The only way one can recover some of the money that has gone out due to overhead is to get creative. Take a normal husband/wife situation, the husband is the driver and the wife is the bookkeeper. The wife starts a trucking company, she needs equipment so she leases a truck and trailer combo., (which happens to be the husband's equipment) who in turn is hired on as a paid co. driver. She then will have to pay employer taxes, and must take FICA out of her drivers pay, along with her own because she is the bookkeeper, her time is valueable too.He in turn can deduct the depreciation on his truck, she can deduct the lease payments on the equipment, he files a regular 1040 EZ form (income taxes) with his copy of the W-2 from the trucking co. (cuz he is a co. driver) The trucking co. will have to file the standard schedule C, employer taxes, ect. but will have it set up in an LLC to do so. There are plenty of ways to get around the issue of taxes, one must do their homework. I don't have all the answers, but i'm working on it. We plan on getting another truck, just found out that the co. that he drives for is paying all fuel surcharges..he hauls food. People have to eat, it's consistant freight. We will set our business up this way, have a business plan, mission statement, etc. Go to [LINK POSTED BY MEMBER] Only Members Can View This Truck Forum Link. they have plenty of help there. I'm also in college taking supply chain management (logistics) which helps us now, but back years ago...we didn't know a damn thing, flew by the seat of our pants...never ever again. Hubby is game, plus i really don't want a cubicle job.

Be good,
Rosebud

I would be VERY careful offering any tax advice unless you are a licensed professional. I already see some errors in your post that could get some folks into some serious hot water with the IRS.

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If you don't like the rate, don't haul the freight.

IRS has related party issues in their code.

Also, when you lease equipment, the income has to be reported. The net effect of this transaction is a loss. The loss is because of the charges the accountant and taxpreparer will charge you.

Otherwise, you are just wasting your time.

As TXProud says, you could get into some real trouble.

Not only those problems mentioned in the last two posts, but as an employer, you have to pay Federal and State unemployment taxes, which you would not have to deal with as a self-employed individual. Also, as an employer, you have to match the social security and don't get any breaks on that, whereas with self-employed you do get a bit of a break. Use to run my own cleaning biz, and did all the bookkeeping myself, had a good accountant for the monthly, calculating my tax payments, and doing my tax returns at the end of the year. I paid a monthly rate, and also another amount for the tax returns, but it was worth every penny. There is no way to cheat the IRS or get around taxes. Sooner or later they will figure it out, and there are certain things that are total red flags to them.

Good info here! I hope this thread takes off... we all need to use every advantage we have today.

Is a lease a 100% write off like "they" say it is? It comes right off the gross income???

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"Today is the tomorrow you worried about yesterday"

A lease is a deduction that is directly off the income. However, in their example, they also have to declare it as income to the other spouse.

Yes, as Roadmedic stated a lease is 100% deductible.
You have to be careful though. A Lease purchase with a buy out at the end has different guidelines. I do not want to post incorrect info here so I will defer to our in house experts and ask them to explain the tax ramifications when it comes to a lease purchase; at the end of the term in regard to residual value (in the event the vehicle is re-sold) and if the buyout is $1.00 then the capital gains that must be considered.

In the case of a driver that is "buying" a truck then he gets depreciation AND interest paid on the loan as a deduction. In my opinion this is a better solution and with respect to the original poster I believe they are making things much tougher on themselves. A sole proprietership with direct pass thru of all monies earned is by far simpler than what she is attempting.

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Knowledge is Power

Please post the outcome and penalties that you receive from the IRS when they complete their audit.

Yeah, right! That scenario just has "Audit" written all over it.

Looking at a lease on a '06 Pete 387, its $1675 a month for 42 months with a $4,000 down payment (security deposit) and $12,000 buyout at the end (Security Deposit will be deducted from the 12K)

Is this a good idea - tax wise? I know that for me a lease is the preferred option at this time due to a recently discovered judgement on my credit report... didn't know it was there - really, honest! Anyway, this works out to be only about 9% interest, compared to most of the leases I've studied that come out to 30% PLUS!

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"Today is the tomorrow you worried about yesterday"