Got a nice letter from the IRS stating I owe $8k taxes for year 2006 because it was reported that I had $26k "non employee compensation". I immediately knew who the culprit was. C R England. This was my mistake. Shame on me for thinking that my operating at a negative and assuming everything was on autopilot at C R England meant there was no issue. But I can correct this. All I have to do is prove that I had a negative operation while at C R England(easy to do with pay statements and my schedule C). First I have to keep the IRS at bay with a letter. Now. . . Who the heck said I was a "non employee"?! Sure felt like I was working for them!
By definition, lease operators or owner operators are self-employed, in most states. CRE would have issued you a Form 1099 with the $26K in box 7 "non-employee compensation". They are saying that this is the amount that was paid to the truck. This is not only done for l/o or o/o, thousands of Americans, me included, get a 1099 for service performed that fall in the self-employment category, as l/o and o/o do in most states. It was then your responsibility to complete a Schedule C. That amount would be listed as your business income. Then you put in all your legitimate business expenses on Schedule C. These would include primarily your truck payment, insurance payments, any unreimbursed tolls, mechanical expenses, utility expenses (like a cell phone-this one is tricky how you enter it), plus many others. Once that was done, the bottom line of the Schedule C would tell you what your net income or loss was for that year. That amount would have gone to Schedule SE to figure your Self-Employment (Social Security and FICA) tax and also to, I believe it is line 21 on the Form 1040 to become a part of your total taxable income for the year. If you didn't do this early in 2007 (by April 15), then how is CRE responsible for that? If you did, you will have the tax return showing that you did and all you would have to do is send a copy of the return showing you did all that to the IRS and the case is closed.
Yeah I called up England. They're sending me copies of my pay statements showing my negative operation and a Schedule C. $10 for both. I'll use that as a tax deduction. I still blame England for catering to suckers like me. Now I'm a little bit wiser.
