1099 or employee

Discussion in 'Trucker Taxes and Truck Financing' started by keywestwego, Jan 6, 2013.

  1. Countyboy

    Countyboy Medium Load Member

    495
    179
    Nov 10, 2010
    Littleton, NH
    0
    Correct. If you get hurt in most areas unless you yourself as a "contractor" paid/attained your own workmans comp then you are SOL. It's merely away to illegally shave 17-20% off of the owners overhead and shift financial responsibility to the driver for many fees and taxes. Also, usually you can be terminated and will NOT receive unemployment insurance or have a harder time getting it Again assuming you have been paying into UI as required as "a small business/DBA"
     
    aiwiron Thanks this.
  2. Truckers Report Jobs

    Trucking Jobs in 30 seconds

    Every month 400 people find a job with the help of TruckersReport.

  3. Countyboy

    Countyboy Medium Load Member

    495
    179
    Nov 10, 2010
    Littleton, NH
    0
    Yeah don't forget as a "contractor" in this set up you also need to put away aroun 13% for SS, The percentage required to be paid to Unemployment, 20% ish for your tax bill (some places your required to pay quarterly to avoid penalties), register your business (DBA's are easiest), AND most places require you to carry some form of liability insurance to actually have a business, and register the business for however much money in fees the state wants.

    also if your going to get a loan Independant contractors/small business owners typically have a real hard time until they have a track record of financial success and making $75,000 gross but 39% goes to SS/income tax so your only showing an income of $40,000 and have the risk of not having income like an employee as in a lenders eyes you find your own work. Best is you will need to list business assets as a small business owner to get most loans and guess what, YOU HAVE NONE as you don't actually own a business
     
    Budha Thanks this.
  4. Budha

    Budha Light Load Member

    142
    138
    Jun 23, 2012
    Here
    0
    Countyboy , thanks a whole bunch for clearing that up...I know now to not work for people like that...I also got a good speech , and am new to things like that , so I didnt know what was going on. I love learning things like this...thank you...
     
  5. Roadmedic

    Roadmedic Road Train Member

    18,951
    8,981
    Apr 4, 2007
    0
    No, it is not "legal". If you are hiring a driver to operate a truck that you provide and you get the loads, and tell him where to go and etc. He is basically a misclassified employee.

    This is one of the things the IRS is focusing more on.

    I expect to see some of the "leased truck drivers" from the companies getting closer looks because of the fact that the truck is restricted to the company and in many cases forced dispatch.

    I own my own truck and am leased to a company and the agent on my audit is confused and thinks I am employed by the company.
     
    CondoCruiser Thanks this.
  6. Roadmedic

    Roadmedic Road Train Member

    18,951
    8,981
    Apr 4, 2007
    0
    They get their taxes up front. They do not get more taxes.
     
  7. CondoCruiser

    CondoCruiser The Legend

    19,726
    18,734
    Apr 18, 2010
    Tennessee
    0
    http://www.ncsl.org/issues-research/labor/2012-employee-misclassification-bills.aspx


    Pretty much if you use their equipment and you work at their direction you are an employee. It's more complicated than that, but there are more companies out there doing things the wrong way to dodge taxes than there are ones contracting out properly.

    Not only do employers withhold social security, they have to pay a match. Then there is workers comp. Get caught in an state audit and the driver is deemed an employee, payback is around 24%.

    You get John Doe over here screwing the gov't and he tells the next guy he 1099's and the next guy thinks it's okay because this guy over here is doing it.


    Anyone that wants to set up with a 1099 really needs to consult with an attorney and not attempt to make their own rules up. It can get rather expensive.

    On the employee end some think O'boy, no taxes. Maybe not at the moment but it will catch up with you. There are so many more benefits to doing things the right way from an employee end.

    Like RM said this is an issue they are focusing on more and more because the loss of revenue.
     
  8. Batoexpress

    Batoexpress Bobtail Member

    31
    9
    Aug 12, 2012
    Wisconsin
    0
    Does anyone know an actual IRS agent that can confirm this???? My CPA was pretty ticked of at this practice from my "wtf is he called, employer?""
    Furthermore, in this day of red budgets and people with more than one legitimate employer, I would think a 1099 would be a huge red flag if itemizing and (heaven forbid, audited for this O/O.)

    As I understand it (since I am in the process of starting my own business) my cpa was going to have a hard time with a 1099, since I have my own EIN, tax id, etc and this method is a huge red flag for accounts receivables!
     
  9. Roadmedic

    Roadmedic Road Train Member

    18,951
    8,981
    Apr 4, 2007
    0
    Your CPA would know the rules too.

    I am an enrolled agent to practice before the IRS.

    You can call the IRS at their 800 number and inquire if you want.

    The information has been given that supports this.

    A 1099 reflecting just the revenue from driving without an asset involved to produce the income presents a major flag. There is no actual deduction available, because it is a false reporting that avoids insurance and employer costs. The "employee" finds that when they are doing the return, there are no actual deductions available. The preparer is then placed into an ethical nightmare. They cannot legally prepare the return with this type of document when they know it to be incorrect.
     
  10. Batoexpress

    Batoexpress Bobtail Member

    31
    9
    Aug 12, 2012
    Wisconsin
    0
    That sounds about right....she just about fainted and proceeded to give me a reaming for putting myself in this position....(easy on the jokes!) In the IRS world,ignorance does not prevent fines and audits. Don't hey me wrong, I can appreciate the O/O going after the American dream, but dumping on mine ay the same time. And to top it off with this Fiscal Cliff BS and she is really screwed this Q1 and year end returns!!!
     
  11. carrkool

    carrkool Heavy Load Member

    883
    495
    May 10, 2012
    adah, pa
    0


    It is still legal. Even the IRS says a company can hire contractors to operate their equipment. There are ups and downs to both pay systems. Yes the IRS prefers W-2 over 1099. even on a 1099 if your state of empoyment requires workmens comp than you still have to have it..

    Ive paid drivers on 1099's for years and up to a year ago still did. Just because the IRS tries to push you the owner to pay on w-2 does not make it illegal. the fact is it is still legal just not liked by the IRS
     
  • Truckers Report Jobs

    Trucking Jobs in 30 seconds

    Every month 400 people find a job with the help of TruckersReport.