Independant contractor

Are you sure that arrangement will actually be recognized by the IRS? Have you received advice from a competent tax advisor? I know that up here (Canada), regardless of whatever agreement made with the company, such an arrangement would be disallowed because it does not meet the test for being self-employed (unless you were leasing the truck from the company and can pick which loads you accept, among other things). Obviously there are differences in tax legislation between here and there, but for the most part many of the concepts and principles are the same. The thing that really bites about such an arrangement is when you get a ruling by the IRS against you after an audit after having done it for some years. Again, I would strongly suggest you seek advise from a competent tax advisor, and not someone recommended by the company.

Also, I have never seen such an arrangement that wasn't being done in order to effect some slight-of-hand on the part of the company. It normally doesn't make any sense otherwise. After all, why not just pay you as a company driver, if, in fact, that is exactly what you'll be doing? Usually the only reason for such an arrangemennt is for the company to shift some of the financial burden onto the individual and typically that means the employer's portion of payroll taxes and/or an attempt to avoid worker's compensation, etc.

 

In my opinion, your situation is what the government is trying to stop. You have no investment in the equipment and are not an independent contractor. Your employer is pulling a subterfuge to avoid unemployment tax, social security matching, federal and state tax withholding, etc. Your employer will probably argue in court that you have complete freedom over when, how, and whether to perform your job.

In my opinion, you should file state and federal tax returns quarterly. Your deductions are the same as any company driver.

 

Illegal as hell! And if you are ever involved in an accident, which I hope you never are, you will be "up the creek without a paddle". Get hurt on the job and you will find out that the "employer" isn't responsible for a thing, the medical bills and workman comp.

 

Can you say illegal, can you say IRS audit

 

Maybe I missed it in the OP post, but I don't recall him asking if it were illegal or not...?LOL

Smartest thing to do is go to someone who deals in taxes and the IRS.

 

A good accountant isnt gonna do anything except, tell him its illegal.

 

I'll hold my opinion of what your into, do what you have to...... You tax obligations are yours and their share after deductions. State tax? IDK where you live but it's your share and theirs. W/C regs ? again, IDK where you are.

They will 1099 you at years end for everything you collected....... good for them, bad for you...... If the arrangement is illegal under Fed tax laws or state law then you could also suffer the wrath of the entity.

Seek competent tax advise rapidly Mr. Driver, this does not look good on the surface.

JMO

 

I know they have been trying to change/stop the 1099 deal, but every time it seems someone derails it. Last I heard or dealt with it, it was still legal.

Regardless, that wasn't the question he asked...

But to put an end to any or his worries, just call the IRS.

 

My wife is a CPA. To be deemed eligible as an independent contractor by the IRS you'll need to meet a few criteria.

You'll have to be able to make the decisions as to what loads you haul and when you haul them........no forced dispatch telling you what you'll haul or when you'll work. If you don't have this freedom, the IRS will classify you as an employee.

As an independent contractor, what deductions would you think you're eligible for? You don't have a truck payment and the interest on the loan you would expense as a business cost. You won't be buying tires to maintain the vehicle. You won't even be buying the oil in the engine. Your not doing the repairs on the vehicle yourself, so you won't need any special tools to purchase. As a independent contractor you can't write off your personal vehicle expenses for your car to drive back and forth to where the truck is parked regularly overnight..........you don't have any expenses to decrease your gross income against..........you're Joe Blow Taxpayer with a regular job with an aszhole for a boss.


What I see here is your boss trying to get out of paying Unemployment Insurance and Worker Compensation Insurance to the state. If he declares all drivers as contractors he'll save a minimum of 10% or more more of the wages of each employee that would be worker comp insurance premiums to the state. If he has a past history of laying off drivers during slow times with the state, his payments are also high and are based on how much he pays out in wages. He maybe saving another 7-8%. Now if he decides he doesn't need you any longer in the future, he can tell you to hit the road and you won't be able to collect any unemployment benefits. If you become injured on the job and can't work for 6 months, you have NO Worker's Comp to file against, unless you buy your own policy, expect to pay at least 10% or more of your gross income for this protection. You could expense this to the IRS as a deduction as an Independent Contractor......this will be about the only thing they'll give you to write off, unless you buy additional insurance to cover unemployment benefits

My thoughts are for you to call your state governments labor relation board and ask them to explain your situation of employment with this company. I think they'll tell you that it would be better to find a new job they also may decide to open an investigation up against this company and collect all taxes due them for Worker's Comp and Unemployment Insurance.

Now your last question. Yes you will need to make quarterly payments for taxes due to both the state and federal governments. The way to determine how much is you'll have to have a basis of income, since you have no past income history to estimate from, you'll have to estimate your yearly net income, divide it by 4. then estimate the taxes due for each quarter. You will have to be fairly accurate, otherwise you will pay a penalty and interest if you under estimate by too much. You need to go to a CPA in your state that is familiar with your state tax laws......you'll be able to write this off your gross income though.

Unless this company is paying you an additional 25% premium above the average wages for this type of driving work in your area. You'll make more working for a regular company as an employee than for this company as an independent contractor