1099 tax savings

If you go the 1099 route, make sure you HIRE AN ACCOUNTANT! You are going to have to pay Quarterly ESTIMATED TAXES. Yes......in advance! You must ESTIMATE your income for the next 3 months, then pony up your Social Security and Medicare taxes, plus Federal and State income taxes......BEFORE you earn the.money! Plan on putting away a minimum of 30% of your paycheck every payday to pay those taxes. LOTS of people get into hot water with the IRS in a hurry working as an Independent Contractor. If you are not good with money, don't do it. You have been warned!

 

That’s going to throw a huge red flag if you have a ton more deductions than income. Yes the company may be in trouble, but you’re on the hook for fraudulent tax return and all penalties.

 

How is it a fraudulent tax return?driver getting paid 1099 therefore he’s a contractor and entitled to deductions,not breaking any rules.

 

I don't agree at all. Once to figure how much you will pay for Social Security and Medicare taxes, Federal and State taxes, Medical, Dental and Vision insurance. ( have you priced those in the individual market lately?). You are also giving up a 401k match, Unemployment Insurance and Workers Comp coverage. I'll guarantee you that these 1099 outfits are not offering near the pay to compensate for all of the above. Actually, quite the opposite. If that is how you want to roll, knock yourself out. I'll take the EMPLOYEE/W2 route any day.

 

As long as you are not using any receipts that the company reimbursed you for. ALSO.......If you are single, you already get a $12,000.00 STANDARD DEDUCTION. You will have to have expenses exceeding that amount to even think about itemizing. If married.....$24,000.00. For some reason, uninformed people like to throw the "It's a write off" card around. Talk to an accountant. It ain't that cut and dried.

 

He’s not entitled to deductions for money that he didn’t put out.
If your buddy has a inframe would you ask for a copy of the bill and use it for yourself?

 

Not the same thing,companies that pay drivers on 1099 are doing so to avoid paying payroll taxes,health benefits and workman comp,falsly classifying their employees as contractors.
They tend to pay little extra to attract drivers and their pay is never in a form of a settlement or itemized revenue and expenses,its usually a company check.
These companies are both cheating the driver and the goverment.
What im suggesting is probably not moral but 100% legal since these outfits cant and wont prove who’s responsible for these expenses,no contract in place.
As a driver you make 90/100k claim 50/60 in expenses.pay taxes on 40k(average acceptable income for a truck driver in the usa) and move on to a legit job.

 

If paying by a fuel card there will be records of who is paying for the fuel. How is a single driver going to explain to the irs paying for probably multiple trucks out of there income?
I have had scales call and get a print out of my card transactions. The irs will have no trouble tracking who is making the payments.