Paying a driver on a 1099

Discussion in 'Trucker Taxes and Truck Financing' started by Oscar the KW, Nov 26, 2013.

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  1. G/MAN

    G/MAN Road Train Member

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    It sure sounds like you would turn in your clients. I don't know ethics that preparers must deal, but I do understand ethics and when someone is commissioned to perform a service, they should not have to worry about those whom they contract with will turn them in to the IRS. Things are either right or wrong. It has little to do with the profession. If you don't like the way the client handles their business, just don't work for them.
     
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  3. G/MAN

    G/MAN Road Train Member

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    If the 1099 worker pays his taxes, then it is a non issue with the company. There are advantages to working on a 1099. It may not be for everyone. On the other hand, we should all have to sit down and write check for our own taxes and keep the company out of the picture altogether. One problem some have with the 1099 is that they don't want to take responsibility for themselves, paying their own taxes and planning for their own future.
     
  4. Guntoter

    Guntoter Road Train Member

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    They will not answer that question on the phone but they will send you the form to fill out with your EIN and the EIN or SSN of your "sub-contractor". In 2009 my company was not earning enough to make sense so I considered a few things to save money, one was putting my 4 drivers on "sub-contractor" status and giving them a 1099 at the end of the year. I filled out the form and sent it to the IRS, about 45 days later I got a letter informing me that they were in fact "employees" who must receive a W-2 and I must continue paying payroll tax and SS contributions.
    The guidelines said that if they drive a truck that I own, haul loads primarily for my customers (not their own contracts), they can not set freight rates (I do) and I pay for maintenance and repairs then they are indeed employees.
     
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  5. Roadmedic

    Roadmedic Road Train Member

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    I advise my client as to the law and the way I will have to prepare it. I then advise them to attach the disclosure required concerning the misclassified employee status and the employer.

    If they are not in agreement the return will not be prepared by me.

    I will not be exposed to preparer penalties or ethics violations.
     
  6. Hurst

    Hurst Registered Member

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    I've been driving as a 1099 contracted driver for 2 yrs now.

    Neither I nor my boss (Who has been audited) have had any issues over it.

    I registered for my EIN as sole proprietor and I have a DBA as well with my bank.
    Its works well for both parties as long as everything is understood and agreed upon from the onset.

    I pay my taxes quarterly, just like any other business owner. Actually my wife handles that end of it. I take out 27% of my gross and it goes into an account that my taxes are paid from. Last year (My first year filing as 1099) I got back $2300. This will be my second year filing. I save every single receipt and expense I possibly can to be used as a write off. Be surprised how quickly things start to add up.

    If it were illegal I think I would have had a problem by now.

    My boss benefits by paying less taxes and no workmans comp.
    I benefit by getting paid a higher rate than I would have gotten by a company doing everything by the book.
    I will have grossed almost $80k this year. Tell me any other company driver with under 2 yrs 'recent' experience that is making that kind of money?

    I agree,.. there are company owners taking advantage of people by putting them on as 1099 and paying/treating them as a regular employee. Those cases the company owner should indeed be shut down.

    Hurst
     
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  7. TaxPhd

    TaxPhd Light Load Member

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    No, is is not "all in how you set it up." There is NO WAY that you can create a "set up" that will magically turn an employee into an IC. It is impossible. The test for employee status is based on "facts and circumstances" with a lot of guidance, such as the 20 common law factors that have been mentioned earlier.

    Emplyers, if you are paying drivers as IC's and they get re-classified as employee's, YOU bear 100% of the responsibility, and you will face 100% of the pain. You will pay all unpaid employment taxes for the time period that they were mis-classified. You will pay interest and penalties on the amounts owed, and you will be responsibly for those employees income taxes, if they haven't been properly paying them through estimated payments.

    Again, the employer bears 100% of the risk. And it can be VERY costly. While you may have gotten away with it in the past, that is no guarantee that you won't get caught in the future.
     
  8. TaxPhd

    TaxPhd Light Load Member

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    This is simply untrue, and by stating such nonsense, you demonstrate your ignorance.

    If someone is incorrectly classified as an IC, and they don't pay any of their taxes, it is the employer who will get in trouble, not the employee. They employer is a withholding agent and has failed to properly withhold and remit taxes. The employer is on the hook for 100% of the taxes, the penalties, and the interest.
     
  9. TaxPhd

    TaxPhd Light Load Member

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    More incorrect information. It is not up to an individual or the company owner. You can't just decide that someone is an employee or an IC. If someone is in fact an employee, and you say that they are an IC, it doesn't make it so.

    It IS illegal if they are in fact an employee instead of an IC.

    You really need to stop talking about things that you don't understand. You couldn't be more wrong about this.
     
  10. TaxPhd

    TaxPhd Light Load Member

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    A very common misconception that people have is if they are audited, and the IRS doesn't say anything about a particular issue, that the IRS has somehow "signed off" on the issue and it is OK. Nothing could be further from the truth. An audit doesn't mean that the IRS has approved or blessed everything that the taxpayer is doing.
     
  11. Hurst

    Hurst Registered Member

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    Well then explain to me where what I am doing is illegal?

    My taxes are paid,.. I am well paid,.. my boss has a happy driver who respects his truck and company. All I see is win win.

    Hurst
     
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