Taxes?
 

If there another post around here about this then I am sorry but I could not find it so I am asking it again ( maybe). I have been offered a driving job by a friend. He is going to pay .30/mile about 3000-3500/week. But he is going to pay with a 1099. Here is the question about how much % should I keep out for taxes on lets say $900. (3000 mile week). Any help will be appreciated

Based on the numbers you gave it looks like you only plan on working about 33 weeks out of the year. If we assume this means 230 days then you're federal income tax and self-employment tax will be around $5600 for the year. Assuming you work that much you won't be any higher than this. You would be lower if you have dependents or enough deductions to justify itemizing but it's a good safe number. Also, don't forget your state taxes.

Re: Taxes?
 

I would avoid this at all costs - it will end up causing you more harm than good.

Besides - if the DOT looks at his operation, it will be found that you are an EMPLOYEE, and therefore he must be paying you via a W-2.

There is a reason he wants to pay you with a 1099 - it's cheaper for him to do so. He doesn't have to pay FICA on you then.

But when push comes to shove, it is illegal.

I agree with Rev, it's illegal. Guys try this all the time in construction. At those figures you're an employee.

Just for kicks though, is it possible in trucking for someone to provide their own liability insurance and workers comp. but drive some one else's truck?

Technically, their subcontracting their services, just using the owners truck. Of coarse the rate (either percentage or mile)would have to be much higher to justify the added expense.

One of the criteria for whether you are an employee or not is whether or not you have complete control over how a job is performed. Many people who are O/O's for large companies (particularily those in L/P scams) are actually employees, but don't realize it.

Exactly right Rev, I guess I should have also said you have control over when you will work and how the job is performed. Also the ability to sell your service to anyone.

Wasn't there a company that done that and the state labor board said they were employees. I want to say it was fed ex dhl or someone like that

I used to get a 1099 at an Atlas Van Lines agent, paid hourly. My check was wage X hours, and no taxes taken. I didn't have control over the work and how it was done, and I was exactly the definition of an employee.

As said above, 1099 means you have direct control of the operation and/or work performed. I can't say its illegal or not, as I've been 1099'ed by United as a company driver in between summers using their truck to do 800 mile runs.

I discussed this with the IRS a couple of years ago. There is a very fine line between issuing a W2 or 1099, as far as trucking is concerned. For a driver to be considered an independent contractor they will be able to determine what they haul and where. They are not under direct dispatch. If your friend finds your loads and you are forced to take the load he gives you, then you will probably be considered an employee and should have taxes taken out and issued a W2. If you decide which loads you take and where you run, you can be considered an independent contractor and could be issued a 1099. You could be offered several loads from which to choose or find your own loads. As an independent contractor you are in control as to how you work. That is the main distinction as relayed to me by the IRS. I would put aside about 28% for self employment taxes (15%)(FICA) and income taxes (13%). Self employment and FICA are basically the same. If you work for a company they pay 1/2 of the FICA or about 7 1/2% and you pay 7 1/2%. Your income tax rate will depend on your deductions. If you have doubts, you should go to your local IRS office and ask them. I think everyone should be responsible for their own taxes. It will give you a much different perspective about paying taxes if everyone had to sit down and write a check to the IRS every week.

Fedex ground package drivers are suing Fedex over this issue. The company considers them contractors, but they pretty much control everything. Uniforms, how to walk, drive, release packages, hold their keys, etc. The drivers can sell the rights to their area (with company approval), but other than that they are no control.

So far the company has lost every time in court, but keeps appealing. Will be years before its settled.

My two cents. If you are an independent contractor shouldn't you be paying for the truck, fuel, maintenance, etc. If the company is doing that than you are an employee.