Pass Travel Costs on United                Updated  4/23/2018


1) Retirees must pre-pay any service charges, departure taxes, and customs fees when listing.                                 Visit employeeRES>Quick Links>Pass Calculator to see a cost breakdown of each segment.

        NOTE: Departure taxes leaving Belize, Colombia, Honduras & Panama may have to be paid to a United rep at the airport
  

2) Retirees will pay Imputed taxes, if applicable, annually to the IRS via their Federal Tax Return.

NOTE: Pass Travel Tax collection method has changed in 2018, see below.


Info and examples of service charges and imputed taxes on FlyingTogether: 

FT > Travel > Programs and policies > Types of travel > (look in fly out menu "In this section") > "Preparing for travel" > "Service charges, taxes"



1) Service Charges

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Costs when using a VACATION PASS:

ALL retirees and their eligible pass riders fly "service charge waived" in all cabins system-wide. That means FREE!  However, any applicable departure taxes, customs fees, etc. must be pre-paid.


Costs when using a PERSONAL PASS:

Retirees with 25+ years of service fly "service charge waived" in all cabins system-wide!  Ditto for their eligible pass riders (whether accompanied or not); sweet deal.  But, on international flights there are departure taxes, customs fees, etc. everyone must pay. 

Retirees with less than 25 years of service fly "service charge waived" system-wide in Economy; however, they pay service charges for premium cabins (BC & FC) system-wide; (plus any departure taxes, fees, etc).   Ditto for their eligible pass riders (whether accompanied or not). Applicable service charges are 10% of ZED fare on domestic flights, 50% of ZED fare on international flights.


Retirees must Pre-pay with credit card (employees pay via payroll deduction):

employeeRES requires retirees listing for flights pre-pay with a credit card, unless the trip is completely free. It will show the amount owed and you should WRITE IT DOWN!  When you pay with your credit card the cost changes to "0" and your email receipt says “0”.  To see a breakdown of costs, taxes, etc. click on the l ittle blue “i” button, on the top right of the payment page. For security, employeeRES will not remember your credit card number, you must input it every time. 

If listing with the United app, your credit card will be charged before listing is completed.


REFUNDS: 

If your plans change, CANCEL your listing in employeeRES before departure time and your credit card may be refunded automatically.  If you cancel after flight departure you will have to request a refund.  If you list in a premium cabin and it's full, you should be automatically boarded in lower cabins; if you paid for a premium cabin, your cc may not be automatically credited, so keep your boarding pass!

Write down your employeeRES payments & track your credit card charges on United.

More information, go to FT > Travel > Top Hits > Get a refund



2)  Imputed Taxes  (aka "Pass Tax Value")           Updated 4/23/2018


IMPUTED TAX REPORTING AND COLLECTION  changed effective 11/1/2017

See the article on FT > Travel > Types of Travel >  "In this section" > "W-2 Pass Travel Tax Reporting"   https://ft.ual.com/travel/w2passtraveltaxreporting


Background information:  Before the new pass travel policy took effect in March 2012, United retirees may not have paid a lot of imputed taxes because service charges on that travel offset the taxes. Now, many pass riders fly “service charge waived” system-wide, so imputed taxes add up fast.


The U.S. government deems pass travel by certain pass riders as a “taxable benefit"; which triggers "imputed taxes".  They accrue whenever your taxable pass riders use personal passes or vacation passes.  


By law, United must keep track of each employee/retiree's "Pass Tax Value". If your "taxable pass riders" fly using your passes during the year then United will send you an invoice each quarter for withholding taxes you must pay. In January you will receive a W-2 form that reflects the total Pass Tax value and how much you paid in withholding during the last fiscal year. The W-2 will be reported to the IRS; you must declare it on your taxes. 

NOTE: Previously, retirees did not pay withholding taxes quarterly, we were sent a 1099 for the entire year. In January 2018 you may have received your final 1099 form (if your taxable pass riders accrued more than $600 of Pass Tax). Going forward, we will be invoiced quarterly (beginning in March 2018 for Pass Travel from 11/1/2017- 10/31/2018) and we will receive a W-2 form in January 2019. There is no $600 threshold with the new W-2 reporting method.  



