Deducting The Percentage The Company Keeps?

No! the load isn’t the contracted owner’s, it is landstar’s.

Landstar “owns” that load legally (custody of the load as the initiating party) and is the sole source of revenue for the owner, not the customer or a third party … only landstar. Landstar can reassign the load that load, delay the load or cross dock the load to another contractor.

 

If you make $1 GROSS and the carrier takes 35% or $0.35, you can:

A) Enter a GROSS revenue of $0.65 and subtract nothing.

B) Enter a GROSS revenue of $1 and subtract $0.35.

Obviously the best choice is B to show a higher revenue on your reports which may help for financing and credit down the road.

You cannot claim $0.65 income and deduct $0.35.

People worry so much about their tax bill and spend thousands on business expenses to save mere hundreds in deductions because they don't know how it works. You can't cheat the system. Minimize your costs and pay your taxes.

If you were sitting in a 20% tax bracket and had a $20K tax bill coming due, an ignorant person would go out and claim $20K in expenses thinking it'll clear their tax bill. All you did was reduce your income by $20K and saved $4K on your tax bill. So now you're down $20K and still owe $16K, instead of paying $4K more in taxes and keeping the $20K. If you want to be like the big corporations and have no taxes, you have to be constantly investing and growing. Instead of wasting that $20K on chrome and the blue beacon, buy a second trailer. Use that trailer as collateral on a $100K truck. Now you have $120K in depreciation and wouldn't be paying any taxes, have another stream of income putting a driver in that truck, have assets on your balance sheet, and a much better looking cash flow statement.

 

First you gross a $1, the carrier does not subtract anything, your settlement is $1.

you earn or produce $1 in revenue.

what people are messing up on is thinking that the carrier gross is what they are making and the company takes their share when the fact the carrier doesn’t take anything from the gross to the truck, they give you their gross minus the contracted cut.

The irs knows under the fmcsa regulations leasing takes a different form of a relationship between the shipper and service provider, they know the load doesn’t originate from the truck but only from the responsible party, the carrier.

When you are contracted to haul for a carrier, they take their cut when is an agreement to accept the load, as it is contractual, and because it is already taken out before the settlement is issued, then where is no way a lease holder can deduct it as a legitimate business expense.

 

You are correct. Your GROSS is whatever the GROSS is on your settlements. If they have your statements as GROSS revenue being $0.65, you made $0.65. But they have your GROSS as $1.00 and their $0.35 as a negative line in income or a deduction, that's how it should reflect in your bookkeeping. I've never seen a Landstar settlement so I don't know what it looks like, but I do know that if you deduct their percentage of the total GROSS, it would be a negative number in an income account, not an expense account. No different than factoring. If you factor your loads at 3%, you'd still show $1 in revenue then subtract $0.03 from an income account for factoring.

 

There's gonna be a bunch of truck stop accountants along shortly to to tell you you are wrong.

 

Yeah but the irs criminal investigator I know said I’m not, nor has any auditor I had to deal with.

 

That’s not how it works, the contractual fees are separate from their percentage of the billable, which is what the problem in thinking it is a deduction. Some carriers with their settlement sheets will put a billable amount to the consignee and then break out the fees and the “to the truck” amount as a matter of course. This does not mean that the “to the truck” amount is the difference of the billable amount as a fee. It isn’t.

factoring is a different situation, you are using a service outside the leasing authority regulations and that 3% you posted is not part of the settlement agreement or a contractual agreement with a carrier.

 

That makes sense. I can only speak from experiences at my carrier.

We have a GROSS earnings line, reimbursements, and deductions, then our settlement balance. I know a few drivers here that have told me they are only adding their settlement balance towards their income and then expensing their deductions from that. They're basically making double entries for deductions which is wrong, and what sounded like the OP wanted to do to save on taxes.

For example last week, my GROSS earnings were $8,211.51. My settlement deductions were $2,694.04. My settlement balance that was direct deposited to me was $5,517.47. I create an invoice in QuickBooks to reflect just that. I don't enter my income as $5,517.47 then deduct $2,694.04 from that again like some do. The GROSS earnings is all to me. Nowhere in my income or deductions does it mention what the carrier made so I don' care.

 

Long term Trucking businesses are on the most audited lists. When you are spending $0.95 to make $1.00 the expenses attract auditors. Must think we HAVE to be cheating because NOBODY operates a multi million dollar business on such a slender margin...a real shame when one ponders where the economy would be without truckers...

 

The computer does that. But here is the thing, I support a change in the tax system. I prefer a consumption tax (the FairTax) for a bunch of reasons, one is in 2002 and again in 2009, we had a huge dump of cash into the economy to get people to buy crap. It made no sense to allow that to happen while we are not fixing the tax system to capture that consistent revenue stream.

If you actually read the explanation of the FairTax, you can see that this consumption tax is far better for us, and it will produce a lot of revenue.

My cousin when he was on the road did a comparison by keeping a record of every thing he purchased for a year and he applied the FairTax numbers for both consumption and tax revenue. He came ahead by thousands while producing a little more than the taxes he paid in the year.

What puzzles me is how people defend the progressive punitive system we have now. Many are conditioned to use the position that people need to pay their fair share when in fact there is no such thing as a fair share. The move from a labor tax to a consumption tax will remove a lot of burden off of people because it is said (IRS is one source) that 90% of capital expenditures and business decisions are driven solely on the income tax.

By the way, the IRS just got my taxes processed. They are a mess.