Independent Contractor Status

[chetjester]

This became an item in another posting and I wanted to give it its own thread, if that's ok.

It seems there is question about independent contractor status. I have taken a job driving a truck as an independent contractor. I pay fuel and tolls, O/O pays me per mile. I am responsible for all my taxes. This means I will probably have to do quarterly returns and will be responsible for the full Social Security payment. That's not a problem.

But, I'm getting the impression some people are bothered with this. Are all the drivers out there who drive for Owner/Operators having their taxes deducted and being paid a net amount? W2 instead of 1099? I sure must be green if this is true. I had no idea.

I was approached when I first posted an ad by an owner/operator to drive his 18-wheeler. He was leased on to a company in Oregon. He tried to explain to me what a big favor he was doing for me because he was going to give me 23 cents a mile and not deduct taxes!!! Oh my!! Why pay me at all? LOL. He seemed to think by not taking taxes out he was paying me more than if I were to get paid a normal 33 cpm or more. I attempted to explain to him that instead of doing me a favor, he was making my life harder as I would have to do quarterly returns and be responsible for the full SS tax. Now, if he wanted to pay me 40 cpm, I might consider it. But 23 cpm? I may have been born at night, but it wasn't last night.

Anyway, I'd like to know if I'm wrong in thinking that all you drivers out there are getting your taxes taken out before you are paid. Please enlighten me.

Thanks.

 

[Weave]

When I was a driver for a fleet owner it was the same for me as it is for you now, my owner did not do any withholding, and I got a 1099 MISC form at the beginning of the year. This is still the way it is for me as an O/O, the company I lease to gives me the 1099. Where you are suppose to pay a quarterly estimated tax, you do not HAVE to. I just do the taxes once a year, and then will pay a small penalty for not making the quarterly payments (around $80 or so in my case.)
Some fleet owners might be willing to take the withholdings from your pay. But if they don't and use the 1099, you have to set some of the money you make aside to pay your taxes in April. Ask Frank Katz in the tax forum what a good amount to set aside would be in your case. My guess is somewhere around 20%. No matter what, that O/O would have to report your income to the IRS, and issue you a 1099 so you can file your taxes. Sounds like he was trying to pull a fast one.
-Weave-

 

[chetjester]

Yeah. I can't believe he would think I was that gullible (sp?).

I've worked as a 1099 consultant for some companies. I'm very aware of the responsibility of the taxes.

Thanks for agreeing.

 

[Weave]

Knowing that you have to pay income tax either way, you should have told him you can drive for Schneider for .23 a mile, and get a good benefits package with that:7
-Weave-