Feel cheated by 1099

i always worked on 1099 its great, but to see it you need have a good accountant not h&r or other seasonal workers who dont know anything about trucking job, as you will file w2 irs will make you pay all taxes may be some penalty for your employer but from gross you'll pay out of packet,
go to tax accountant and ask him difference and you'll see that instead 33% on w2 taxes pay 10-15% or less on 1099

 

Truck drivers that are owner/operators are independent contractors....all other drivers are W2 employees. The IRS rules make that pretty clear.
The irs rules say if you own the equipment then you control it, if you don't own the truck you do not control it.

Anyone that has been audited by the irs will confirm this...you can get away with it until the employer gets audited.

 

There are a lot of advantages of 1099 work if you have a good CPA, I did it for over a decade. Many people cry about it but they don't know how to work the system. I was lucky years ago to wind up with a connection to a really good CPA. You can't just file as it were a W2, doesn't work that way. You'd have to file an SS-4 for the IRS to classify you. Works both ways you know, if you were reclassified the IRS would send you a big bill for all the income tax, and deductions you didn't make, and don't have as many excuses to write things off as you'd like.

This is how they determine whether your a contractor or not, signing contracts or agreements means nothing to the IRS, only these conditions.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Behavioral-Control

 

What tax advantages does 1099 have, that a W-2 employee doesn't? I'm on W-2, last year I grossed 61,000 and had a 12% effective tax rate. I can't imagine 1099 offering much better than that.
Other than having the money all year, and not giving uncle Sam an interest free loan, I dont see an advantage for the employee.
For the vast majority of drivers, 1099 only leads to hardship at the end of the year. You should be living frugally, and saving receipts/logs regardless. A lot of drivers don't do that, and live check to check. So at tax time they ha've a 10k bill that they wouldn't otherwise have seen.
All they have to show for that extra 10k is junk food, restaraunts, hotels, overpriced truck stop goods, and useless gifts. Not money in an investment account gaining interest.

 

With a W-2 form, the employer is not only taking out for income taxes, (federal and state), but is also contributing to social security, Medicare, along with paying unemployment taxes and workman's compensation taxes.

 

The only one who might be cheated is the government. I think it's all about money management. If your 1099 check is 1200 a week, it's easy to put around $200 into separate account and use it to pay taxes.

 

Yeah, but you have many more protection under W-2. On W-2 you can just claim more if your concerned about giving more than neccasary during the year.
The reason companies want to do 1099, is they feel that they are less liable for workers comp, and unemployment.

 

Yes also they don't have to pay for employee taxes because your really not an employee of theirs on the books if your 1099 your a sub contractor and you assume responsibility for tax liability so if you dont put away for it you owe a huge chunk at the end of the year

 

If you are responsible you should not have a problem working under a 1099. The main difference between a W2 and 1099 is who writes the check. You are still paying the bill. As a 1099 you will be responsible for paying your own social security and income taxes. That should not be a big deal if you are putting money back from each check for the taxes. With a good CPA or other tax professional, you could do better under a 1099 and pay less in taxes than those working under a W2. It is probably not for everyone because not all people can manage their own money. They prefer someone else do it for them. If you don't want to accept responsibility for your money and taxes, then don't. Find a job that will take the responsibility of paying your tax obligations for you. But, I don't see attacking those who do prefer a 1099.

 

I'm curious, a 1099 worker must pay his taxes yes AND he must pay the employers share resulting in a salary decrease of 7-8% aka the employers share plus the SE tax. The 1099 worker also waives many rights and protections afforded him under the law including w/c protection and cost.

The rule of thumb for employment is the employee will cost me 3 times his wages in compliance, taxes and benefits. So if I pay you $20.00 an hour your ultimately costing me $60 when it's all said and done.

Nothing wrong with 1099 as long as you collect the additional two thirds I mentioned and are prepared to do all the extra work maintaining ( compliance, cpa, qtrly taxes etc ) said employee. Failure to do so could result in penalties that up the cost of said employee.

Now we have Obummer care......and yes if you are contracted to anybody then you push his number up and are counted SO if your body number 51 then you must have coverage.......and where is that number at today? $900 to $1500 a month and rising for an std. 80/20....... something like that?

Being cheated by a forced 1099 ? yes you are.