Paid by 1099

1099 Contractors are treated a sole proprietors by the IRS

Here is some 'very' useful info...for those guys considering running for a Bosnian refugee with two trucks.

Expect to be taxed much like a sole proprietor when you work as a 1099 contractor. The Internal Revenue Service (IRS) has a 20 point test it uses to determine whether you are truly an independent contractor and not an employee. It's easier to meet this test, when you're working from home, and can show that you work for more than one company at a time. Know the tax implications of being a 1099 contractor, so that you can plan for and file your taxes correctly.


Quarterly Tax Payments


As a 1099 contractor, you have to make quarterly tax payments to the IRS, unless an exception applies. You're not an employee, and therefore there's not employer to withhold those taxes from your paycheck. You can avoid quarterly payments, known as estimated taxes, if you don't owe more than $1,000 in taxes. The only way to determine that is to guess what you'll owe in taxes for the tax year, based on tax credits you received the previous year. You can also compare your household income for the tax year before you became a 1099 contractor, to what it is now, to see whether you'll owe more or less in taxes.


Social Security and Medicare Taxes


You're also expected to pay social security taxes as a 1099 contractor. If you worked for an employer before, you're used to seeing your portion withheld from your paycheck. The employer had to pay their half of the taxes too. You have to pay the entire 100 percent of social security taxes now, but you are allowed to deduct 50 percent of the employer's portion from your taxes. You won't have to pay social security taxes at all, if you make less than $400 after you take all of your business deductions. The amount you have to pay in social security taxes is 12.4 percent of your income. You also have to pay Medicare taxes, which is 2.9 percent. The total payment for both is 15.3 percent of your income.


Business Deductions


When you work as a 1099 contractor, you can deduct expenses for doing your work, as if you were a sole proprietor. You should research all the business deductions that's allowable, such as:


Auto expenses
Home office use
Office equipment depreciation
Meals
Marketing and advertising costs


Business deductions reduce your tax liability, and you should take what you can.


Income Taxes


Don't forget your income tax payments. You'll have to fill out a 1040 Form as usual, and you don't want to spend your income each month and forget to save up for income tax payments, which are due April 15th every year. You should consider saving a percent of your gross income to pay for taxes. It depends on your annual income, but some 1099 contractors save between 20 and 40 percent of their gross income each month to cover self employment taxes and income taxes.


If you don't plan your tax payments, you'll end up owing higher tax fees than you would if you were an employee. The penalties and interest that the IRS charges can cripple any efforts to make a living from home. Avoid tax problems, by understanding the tax implications of a 1099 contractor.

In reality, only ones who should qualify are guys who lease onto a carrier and file 1099, not drivers, but it is legal for a independent contractor to work short term projects and not be considered a full time employee. Technically after 90 days, the contractor should be hired on as a full time employee.

 

lol i suppose w2 companies are different? there are just as many scams coming from w2 companies as there are from 1099 companies. in fact there are horror stories from just about all the major carriers out there. bottom line is you would do way better with a small 1099 company they you would a large w2 company.

cheap? broke? really you guys have no idea what it takes and quite honestly you don't care as long as you get paid. well lets do the math shall we lets say you drive about 3,000 miles a week although that's a pretty good amount of miles per week more like 2,500 for a lot of companies.

3,000 miles at an average of $2.00 a mile
Driver pay on 1099 is 25% (typical driver pay)

3,000 x $2.00= $6,000

$6000 x .25 = 1500 (driver pay)

6 miles per gallon of fuel
3000 /6 = 500 gallons of fuel

500 x $4.00 per gallon = 2000

so lets see after fuel expenses and driver pay we are at

6000 - 1500 (driver Pay)= 4500 - 2000 (fuel)=$2500

so far we are at $2500 per week to the company and we haven't even deducted maintenance are operating expenses yet
shall we continue

$200 per week for insurance
$420 per week Maintenance
$12 per week 2290
$42 per week Base plates/permits
$20 per week ifta costs (varies but just to give an idea)
$4.00 per week ucr annual registration
$94 per week safety program/ employer dot training (mandatory by dot)
$180 per week quick pay from broker (common for carriers that cant bankroll all operating expenses 30 days till brokers pay
add all those together you come up with an additional $698 per week

