1099 - How Much Should I Set Aside for Taxes?

Discussion in 'Questions From New Drivers' started by newtrucker2011, May 22, 2011.

  1. newtrucker2011

    newtrucker2011 Light Load Member

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    Ok, the company I am driving for now pays me cash with no taxes taken out. But at the end of the year I will get a 1099 form.

    I know that means that I am responsible to pay all income taxes myself at years end.

    My question is this: How much money should I be setting aside each week out of my paychecks to cover my taxes ?

    If it helps - I will be claiming 1 dependant (myself) and also head of household, single.
     
  2. BIGMIKE1

    BIGMIKE1 Light Load Member

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    Do you own part of the truck or business, because if you dont what you are doing or should i say the company thats paying you is not legal.:biggrin_25524:
     
  3. newtrucker2011

    newtrucker2011 Light Load Member

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    No, I am not an owner operator, just a milage paid employee........

    Uh oh..................
     
  4. BIGMIKE1

    BIGMIKE1 Light Load Member

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    Thats the key word "Employee". By law there supposed to be paying in half your social security, and paying in workmans comp.
     
  5. newtrucker2011

    newtrucker2011 Light Load Member

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    Unfortunately I have already drove for them a few weeks............

    How much should I set aside ?
     
  6. BIGMIKE1

    BIGMIKE1 Light Load Member

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    I think its still 12.5% for s.s, the other, fed. and state would be on a sliding scale depends on what your making. To be safe id say about 30% for that.
     
  7. Bazerk Wizz Bang!

    Bazerk Wizz Bang! Medium Load Member

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    If you are getting 1099 for whatever reason there are a few insignifacnt viarables to look at when deciding how much to set aside.

    First question is are you paying for your own fuel then you will really need to get someone with experience to help you figure out your fuel taxes. If you are getting 1099 that makes you basically in Independent Contractor. I/C's get more tax breaks than company drivers for good reason. You also have to figure out your per deim. More to it, but point being you probley need an accountant if the above is the case.

    If you fall into an odd catagorie, like a construction worker who is self employeed or who's employeer is hiring him as an independent contractor its much simpler. You keep receipts of everything you buy thats work related, the totle amount of work related expences you paid for gets deducted from gross income. Basically you dont get taxed on it, so you get a 20% to 30% savings on those cost becouse they are not taxed on your income. Some people think anything work related is free when used as a wright off, those people are stupid.

    More to the point of your question. 20% to 25% is average. Slightly less than what you will owe is what you are aiming for. You always want to owe at end of year, not overpay. When you overpay and you get your big tax refund, uncle sam has been earning interest off your money you overpaid him. It is better that you earn interest on that money, or invest every penny of it and not let the IRS do it. Paying at end of year stinks but its sound advise.
     
  8. jlkklj777

    jlkklj777 20 Year Truckload Veteran

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    Big Mike is correct. 1/3 of your earings should cover your tax liabilities; social security, medicare federal, state, local, and county taxes may be due based on where you live. You should be making quarterly estimated payments to the feds and state. Workers comp is also an issue you should check into.

    "Working" for a 1099 is not a smart plan either. The IRS is cracking down on these operators so be sure you pay the taxes you owe.
     
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  9. Bazerk Wizz Bang!

    Bazerk Wizz Bang! Medium Load Member

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    if you get 1099 you dont get workman's comp. You could pay for heath insurance if you wanted or any of the many other types of private insurance if you wanted that cover the same things as workman's comp, but you will have to pay for the premiums yourself, the company will not pay for them for you. Thirty percent is high, as head of household he will be overpaying, which is not good. 25 percent range is better. Best is to get an actual accountant to help you figure it out. Truckers forum is good place for hundreds of threads with hundreds of bits and pieces of good and misleading information all tied into same thread in an almost indistinguishable mess.
     
  10. BIGMIKE1

    BIGMIKE1 Light Load Member

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    I think your missing the point, he is considered an employee by company but they are not withholding anything or providing workmans comp. In other word they are trying to skirt all the laws to save themselves money, and cost him more. For him to be a private contractor he has to own the equipment or have a contract that he is leasing it from the company and he has day to day control over what that piece of equipment does. This is a problem that bottom feeder companys try to save money and haul freight cheaper, I.R.S is cracking doen on this very practice.
     
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