What gets taxed?  Pass travel by the retiree's "taxable pass riders": domestic partner, enrolled friends and non-dependent children after age 18 or 23 (if attending school). Employees also pay tax on buddy travel.


What does NOT get taxed? Pass travel by "non-taxable pass riders": the retiree, spouse, parents and dependent children < 26 yrs old.


How is the "pass tax" computed?  It is the ZED medium economy fare on every flight flown during the fiscal year by your taxable pass riders, minus any svc charges** paid.  

NOTE: United's Fiscal Year is November 1st to October 31st.  Departure taxes, customs fees, duties, etc. are not deducted from the pass tax; only service charges** paid can be deducted. 

Example: Currently the ZED medium fare from SFO to KOA is $59 . If your taxable pass rider paid a  service charge to sit in a premium cabin on that flight, then the Pass Tax value would be $59 minus the svc charge. If the svc charge was more than $59, then no imputed taxes would accrue. 


To see the “pass tax value" per segment, go to employeeRES > Quick Links > Pass Calculator and fill in the segments (SFO-KOA=$59).  The “Estimated Tax Withholding” amount displayed (SFO-KOA= $22.80) is a rough estimate of what you would pay for that segment.


ZED fares are based on mileage & can change every year. 

For a current ZED fare chart on FlyingTogether, click HERE.


Who pays the IRS?  YOU do (the retiree)not your pass riders.


For employees: "Estimated withholding taxes" are deducted from their paychecks based on the "pass tax values" that have accrued. When filing their tax returns, employees may not have to pay any additional taxes because they were already withheld during the year; this is reflected on their W- 2 forms.


For retirees: "Estimated withholding taxes" are invoiced quarterly based on the "pass tax values" that have accrued. When filing tax returns, we may not have to pay any additional taxes because they were already withheld during the year; as reported on our W-2 form.


  To make sure the amounts on the quarterly invoices and W-2 are correct, retirees should periodically view their Pass Travel Report  by visiting FT > Travel > Pass Travel > "Pass travel report".  Use the tiny arrows at the top of the report to view multiple pages. Click the small symbol at the top of the page to download a copy of the report in the format you desire (pdf, etc.). You will see where each of your pass riders flew by dates

Adding up all the "Pass Tax Value" amounts on the left side of the Pass Travel Report should equal t he amounts on your invoices and W-2.  If they don't match, read on...


OOPS! Your Pass Travel Report amounts do not match your W--2?


The problem may be dates flown versus dates billed.

The taxable amount on your 2018 W-2 form is calculated from trips FLOWN between the dates of Nov 1, 2017 and October 31, 2018.  Trips on the Pass Travel Report are displayed by dates BILLED.

If your W-2 amount is greater than the total Pass Tax Values on your Pass Travel Reports through October 2018, then check your Pass Travel Report for November and December 2018. Often trips FLOWN in mid or late October will show up on the Pass Travel Report in November or December. 

Pay attention to the dates the trips were flown, not the dates those trips were billed.

Likewise, if your 2018 W-2 amount is less than your Pass Travel Report total, check your November 2017 report. There may be trips listed there that were actually flown in October 2017. Those trips may have been on your 2017 1099; they would not count toward your 2018 W-2 amount.


How much will you have to pay the IRS due to "imputed taxes"?

That will depend on how much travel your taxable pass riders did, your applicable Federal and State tax rates, your tax bracket and your other income.

To obtain a rough ESTIMATE, add up the "Tax Withholdings" amounts on the right side of the Pass Travel Report. This estimate is based on state income tax (if applicable), 7.65% FICA and 25% Federal tax; your rates may vary. 

A more accurate estimating method is to complete your taxes including the W-2 imputed income United sent, then do your taxes again without that imputed income; the difference in tax-owed = what your pass riders’ travel actually cost you. Then you can either ask your pass riders for the $$$ ...or not.


Footnotes:      

** Service charges: Retirees with less than 25 years of service and their eligible pass riders pay service charges for pass travel in premium cabins. See the “Service Charges” link in FT>Travel>Policies>Overview>ServiceChrg.


Compiled by Kirk Moore, RAFA Travel Benefits Committee


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