IRS TRAINING Deductions

[bob]

I need to get a new CPA :/

New tax question:

Im an AB with a 100 ton. I want to take PMI's OICNW Mate course.
Is that $17,000 deductable?

My CPA says, no because it is a "new line of work" and therefor not deductable. I say its a normal career advanment and required by CFRs.

Any thoughts?

Cordially,
Bob

[Jeffrox]

I cordially agree with you Bob. To be sure, All the IRS Pubs are on line, just read all about it when questions arise. No offense but I think it's kind of amusing that an AB/100tonner has a CPA.

[seadog!]

sailortax.com
This guy is great!!

Not only is the tuition deductible, but travel to and from school, meals at, and traveling to, school, books, paper and pencils are all write offs.

I went to EMD school several years ago. I rented a car and drove the 1,000 miles. Stayed 2 weeks. Every single penny I spent was deductible.
Save receipts and keep good records.

[bob]

Originally Posted by Jeffrox

I cordially agree with you Bob. To be sure, All the IRS Pubs are on line, just read all about it when questions arise. No offense but I think it's kind of amusing that an AB/100tonner has a CPA.

Shhhhhhh....... dont blow my cover Im having too much fun bra

[Cap Robert Gray]

You Need a new CPA. It sounds like that person needs to work for H&R Block.

[Cal]

Originally Posted by bob

Im an AB with a 100 ton. I want to take PMI's OICNW Mate course.
Is that $17,000 deductable?

My CPA says, no because it is a "new line of work" and therefor not deductable. I say its a normal career advanment and required by CFRs.

What is your current job description? Do you work as an AB or do you work as a 100 Ton Master/Mate?

If your current job is as an AB, then your accountant is correct. PMI's Mate course would qualify you for a "New Trade or Business". If you already work as a Master/Mate, then PMI's training course would improve your existing skills without qualifying you for a new profession.

Make sure you have a stiff drink (or 2) available and read the pertinent parts of IRS Pub 970. You might be able to back end this with the career advancement angle. While it's a logical progression, advancing from AB to Mate is not required by the CFR's. Where you may have a reasonable argument, time is required on deck as an OS or AB before you can work as a Mate, even if you come out of an academy with a license.

Opinions and interpretations are all well and good, but it really boils down to how the IRS is going to view it should they decide to audit you and how deep your pockets are for the appeal should you lose. Martin Kapp (sailortax) had a good thing going and I'm sure is still doing quite well, but the IRS clipped his wings and is systematically challenging Mariner returns using precedents that Kapp established. He is no longer allowed to file returns for mariner's claiming meal deductions in the manner he had been.

Another of the precedents he established were the travel expenses from home to the vessel. I have a coworker that is going to tax court over this very issue right now.

Claim whatever you are legally allowed to claim, but be careful getting creative or doing anything "unusual" until the dust settles. They're looking to get every penny they can out of everyone....

[seadog!]

Not an expert but, your trade is "Seaman/Mariner".

ANY course advancing your trade would be deductible.
A captain wanting to take Engineering courses is advancing his knowledge base and becoming a better mariner.
An AB is part of the navigation watch, any course that makes you a better watchstander would be acceptable.

I held a masters ticket while I worked on getting my Engineers license, never had any problems with the IRS.

I still take courses, not required by CFR's, (shipyard competent person, HAZWOPER) and write them off.

As CAL says about Kapp, I got audited 2,3 years ago about the meal deductions and it worked out just fine. They never batted an eye at any school deductions or travel expenses.


He might be real busy this time of year.

Give Martin Kapp a call, he is easy to talk to and will give you the straight scoop. Yes, he wants your business but he will answer general questions on the phone.

[Cal]

Originally Posted by seadog!

As CAL says about Kapp, I got audited 2,3 years ago about the meal deductions and it worked out just fine. They never batted an eye at any school deductions or travel expenses.

Their particular witch hunt at the time were the meal deductions. That was the singular reason the court ordered Kapp to give them your name and information so they could audit you. So those agents had a flood of audits for multiple years for each taxpayer.

So I wouldn't interpret their lack of taking issue with travel or education expenses to mean that those were perfectly ok, could mean that they simply didn't give a rats a$$ at the time. Just because they audited you, don't think they can't come back and audit you again for the same return! Crazy but true.

You say that it worked out just fine, what exactly does that mean? Did you have to pay more or not? They were really looking at the tugboat guys, dickering over the terminology of having meals provided versus having to cook your own meals.

I don't mean to be contrary or discount anything you're saying. My point is rather to be cautious, nobody needs that kind of grief. If your current CPA is unwilling to make a few phone calls then they wouldn't back you in an audit either. I remember my first tax season. There were some issues where I would call the IRS, inquire about a particular issue, they would give me an opinion I didn't want to hear. I would thank them for their time, hang up, and call right back. I would do this for hours some times until I got an agent to tell me what I wanted to hear. Then I would take their name, employee number, time and date. Then I would file the return the way I wanted to in the first place.

