Driving for an Owner Opperator and Taxes

i know in the state of montana , unless you are a direct family member, they must take out a workmans comp. policy for you

as for taxes, thier accountant can/will do that for a fee. yes im sure it costs them more but itd be cheaper than an irs audit or a lawsuit if something should happen to you

if they dont have a workers comp policy for you, and you dont have a workers comp exemtion certificate, i would first try and reason with them, if that doesnt work go to the labor board. at a very minimum get occupation health insureance

 

basicly they are putting you on as a subcontractor. You are contracted as a driver. You are at that point self employed and not an employee. This is pretty common when you drive for an owner operator. You will be responsible for paying your own taxes. If you are not disciplined enough to do that then don't take the job you don't want to get in bad with the irs. Trust me, you never win with the irs.
I believe they can put you on as a contractr and still have the taxes taken out of your check and held for you. This would be more of a curtesy and you'd still be a contractor and they wouldn't have to pay the workmans comp which is what they are trying to stay away from. Workmans comp is a killer to a small, one or two truck operator

 

I have had alot of owner operator jobs like this in the past,the irs rules are,If you are driving or operating any tools vehicles that the company supplies for you to do that work,they cannot make you sign legally any statement saying you are self employed or contracted in any way.If you are renting that shovel,fence post digger from them or someone else you can be considered a sub contractor,if you lease a veh and pay anything like fuel etc you are considered a contractor and pay your own taxes. Some states may have a right to work law,in these states,may be not considered the same on state taxes but the irs eyes say the employer pays ssi and any federal taxes due,unless you are leasing equipment used by you to do that job,if they provide it and you are not leasing it or not supplying it,the employers has to pay and withhold taxes on your earning and have workmans comp paid by them for you. The fine for not having it on an employee is in the thousands per day. I have,in the past worked and paid taxes,even though I knew it wasn't required by me,in these cases i liked the truck and job and was treated fairly and i got disability insurance on myself by myself. Keep in mind that if you pay your own,you have to pay double ssi,as the employer pays half when they pay your taxes. If a company hires you and surprises you with a 1099,self employment,making you pay all the taxes,just go to your ssi office in your town,or job service and the irs also,they will have to pay it all. I have forced a couple of companies get legal this way by reporting them when I was mistreated or used,and not told. The birs will have them on a list and the state they operate in will keep check on workmens comp etc. Every accountant has told me these rules in person when I have done my taxes. If you have any doubt call your local folks and especially the Irs,they will be glad to know and reward you when they make that employer pay taxes,and you get a % of that for yourself. You need not to feel quilty,because alot of these companies are srewing the little guys like you and me and they don't care about you when they hand you a 1099 by surprise or not pay you all your money you should get.

 

buk and a half is right. I meant to mention that. Tecnically speaking, a truk driver does not meet the requiremnets for being considered a sub contractor. One of h big rules is that if you are a contractor then they can not tell you when or how to work. So basicly they couldn't get you loads.

However there is ALOT of companies out there 1099ing there drivers and nobody says nothing about it

 

They can still get you loads but you have to be able to choose whinch one they offer you,and also let you refuse a load also. If the oo or person you are working for doesn't pay you at least 45 to 50 cents a mile it isn't worth doing as a subcontractor,also no workmens comp if you are injured,also you can be held more responsible in an accident as you are considered to be in your own business as a sub contractor. Unless you know or trust this employer I would never do it. SSI kills you later and IRS wants it right away.

 

They can't FORCE you to work as a contractor, however if you want the job you have little recourse on this issue. I would perhaps look for other employment. To determine if you are legally considered an employee or an independent contractor go here: Am I an Employee or Contractor?
If other employment is what you decide to do then for the time that you are employed at this company take 25% of your pay and set it aside in a savings account to pay your taxes, SSI and if applicable state income-taxes. File the estimated taxes quarterly without fail so that at the end of the tax year you do not owe a huge amount of money. The IRS has a withholding calculator on their site that is free to use as well. It can be found here IRS withholding calculator.The estimated tax forms and guidelines can be downloaded and printed from the IRS Site here: Forms and Guidelines Estimated tax forms More information and advice can be found here Tax Topic 762

Many small companies and Owner Operators with one or more trucks use the contractor status to avoid the taxes that they are responsible for. Some even have a contract that they have you sign that essence boils down to you agreeing to be responsible for ALL the taxes and having NO recourse legally.

Another down side to this situation is if you get hurt on the job you will not have Workman's Compensation Coverage. If you are in this situation there are Accident Policies that you can purchase that will cover you, of course you will have to pay that out of your pocket. Not all states allow this insurance to be sold in their state so check with your insurance company to see if they offer it or can point you in the right direction to get this. I friend of mine had it as he was an O/O and his was about $150.00 per month. It provided coverage on and off the job.

If your company has a General Liability Policy in addition to the normal Auto Liability Policy you MIGHT be covered under that but you'd have to contact the insurance underwriter to see. A lot of companies do not carry it as it is an additional policy. Basically it covers anyone that is around the truck working or not that gets injured. You may have to be added as an addtional insured to have that coverage. Look at the insurance papers in the trucks document book to see if that information is there.

 

I just started my own trucking company less than a month ago and haven't even gotten on the road yet. I'm buying the vehicle and leasing it at a driver out to a freight company.

I've spoke to enough folks at the state (IN) and with attorney's and so forth and I'm paying $4300 a year in workmen's comp for my driver and I'm withholding taxes for them as well. I'll also take out per diem and pay that tax free if the driver chooses.

No sense in cutting corners and getting you or your driver burnt.

 

Welcome, Michael Bond! My sister lives in New Castle, Indiana. Thanks for signing up and for the info!

 

Wow - that's cool. Small world eh?

Well I hope I can learn alot here. I'm going to start small and slow. Any money I make I'm going to keep in the business for awhile as I'm keeping my regular job for the time being. I created an LLC and have done about 17 months of research prior to getting started. I hope to have a unit on the road in early August. Any advice will be appreciated!