1099 Form Question

They don't make laws to show that something is legal. They make laws to make things illegal. You have only quoted something you got off the IRS website. Those were not laws. They were guidelines that are given from the IRS. The IRS cannot make laws. That is the job of congress. And I could care less what anyone things about my opinion about 1099 vs W2. Working on a 1099 works for millions of Americans. If it you don't like it or don't want to work under a 1099, then don't. But, there is no reason to put others down because they may prefer to work on a 1099. It is their preference. If I worked for a carrier, I would prefer being paid on a 1099 rather than a W2. I have worked that way before and prefer it to a W2. I can legally keep more of my own money under a 1099, even after paying the extra social security (self employment) tax. Apparently, others feel the same. I have no problem paying any taxes that I owe. I do have a problem giving the IRS an interest free loan for a year. When you have taxes taken out of your check and your employer pays it to the IRS and you get a check back at the end of the year, you have over paid your taxes. That means that you have lost any investment income on that money and you have essentially given the government an interest free loan. You may convince some that working under a 1099 is illegal. It isn't. If it were illegal, there would be no provisions for working under a 1099.

 

You can bring a horse to water but you cannot make him drink.

The rules posted are from the law. If I was around my computer I could link it. But why waste the effort.

The reason 1099 are there is for payment to actual independent contractors. But some employer thought it would work.

Just like running illegal. You know it is wrong but if they are not catching you it must be legal and okay.

 

The only way running as a "contracted driver" makes any sense in terms of the trucking industry is if you have a say (stake) in the primary asset (truck equity and it's costs to operate). If you are merely a driver contractor, you are setting yourself up for a catastrophe, especially if you do serious injury to others in the course of your self-employment duties (notice I did not say your job)

 

It's not a choice. A person is either an employee or they aren't, but you can't simply choose the status.

If you treat someone as an independent contractor, and the IRS re-classifies them as an employee, you will be on the hook for employment taxes, penalties, interest, and if the employee wasn't paying his income taxes, YOU are responsible to pay them.

Miss-classifying employees as independent contractors can be very expensive for you.

 

Please tell me what advantages are there for an employee driver to be paid on 1099? He gets no health insurance, no unemployment insurance, doesn't pay in to SS, owes the IRS money at tax filing time, and has an increased liability over his head. And don't tell me it's better since you're not loaning the government money interest free. Since on a a W-2 you can claim as many or as little exemptions as you want. Therefore controlling how much is taken out. Besides I'd rather get a check in the spring time than owe the IRS money.

 

The employer actually owes the tax whether paid or not.

 

As a withholding agent who fails to withhold, the employer is on the hook for the tax. However, as a practical matter, if the employee has been paying their quarterlies, there is no liability on the part of the employer for the income tax - it has, in fact, been paid.

If your point is that the employer is responsible for paying the income taxes, even though the employee has already paid them, I would be interested in hearing more about that. . .

 

Many companies who pay on a 1099 will pay at a higher rate and offer the driver greater flexibility on loads he carries and where he runs. I would rather work under a 1099 and invest the money that would be taken out of my paycheck so that I could do even better at the end of the week. I would rather owe the IRS money at tax time than have them return my money to me. Noone who has been in this business for any length of time should ever have to worry about collecting unemployment. I can pay for my own occupational accident policy which would be tax deductible. I prefer an occupational accident policy to workers comp. As long as the driver puts his tax liability aside he should have no problem paying his taxes when they are due. He can even set up his own retirement account which would also lower his tax liability. Even if you work as a W2 driver, you may or may not have insurance. You should be able to get that for yourself. If you want to work under a W2 and let the government use your money for free for a year, that is your business. If I want to work under a 1099 and pay the government at the end of the year, then that is my business. I don't see why some of you want to put others down for how they want to be classified.

 

At least as an employee, the employER is responsible for a portion of FICA, self-employed, the contractor is responsible for his FICA and what would have been the employER FICA (Self Employment Tax) And that argument that as an employee, you have to "let the government use your money free for a year" does not hold up well, either. An employee can choose to have as much or as little Federal and State income tax withheld as desired by how he sets his allowances number on the W-4.

But I still stand by my earlier posting, any driver, driving someone else's equipment, and doing so as a "contractor driver", better be making serious money (60+ cents/mile), otherwise, it makes no sense at all to take such a job when other employee jobs, with much less financial risk, abound.

 

You do understand that if your taxes aren't paid via withholding, that you are required to make quarterly estimated tax payments, don't you?