantaged accounts though. What if you need access to your savings before retirement? Roth has penalties for early withdrawal and I-bonds have to be held for at least a year. Some of us need more liquidity than that provides.