1099-Misc Tax Help... PLZ
 

I was wondering if any fellow truckers here know how to file income tax if your paid on 1099-Misc even though you never own a truck? A very good friend of mine drove for a year for a small company and was presented with a 1099-Misc since no taxes were withheld from his bi-weekly pay checks. I know he has to file Schedule-C to show his deductions coz on the paper he operated the truck as if he was the owner. But I can't find any help(without going to to a tax guy) anywhere that states the steps to file 1099-Misc. Has anyone here ever filled taxes based on Driving-1099-Misc and can share steps involved filling year end return.

Much Regards in Advance.

The fact that he received a 1099 is all the more reason to see a tax professional.

I would never work as a company driver for any company who isn't withholding. It's illegal anyway, as the job description and duties would show that he is an employee, not to mention it throws the tax burden on the shoulders of the employee, and allows the employer to get out of paying their required employee taxes.

You definitely need to see a tax professional. There is more to it than just filing the federal taxes. You may have a self employment tax due, depending on the actual relationship and whether the IRS considers this a contract employment arrangement or not, there may be SSI and Medicare to pay in. For the most part unless you indeed own the truck yourself a truck driver is an employee and as such all taxes must be withheld by the employer or fines may be accessed. Just because an employer says you are contract does not clear you, you the employee are responsible for ensuring that you are classified properly to protect yourself financially at the end of the year. I hope your friend put a LOT of money to the side to pay for taxes!!!!

As was mentioned, he's going to be liable for self-employment taxes. The only way to avoid that is to petition the IRS for a change in classification (which he would win) in which case his employer would have to issue a W2. Even in that case he'd still be liable for all his regular taxes, i.e., 7.65% plus all state and fed taxes since, presumably, nothing was withheld. As far as physically filing, he files a 1040 and simply puts the income in the appropriate box. My guess is he's not well-versed in tax filing...tell him to pay a professional.

The friend needs to file form SS-8 with the IRS to have them determine if the person was an employee or a independent contractor. (there is a fine line between the two) If the IRS determines that the friend was improperly classified as a IC, the employer will be required to pay all taxes not withheld.

You just put it on the line that says other income. If you use Taxcut or any other program it's just Misc 1099 income.

It's simple, I've been doing it on and off for over 30 years when I did side work for other people.

Your friend might want to consider talking with someone such as H & R Block. They won't charge much and will likely do it right. He could always buy one of the tax programs and follow the prompts. Being paid with a 1099 could actually lower your tax bite. I have always preferred being paid with a 1099 when I drove for someone else. I usually managed to pay less in taxes.

H&R Block knows NOTHING about the trucking-related deductions.

Rev do not be so sure about that. Were I am at the so called best tax prep specalist for OTR truckers just got charged for tax fraud for falsifing tax returns for OTR truckers to maximise their returns. She is looking at 300 years in the PEN and 40 MILLION IN FINES. She also did taxes for alot of the county board should be interesting soon. H&R block on the other hand makes sure that whatever you deduct is legit and will not raise a flag at the IRS of the 2 I would take the safer route and avoid the massive penalties and jail time. By the way I used that same person in 1997 and ended up being AUDITED thanks to her in 1997 cost me an extra 2 grand in taxes thanks to her creative book keeping.

GMAN, hate to disagree but I can't see how you'd ever have less tax liability being paid on a 1099. At a bare minimum your liability would be exactly the same as your income is what it is no matter how you're paid. Most likely you'd owe more since your liable for self-employment tax. It is true that your withholdings will be less, but just because you're having less withheld does not mean you're paying less in taxes.

I agree with Rev on the H&R Block. There reputation is far from sterling when it comes to tax prep. That's not to say there aren't individual offices that do a good job, but the company-wide rep isn't great among those in the know. With anything other than a basic 1040 I'd go to a CPA unless you're knowledgeable enough yourself to monitor a tax prep's work.

But hey, that's just one opinion :lol:

two opinions. :wink:

I completely agree.

JEZZUSS,Rev stop it! I completely agree......again 8)

I'm sorry. I'll try to be more conflicting in the future.

I have used a corporate structure most of my life, so my situation is different. However, as I recall if you report the 1099 income as wages, then it may be necessary to pay self employment tax on the entire amount. If it is reported as business income or other income then you may not have to pay the self employment tax or may only have to pay the tax on the net after deductions. Income tax is payable on the net after deductions. Since I am not a tax professional I recommend you consult with one. Everyone is different. I don't want to pay these people any more money than is absolutely necessary. In any case, that is what I was referring. If I remember correctly you only pay self employment tax on wages.

