Work for company in one state, live in another state?

Discussion in 'Trucker Taxes and Truck Financing' started by tscottme, Jan 29, 2021.

  1. tscottme

    tscottme Road Train Member

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    I am considering becoming a Lease-Op or Owner-Op for company in Idaho. I've worked here since last summer and I'm impressed with them. I know a few of their Lease-Ops and they are making what seems like good money AFTER EXPENSES.

    My question concerns my residency in an income tax-free state and working for a company in an income-tax collecting state. Should I get accounting & tax advice from accountant in the company's state or my state of residence?

    A friend says to become an S-corp, pay myself a small reasonable salary. Pay all taxes on that salary rather than paying the taxes on the revenue minus legitimate expenses.

    Looking forward to any insights. Is any of the regulars considered a guru on taxes & business info?

    Thanks
     
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  3. Chr1s

    Chr1s Bobtail Member

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    You will be an independent contractor. They aren't going to withhold any taxes so it doesn't matter where you live.

    Your friend is correct. Pay yourself reasonably, not take every penny you get. Your friend is however wrong, you will pay taxes on all NET income. You can't make $2,000 a week, but only pay yourself $800, and not pay taxes on the other $1,200. It doesn't work like that. If that is what your friend is doing, then he's committing a felony and will be facing years in prison when he gets caught. With an S-Corp, you could pay yourself $800 a week and pay personal income taxes on that, and have the $1,200 a week be charged at the corporate income tax rate, but you have to sit down and do the math and figure out if it's really worth going through all of that.
     
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  4. tscottme

    tscottme Road Train Member

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    So I pay federal taxes and state taxes, if any, based on my residency?

    I guess the alternative to S-corp is LLC?
     
  5. Chr1s

    Chr1s Bobtail Member

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    Both are a waste of money. Just remain a Sole proprietor.
     
  6. joseph1853

    joseph1853 Medium Load Member

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    Call a CPA that specializes in trucking taxes. They will tell you that not only do they use LLC for their company all their drivers do also. With that being said taxes are not why they use it it's for the privacy aspects.
     
    slow.rider Thanks this.
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