4/18/14 - Pass Travel Update
3/21/14 - Pass Travel Update
2/24/14 - Retirees please check with your CPA, the IRS, or your tax advisor concerning 1099s you may have received from CONU for pass travel.
We thank Kirk Moore from RAFA for researching this problem and sharing the information with RUPA!
RAFA Travel Benefits Committee 2/22/2014: Travel Benefits Home
Box 7 vs Box 3: Tax filing information for retirees who received a 1099-MISC from United for pass travel. If you did not receive a 1099-MISC from United, you may ignore this article.
Using Box 7 instead of Box 3 will cost retirees more in taxes.
Like last year, United has placed retirees’ imputed income from pass travel in Box 7 “non-employee compensation” on 1099-MISC forms. Box 7 is normally used for vendors/contractors who accrue income by performing a service for United and it usually triggers the need to fill out a Schedule C and pay self-employment and Social Security taxes in addition to regular federal/state taxes. Retirees are…..retired, we do not “perform a service” for United and should not have to pay those additional SE or SS taxes or even fill out a Schedule C, right?
Unfortunately, United Airlines will not change how it files nor will it amend the 1099-MISC forms. I emailed Chris Kenny, United’s VP & Controller. He replied, “Our reading of the IRS rules requires this be reported in Box 7. The pass travel benefit retirees receive is in exchange for the service they provided when they were active employees and is not tied to the current year”. On the other hand, Mr. Kenny also stated: “I checked with our internal tax department and they indicated that there is no clear IRS official ruling on this matter.”
So, I called the IRS Help Line (800-829-1040, opt 1, 2, 2, 4, 1), asked for a “1099-MISC specialist” and waited approximately 60 minutes on hold. The agent could not find any ruling in the tax code about Box 7 or Box 3 for retirees. The agent agreed that retirees do not “perform services” for United so they should not have to fill out a Schedule C. The agent then suggested retirees declare pass travel imputed income as if it was listed in Box 3: Put it on line #21 of form 1040 and write “retired employee benefit”on the dotted line. The IRS Help Line agent said that “could possibly” trigger an audit, but, in that unlikely event, retirees should explain they did not “provide a service” to United during the tax period, therefore the income should be in Box 3, not Box 7.
I have spoken to several retirees and they tell me:
1) When income is reported in Box 7, some tax software programs will ask the user questions, then move it to Box 3 and place the income on line 21 of form 1040.
2) CPAs agree retirees’ pass travel imputed income should be in Box 3.
3) Conservative CPAs may advise clients to leave it in Box 7 and pay the extra tax to avoid the possibility of an audit. Other CPAs advise Box 3 with a note saying United is using the wrong box.
Bottom line: Retirees should consult with their CPA or the IRS to determine the best method of declaring pass travel imputed income on their IRS tax returns.
More info: read the Imputed Taxes section: http://www.rafa-cwa.org/RAFA/TB_Cost_of_Travel.html
Pass Travel Report info: read #4: http://www.rafa-cwa.org/RAFA/TB_Update_January11.htm
Compiled by Kirk Moore, RAFA Travel Benefits Committee
1/16/14 - Pass Travel Benefits Survey 2014!
Please participate in this new online pass travel survey!
All United employees and retirees have an opportunity to provide input about the pass travel program through a new online survey. The survey asks you to rate elements of the program and your responses will be used to determine whether any changes are warranted.
The survey is confidential and should take about 15 minutes to complete. A third-party vendor will administer the survey and keep all responses anonymous.
To complete the survey, go to Flying Together > Travel
the home page of employeeRES. (The survey option is located in the middle of the page just below the “welcome and name” section.)
The survey is open through Feb. 6 at 11:59 p.m. CT.
Here is the link: http://www9.hayinsightsurvey.com/run/united_airlines2014/intro
Helpful hints concerning the survey questions:
1. Don't use "U" before your file number.
2. There are 34 questions, but pay attention to number 21 and 22.
3. Be cautious with questions concerning added service charges for cabin class preferences - regardless of years of service! (For retirees with 25 years of service currently there is no charge.)
4. Carefully consider question 30. In order to save $60M for costs regarding employee/retiree travel, rank listed items 1 through 6 in order of preference.
5. Questions 32 and 33 concern rewarding active employees for reaching predetermined goals.
6. Comment box – please write your thoughts about the loss of your benefits for all your years of service.
Use this opportunity to voice your opinions! Spread the word!