W2 vs 1099 for a company driver?

Discussion in 'Experienced Truckers' Advice' started by Chattduck, Jun 9, 2015.

  1. bigdogpile

    bigdogpile Road Train Member

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    Try reading the IRS GUIDELINES F&Q to see if you "qualify" for 1099 pay,you probably need to own a truck and have all the "paper" in your name.
     
    12 ga Thanks this.
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  3. Chattduck

    Chattduck Light Load Member

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    Awesome info!

    They are giving me the choice of w2 or 1099. I owned a construction company a while back, and just wondered how things have changed tax wise.

    Here are my thoughts. If I can get the company to sweeten the pot a bit to cover their half of the SS, I could 'bank' more cash between now and the end of the year. Pay myself a salary which would be wages, the rest would be income to my company. Before the end of the year, I plan to purchase a truck and trailer. This extra 'pot' would speed the process. Then come tax time, I could expense the truck, which would probably wipe out the tax bill. I am not sure how things have changed, but you used to be able to expense 17,000 per year of equipment purchases. Had to depreciate or carry over the rest.

    I already have a Corp, business bank account, EIN, and MC/DOT #'s. Just need to put them to use.

    I plan to call a CPA, but any thoughts will be appreciated.
     
    Hurst Thanks this.
  4. Hurst

    Hurst Registered Member

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    Sounds like you will do well under the 1099 if you can get them to make it worth your while. I like it because you can hold cash as you need and pay your taxes as you choose,. quarterly, bi-annual, annual,.. what ever. I liked it because I understood how to manipulate it with 'write offs'.

    Hurst
     
    texasbbqbest Thanks this.
  5. texasbbqbest

    texasbbqbest Road Train Member

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    I've gotta say that even though I don't plan on becoming an O/O in the near future, I do enjoy reading all the posts from you guys that are.

    So THANKS!
     
  6. Chattduck

    Chattduck Light Load Member

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    I checked with my CPA. Section 179 for 2015 allows for a $25,000 deduction for equipment that is purchased in 2015 and put into use on or before 12/31/2015. Any amount over 25k can be put on a depreciation schedule.

    I love it when plan A works!
     
  7. captainmidnite

    captainmidnite Bobtail Member

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    I am one with "skeletons" child support arrears so until I manage to jump thru their once a year hoop for like 1/10 compromise, I've found 1099 works better for me. I've been stranded 2x in KY and chicken coop at sidewinder on the 8 CA side, while garnished paying both support and dinged to reimburse health ins. System and this back in 2003-5 monthly $800! Blamed by last co. Issue at sidewinder even though both times child supports fault not send in releases to DMV in Sac. So there are exceptions, just have to choose the lesser evil.
     
  8. atlasshruggery

    atlasshruggery Light Load Member

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    As far as added tax deductions go for 1099, I don't see that being worth much. Truck drivers already get a per diem for every day on the road, which adds up to a pretty penny. You get to write off all expenses incurred on the road, which is quite broad, and can add up.
    Truck drivers on W-2 already have some of the best tax protection in the country. Whatever is in the higher bracket that you can't write off you just shovel into a 401k(which I hope everyone is maxing out anyway!) Or with children you could open a 529, and most companies have below average health plans, which qualify as a hdhp(high deductible health plan) which allows you to open an hsa, which works like a super charged IRA, all deposits are tax deffered, just like a 401K, except additionally to the income tax defferment, you don't pay Medicare, or social security taxes either. On top of that, all capital gains are tax free, just like a Roth account, and you can withdraw the money tax free for medical expenses, or tax free period after retirement age.
    Bottom line is, with creativity you can lower you're tax rate to nearly what it could be on a 1099 anyway. So it's not worth taking the extra risk of unemployment, workers comp, and other worker protection. Added to this. A lot of these issues depend on the state, so make sure you know the state laws regarding unemployment insurance, and the like when it comes to 1099.
     
    captainmidnite Thanks this.
  9. atlasshruggery

    atlasshruggery Light Load Member

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    If you do end up going with the 1099 for some reason, make sure to do auto withhold. It's been awhile, but if I remember correctly, you can elect to have a certain percentage of your income withheld.
    Getting a suprise 10,000 dollar bill at the end of the year is not fun. So just automatically have 15-25% withheld depending on how tax efficient you are.
     