As far as H & R Block is concerned, I have never used them. However, I know a small fleet owner who has used them for years. Apparently, he is pretty satisfied with them. Personally, I prefer a CPA. There are some good public accountants who work with trucking companies. I know of one locally who works with them and is highly regarded. In fact, he works with one carrier who has about 100 trucks. I think it is a matter of finding someone who is familiar with this industry, regardless of what they have behind their name. However, an individual's taxes should not be that difficult for most people who regularly do taxes. There are tax software packages that are supposed to be good. From what I understand, all you need do is plug in the numbers. It asks questions, you answer and the software does the rest.

The IRS has a website where you can get forms and instructions for about everything. I believe it is www.irsforms.com? You may find the answer you seek on their website.

You only pay Self Employment tax if there is over $400 profit. It's form SE.

You also get to write off 50% of the tax. Look at the form. It goes on line 27 on the form 1040.

If you have a 1099, you fill out the Schedule C. Transfer that amount ( profit or loss) to line 12 on the form 1040.

You can also write off 50% of your health insurance premium.

Thanks for clearing that up, Bigmon.

But this wouldn't be self employment in this case, it is a company scamming the driver into paying their share of taxes. I highly doubt anyone in this situation would have enough legitimate deductions to wipe out any taxes due. If the 1099 recipient were an O/O responsible for all the truck expenses, yes, an employee getting an illegal 1099, no.

I don't see what is illegal about him getting a 1099. He can be considered an independent contractor. The IRS allows drivers to legally be considered an independent contractor. There is a fine line with drivers and certain criteria must be met. Some may be considered independent contractors while others may not. He evidently agreed to be paid as an independent contractor or the company would not have issued one. In any case, all the poster asked was how to declare the 1099 income.

Kevin Rutherford talks a lot about this. He has his own show "trucking business and beyond" on xm 171.

Basically what he says is that if there is NO risk to the driver, and he does not own any equipment, he is a company driver not an independent contractor. The IRS is coming down hard on this. The IRS and several states(37 or so) also made an agreement where they're going to "share" information regarding this. So if the IRS finds out, expect the state to be not too far behind and vice versa.

This guy knows what he's talking about, he's done thousands of tax returns for truckers. That's basically all he does.

I would recommend your friend call Kevin during the show.

303-302-1234

His show is live mon-wed 11 pm CST for an hour. Repeats thursday and friday nights. 3-6 sat and sun CST.

Tell him to call right at the beginning, or even a little before the beginning of the show.

He will get the EXACT answer that he needs.

I spoke with the IRS myself about this a couple of years ago. According to what I was told, it doesn't have anything to do with whether the driver owns the equipment. It has to do with control. If the driver can decide where, when and how he does his job, what loads he takes, then he can be considered an independent contractor because he has control. If the driver is under forced dispatch and doesn't have any control over where or when he does his job, then he is considered an employee. If you stop to think about it, that makes sense. I don't think this guy really cares. He just wants to make sure how to file his taxes. I don't think he is seeking someone to inform the Gestapo (IRS). Perhaps this is the main reason so many carriers encourage the fleece purchase deals. :?

GMAN, if you're incorporated you shouldn't be getting any 1099's. My accountant used to stress that to me. I had one company that 1099ed me every year even though I'd tell them not to, and he (my accountant) couldn't stand that.

Of coarse you should ask your own accountant. 8)

You are right about companies 1099ing me with a corporation. I still have several companies who continue to send them. I suppose is easier to send them to everyone rather than trying to decide who is incorporated and who isn't. :?

Isn't that the main reason for the recent complaints from Fedex contractors? I think there have even been suits filed over it?

I think you are right, Red Clay Rambler. I don't recall the specifics, but believe there was a lawsuit involved.

Fedex has lost most, if not all, of those suits. Even though I disagree with GMAN's assessment of this issue, the Fedex cases aren't really the same. Those contractors (or should I say drivers) were totally micromanaged; very little control over their operation. Not the same situation GMAN describes. There are actually some things in the works in Congress right now that could clear things up :wink:

As usual, I wouldn't suggest treating drivers as contractors.

It would be so much better if everyone had to sit down and write a check for all of their taxes every time we got paid. Do I hear REVOLUTION??? Or perhaps TAX REVOLT???!!! :shock: