Tax bomb ?

Did your tax guy happen to mention that the standard deduction increased to 12000 for singles and 24000 for married folks? Most employees will be able to file their taxes on form EZ and avoid paying someone to prepare their taxes. That's not exactly making tax preparers happy.

 

Can you get them to pay you on a 1099 instead of a W2?

That increase in standard deduction is nothing but a shell game. They took away exemptions and most miscellaneous deductions. I’m not afraid of losing business, next year people will not understand tax returns at all. If they do understand now, they are taking steps to do responsible tax planning.

 

There will tens of thousands of hard core OTR drivers next year just figure this out and be shocked at the "penalty" they now have to pay.

The net result of the increase in standard deduction and the loss of the exemption and loss of employee expenses deductions will cause many truckers to pay MORE in taxes then they ever have.

I'm just one of many who are now cutting hotel stays and meals to bare minimum. How's that good for the economy? Driving OTR is not bad enough and not enough sacrifice? Now we have to pay more to the government to do this lousy job that provides for no personal or family life?

 

I truly hope you either have your forms backward or are not really a tax preparer. Asking a company driver if he can get his company to pay him as a contractor instead of an employee is not only bad advice, it is criminal.

 

I guess the thinking is, as a self employed individual taxpayer (driver contractor), then those lost deductions would come back, in addition to the other tax liabilities.

 

I second that driver

 

I am sure the though process was as a contractor you would have more deductions, however what is usually missed is the fact that as a true contractor you also have greater expenses and exposure. Having worked as an employee, lease operator and fleet owner it all works out to about the same in the end, assuming you are only claiming legitimate deductions. Sure,someone being paid as a contractor could claim many extra deductions, maybe even double-dip, but in the event of an audit it would not hold water.

I am sad that the transportation worker per diem deduction is going away, although I never could take full advantage of it since for most of my career I was not qualified being local. Also my home state, Pennsylvania, does not recognize the automatic deduction and required me to claim only actual expenses supported by receipts. There will be work arounds going forward but they will require better record keeping to be fully exploited. I suggest learning how to journal every single expense and document them electronically, then sort it all out at the end of each quarter so you are better prepared for the end of the tax year.

 

It's not criminal at all. Owner/Operators receiving 1099s will still be able to deduct their expenses, employees will not. It simply takes discipline to take care of taxes yourself.

 

If he is currently paid on a W2 then he is an EMPLOYEE and is not eligible to be paid as an owner/operator, so yes suggesting he ask to be switched to a 1099 would be criminal. I wonder what other shady advice you give as a "professional".

It isn't about discipline, you either meet the independent contractor test or you don't, simple as that. It is a fair assumption that if the employer is withholding taxes then the arrangement does not allow for contractor status.

Perhaps the more appropriate advice would have been to simply point out that business owners will still have deductions available for qualified travel expenses. It may have been the way it was said, not what was said.

That statement implies deception, not advice to leave an employee situation and become a business owner.