I do agree that you need a new CPA and Kapp would be a good choice. I believe his services start at around $400 for the return?

[seadog!]

Cal-
Yes, the emphasis was on meal deductions. But it also had an entire return review. I sent in copies of every receipt for the entire year. (Had to do it all by mail, deducted all postage and copy fees on that current year).

I did have to pay more money, but it was my mistake, not Kapp's.
I wrongly assumed grub money was deducted from our shares (Fishing Vessel) before the settlement. That company did things a little differently.

All my time on tugs, the meal allowance has been straight forward. We're paid about $16 per day for grub and the government knows it costs more than that for each port we visit.

I pay $595 for fed and state returns, lots of complications.
Money well spent to avoid the headaches.

[seadog6608]

I've been using Icon Tax Service. 207 623 4142. They charge half of what Kapp charges and my returns have been excellent with no audits (knock wood).

[TugLife]

Originally Posted by seadog!

sailortax.com
This guy is great!!

Not only is the tuition deductible, but travel to and from school, meals at, and traveling to, school, books, paper and pencils are all write offs.

I went to EMD school several years ago. I rented a car and drove the 1,000 miles. Stayed 2 weeks. Every single penny I spent was deductible.
Save receipts and keep good records.

Dont use him. I used sailortax.com for the first time two years ago. Not only did I pay a butt load of money for him to do my taxes when I don't own any property and am single, Martin A Kapp was audited by the IRS and I got fined. I had to pay around $2500 in back taxes and my new tax guy saved me from around a $4000 dollar fine on top of it. So if you want to end up paying fines or back taxes, definetly use someone else. Anyone is better.

[TugLife]

Well it definetly was not something I did to receive those fines. Apparently everyone that used Martin A Kapp that year all were audited and received the same letter and fines that I did. My new tax guy went back and forth with the IRS and had to prove to them that I had nothing to do with the way Martin A Kapp did my taxes. He also found a bunch of info showing that Martin A Kapp had previously been in court and trouble with the IRS. I would use turbo tax before going back to him. My new tax guy saved my ass because of what he did.

[richard8000milesaway]

at 46 yrs old I have learned not to nickle and dime uncle sam. get a conservative CPA and play by the rules. there is room to wiggle elsewhere in life.

[Mike Bolinger]

Originally Posted by TugLife

Well it definetly was not something I did to receive those fines. Apparently everyone that used Martin A Kapp that year all were audited and received the same letter and fines that I did. My new tax guy went back and forth with the IRS and had to prove to them that I had nothing to do with the way Martin A Kapp did my taxes. He also found a bunch of info showing that Martin A Kapp had previously been in court and trouble with the IRS. I would use turbo tax before going back to him. My new tax guy saved my ass because of what he did.

Ah, yes. I remember when everyone was jumping on the "sailortax" bandwagon. There were questionable practices with him before he got audited in my opinion. I checked into what he was selling and even as a layman I knew he was pulling a scam. Guys that were on live aboards were claiming per diem like they were on lunch bucket boats. Hard to argue to the IRS that you should be allowed per diem when you were getting fed by the cook 100 miles offshore.

I can't afford a CPA. Even if I could I would have to school them on my line of work.

I use H&R Block. They give you a pretty simple sheet of what is deductable.
I have written off training, travel, room, board, clothes, you name it. It all falls under "job seeking expenses" or "work related expenses".

Maybe a CPA schooled in Merchant Seamen could have gotten me a few dollars more but I am pretty happy with my past returns.

H&R Block is not all that bad. The trick for me has been to get someone that works for them year round and not just during the tax season. The "tax professionals" on the supervisory level are the ones that I use. I have used the same lady for the last several years.

It is up to me to know what is and isn't a deduction. Those rules really don't change that much every year. I havn't had an expense in the last several years that I didn't know if it was a deduction or not.
If I am not sure I save my reciepts and ask when it is tax time. They are not gonna steer you wrong or do anything fraudulant on purpose. And if they screw up they will pay the fines and even have a tax lawyer represent you for free during your audit.
I have not been audited yet. I don't have to knock on wood. I have not tried anything sneaky or bought into any "snake oil" tax rules.

I think when the IRS sees that you have used a professional tax service like H&R Block they know that those people are not going to let you commit fraud on their watch. And when they see you have used them for the last 10 years in a row I think it puts the kabosh on any red flags that might otherwise get raised for 20k worth of "job seeking expenses" or "work related expenses".

And in closing I would agree that no matter what you are right now any training you pay for is "job related". Your job title to the IRS is Merchant Seaman. Anything you pay for to stay a merchant seaman or to advance as a merechant seaman is deductable. The IRS doesn't know if the classes were required or optional to advance. They all go under "job seeking expenses" or "work related expenses".
If you don't throw up any red flags you will never have to split hairs on what the fine print says.

Mike