  10. Chattduck

    Chattduck Light Load Member

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    Well, here's my big update. I've been busy and don't get on here as much as I would like.
    First and foremost, a huge THANKS to Rollin Coal and GMAN for their advice and a lot of things associated with getting a truck on the road.
    So, back in june, I started with a company that ran my butt off. Pants don't fit any more. 3500 - 4500 miles a week, but home for at least a reset every weekend. Was able to start banking some money pretty fast.
    In Sept, I bought a 1999 century, 1.2mm, but with a fresh out of frame 12.7. New caps, straight frame with no rust, paid 200 over the rebuild invoice.
    Now the fun starts. Took it to my local shop, for the fine tooth comb look over and fix, and well, things get expensive fast, lol.
    Front end was shot, so not only king pins, but the spindles had to be reamed for new tubes to be welded in for the king pin bushings.
    New lead spring bushings front and right side on rear, then a three axle alignment. Everything else below the steering box checked out good. She goes straight now!
    Front brakes good, put brakes on read axles, drums ok.One air bag leaking, I replaced all four.
    Topped all the fluids, driveshaft and joints checked ok.
    Replaced a few lights, fixed a few air leaks, replaced passenger side windshield. Fixed/replaced electric window and mirror switches.
    Had a leaking heat/ac control valve behind the dash. Dash apart, real pain, didn't go back together as good as it came apart. Installed new low air light and buzzer.
    They gave me new DOT insp sticker and paperwork.
    $6150 so far
    Take it home and strip off the fairings, spare tire, and etc, and get out the degreaser and pressure washer. Not coming clean very easily. So, scrub brush and a bucket of diesel, the scrub brush with dawn gets it where I want it. Actually started sanding it down for paint before the weather turned colder.
    As far as I am concerned, she's road worthy with the addition of a steer tire that I will pick up when I get on the road.
    Lease on with a sister company to the one I was driving with before. I think I have a pretty good deal. They take 12% off the top, all my insurances, inc bobtail, and all are $700/mo, trailer is $715/mo. So, I can figure 81-82% of gross, all in, inc dispatch and trailer, and factoring. Also, I can find my own loads if I want, and can go where I want. But if I send myself to a dead area, well you know how that goes. I told them to sent me where the money is, watch the weather, no NYC. I think it's a good deal, but it all depends on how I get along with the dispatcher. But so far as good. They have a fuel card if you want, and fuel is then deducted. He showed me the payroll that was cut the week before christmas week. After fuel, the OO's were grossing 27-2900 on 2500 miles. Said will get better this spring, hopefully.
    By the time I get everything ready to go, it's christmas week, and I am either self employed or unemployed, but either way, my first executive decision is to take a week off, lol. I did read Blairs posts after all, lol.
    So, the monday after xmas, I get a steer tire, have the other checked, beads in both, fill with fuel, and head for Chicago. Front end was bouncing like crazy for about 300 miles, then it smoothed out a lot. I think the bags of beads took a while to break open. Will pour them in next time. Had some paperwork to do, and picked up a 2015 leased trailer with side skirts. Company said they would pay for bobtail fuel to Chicago.
    Add tire, and I'm at $6600 total
    At this time, new 12.7 has about 200 miles on it, and just doesn't seem to have much power. I was kind of wondering if it would pull a full load, cause it didn't seem too peppy with an empty trailer. With the trailer, she rode dead smooth, and straight. Never had a freightliner that went no hands straight.
    Deadheaded about 60 mi to Sturtivant, Wi, for a pickup. 26,000 lbs, 3 drops, 2.73/mi inc deadhead, have me home around lunch on New Years eve. Perfect. Pay was a little higher because of the extra stops, and the 3 am delivery times, but I was glad to get it, especially looking at a holiday weekend.
    The 12.7 pulled just ok. Def not nearly as good as the D13 Volvo that I was used to. By the time I got back into TN, power was definitely much better. Engine has 1900 miles on it now.
    So all in all, a successful maiden voyage. No road service, no dealership or service center involved.
    But wait, I forgot to mention my little adventure. It has been so warm in TN that I never checked the heat. Ac worked fine, no heat at all. Turn the hose valves on you say? Still no heat. I'm in chicago at 3 am, 28 deg with the wind blowing, and not an ounce of heat. Fix it tomorrow. Then between hustling to get my trailer, go to Wi to get the load, then try to make it back thru chi before rush hour, no time to work on heat. Didn't make it thru before gridlock either!!
    So, drive down to I 74 east of Indy, think about a cheap motel. Naw, heck, I'm tough. Put on everything I had, doubled the blankets. Still froze. Wed, I picked up one of the 12v elec blankets. Worked well, but with the cab being so cold, it was still miserable. Thurs, on the way from Ft Wayne to Chattanooga, everyone I passed had to of thought I was crazy. Down coat, gloves, ear muffs, elec blanket in my lap, and you could see every breath. But, I'm a take it to my house and my mechanic kind of guy.
    Lunch Thurs, it prob around 60 at home. I drop my trailer and head to the shop. Turns out the temp control cable was broken. We rig it so I have heat, look at a few things and call it a week. Next Sat, he penciled me in some time to rebuild the steering box to get some play out of the wheel, fix the heat, and test the CAC if I still don't think the power is there.
    So there it is, hope i didn't bore everyone, but that's my experience of buying an old truck and getting it on the road. And I did get in in service by the 12/31 deadline, so my tax deal should work out.
     
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