$2500 - $972 = $1528 to the company

and I haven't even been paid yet and im doing most of the work getting loads, processing paperwork, sending invoices ect
company cant even grow at that rate and that's just a quick run down on paying a 1099 employee

also didn't account for major breakdowns or roadside breakdowns that number is strictly based on shop repairs not engine rebuilds, turbos, or towing and hotel expenses for driver.

all drivers see is the 75% they don't get and they think the company is being cheap. trying to make a profit to keep business running is not being cheap its being smart.

another thing not calculated is drivers being extra rough on equipment because it isn't there's and they don't care. that by itself can run a company broke.

the owner of Warner only makes 1 penny per mile per driver which is ok when you have a fleet of over 3,000 trucks. but for us smaller guys with way fewer trucks cant operate on that.

hopefully this has cleared up this misconception of us companies make all this money and screw over drivers we are all trying to make money in this business and the ones that still think were all trying to screw them over well... you can all just stay stupid and you cant be helped.

 

I worked for 2 different O/O's that paid me on a 1099.

One, I had to chase for my money, the other paid me 3 weeks later.

I had to pay my own taxes of course.

I got paid back then 20% of the gross. I got paid 20% of nothing empty.

I was driving 2 brand new trucks however!

But that was all.

Stay away from the 1099 BS.

Get yourself a real paying job, with benefits, maybe some sort of retirement plan, or start your own, you WILL NEED IT in your future.

 

My personal opinion on these so called 1099 jobs is that they are a scam. Remember you have to pay your own Social Security 14% plus the taxes, medicare, etc. You can make .42 as a driver many places and everything is taken out.

Because truckers "gross" such high dollar amounts and have a lower profit percentage they are subject to notice from the IRS more quickly. A 1099 contractor would more likely be audited also.

 

nothing you posted has anything to do with how you think it's legal to pay a company driver, that you get the loads for, and that uses your truck and fuel, on a 1099. Paying an employee on a 1099 just to save miney by not having to provide workers comp insurance and take out the employees share of SS contributions is illegal. The size of your company, and your operating costs are irrelevant as to how you classify your employees.

Yes, there are plenty of crappy places that pay on a W-2. But at least they're paying them correctly.

Also, to anyone who signs on as an independent contractor, if your employer stiffs you on pay, you CANNOT go to the state labor board to have them help get your money, since you were not
an employee. Only way to get it is to take them to small claims court yourself.

once again, it's illegal to pay an employee on a 1099. Why not show us your proof that the IRS granted you permission to classify your employees as IC's? You did send in the form to them so they could make the determination, didn't you? Nobody said you specifically were trying to screw anyone over. You may be the best boss on the planet. But, as far as the black and white of the argument goes, you're not within the law as far as how you pay your employees. They are not independent contractors, and aside from having to provide their own WC insurance, they're also losing an additional 15% of their pay to the self employment tax.

 

yes you are right I haven't made that leap yet was originally my plan however didn't realize it was illegal reason being so many companies pay on a 1099. i been in business 3 years and didn't want to throw all my hard work away by getting slammed by the IRS I looked into it looks like social security is matched at 6.2% by employee and employer seems unemployment ranges from .1% to 6.2% and medicare at 1.45% is there anything else that i am missing?

 

The only "best boss", is oneself. All others suck wind.

 

Work under a 1099 and get into an accident. You better have a guardian angel watching over you. Not only is this deal a tax rip-off, but you have no protection if you are involved in an accident and if you are injured, you will be responsible for the medical bills, plus no Workman Comp checks coming in. You involved in an accident, you working under a 1099, can be held responsible for all damages, all injuries, better think twice before doing this.

I have just come off a "on the job injury" and I am here to tell you, I am sure glad that I was paid under a W-2 instead of a 1099. For 7 weeks, I received a check in my mail box for 65% of my gross wages and this was completely tax free. Plus the fact, I am going thru a settlement now and a nice check will be forthcoming after it is settled. All medical bills paid! You don't have this type of benefit when you are under a 1099.