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Tax question - 1099

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Hi all. I'm working construction away from home for a while and I'm being 1099ed for it. I have been here since Oct. of '07 and might be here through Feb. of next year. I don't really have much that I know of that I can deduct other than tool buying. My question is can I put 100% of my tax savings into tools and come out even on the other end or do I still need to save some? I was able to carry over some net operating loss from last years RV transporting but that won't cover everything this year as it has in the past. Any ideas? I know there has to be some tax people in here. Thanks.
 
So many questions to answer here. Are the 1099's being written to you or a corp thta you have? If they are being writtin to you, then I think that you are going to have to pay self employment tax on all that, not a pretty sight.

I am not an accountant or tax person. You need to sit down with an accountant sooner rather than later. the accountant will help you plan. You may also be able to deduct more than you think.

AC
 
Yes, you are right I guess on talking to a CPA. I really hate 1099s but it is what it is. It's personal not a corp. to answer that. I had to pay only 200 for self employment last year and that was with 3 different 1099s but as stated before, the 6 months worth on RV transporting in '07 and loss from the years before offset most of my liability. I didn't have to pay any income tax but this year will probably be a bit different. #@$%!
 
CumminsPower,



Save ALL receipts. Your rent, utilities, even cable or satellite television should be deductible if you are living away from home in order to work but maintaining a residence in another city.



The same applies if you own a travel trailer and use it for temporary housing. If that is the case you can depreciate the value of the trailer and interest paid on a loan if you are paying payments.



If you use your truck in support of your work you can depreciate the value of the truck, deduct interest if you make a payment on a loan, and deduct annual miles or all fuel, insurance, maintenance and repair expenses.



As a transporter/truck driver you can deduct daily meal expenses but I'm not sure whether the same applies when working away from home as opposed to driving away from home.



You can deduct tool expenses and other expenses such as supplies necessary to perform the work you're paid to do.



You can set aside a certain amount of income pre-tax for investment in a retirement account as well.



If you are making a profit, ie if net income exceeds expenses, you are required to file a quarterly income tax return and pay income taxes quarterly. If you fail to do so you will have to pay a penalty and interest.



You will also be required to pay self-employment tax which means 15% of net income for social security & medicare and that must be done quarterly.



Whatever you do, don't make the mistake of thinking all the money you earn is yours to keep or spend. Nancy Pelosi and Harry Reid want a big chunk of it.



You have a need for a good tax accountant or CPA. What I or others tell you is well intentioned and may (or may not) be correct.
 
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Quarterly income tax payments... yes but they suck. :{ You have already missed two April and June and there can be penalties.



If everyone had to make quarterly tax payments there would be a revolt and not I am getting money back frame of mind. :mad:



Cary:cool:
 
Quarterly income tax payments... yes but they suck. :{ You have already missed two April and June and there can be penalties.



If everyone had to make quarterly tax payments there would be a revolt and not I am getting money back frame of mind. :mad:



Cary:cool:



I have missed quarterlys before and they usually don't amount to very much. The most I have paid in penalties was around 30 bucks. I think its a percentage + time overdue. I don't think I'd make a habit of it though.



Your right about people revolting. All most people think is: Cooool, I got thousands of dollars back. Idiots don't realize they paid many more times that in the first place. :p
 
Unless I miss my guess, your employer is required to deduct your federal, social security taxes and workmans comp insurance out of your pay checks, especially if you are working in the U. S. , Unless of course you are self employed. Don't see any other way for them to do it and stay legal. If there is a CPA or someone in the know, pipe in and educate us.

WD
 
If he gets 1099 forms, then he's considered by the employer to be an independent contractor, *NOT* an employee. Taxes are only withheld for employees, not for contractors.

Having said that, without knowing more specifics about the OP's particular situation (supervision, tools, scheduling, etc. ,) I can see it going either way. The IRS does have a test for contractor vs. employee.

Either way, TALK TO A CPA!
 
Thanks for the thoughts guys. I'm sure I am considered an independent contractor. I'm working with my cousin who is younger than me but has the construction experience so I work basically work under his direction. He also gets a 1099 of course. He has most of the tools, while I have only the basics. The guy we are working for is a friend more or less from my high school days. We have been working on his own projects (house, shop at house and a shop at his business). Oh what fun. I wish I had the energy to figure out how to get around this whole less than legal IRS income tax system like some people seem to be able to do.
 
I wish I had the energy to figure out how to get around this whole less than legal IRS income tax system like some people seem to be able to do.



Sorry, there is no way to avoid paying income tax unless you quit working and become a welfare recipient.



Nobody is able to simply earn and legally avoid paying taxes, it can't be done. You can, however, deduct legitimate expenses incurred in connection with earning.
 
You are probably right about no legal way around it. All I know is that it's not fully legal (unconstitutional) from what I've seen but it's in place and they have the power to keep it going unless there was a mass uprising. I know some people that I think are somehow flying under the radar but I don't know enough about it to be talking I guess so disregard that comment.

I guess the reason I'm clueless is because I have never had to pay anything with previous 1099s because I always had something like a w-2 along with to cancel them out or when I was driving I was actually showing a loss using standard deductions so this is the first time I might actually have to pay.
 
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Yes, I know what you mean. In three years transporting I had good positive cash flow but was able to show a legal loss on my transporter activity that reduced my tax liability on other income.



Your task now is to keep receipts this year for all the legal deductible expenditures you can think of in order to reduce your "net income" down to the lowest possibly dollar.



Remember, your employer, who ever writes the checks, is going to send a copy of the 1099 he gives you to the IRS and he will claim all payments made to you as legitimate deductions from his net income.



That's why you can't get away with non-reporting. He will report it for you.
 
yeap, I was able to get out from under some pretty big credit card debt transporting for 2. 5 years but was able to show a legal loss, which was nice and the only way it would have been worth being out on the road so much of the time. I won't be trying to hide anything with the 1099s no doubt since the IRS sees those.
 
Your friend who hired you guys is playing with fire. I have been a licensed contractor for over 25 yrs. and tried that 1099 game with a couple of employees when I first started, the state came in and busted me real good. Especially for you guys working in the field you need a contractors license, I am generalizing here all states are different . I hope you are getting at least double what a regular hourly employee is getting. Good luck
 
I have no idea what GA has for laws in this situation. The business is rebuilding wrecked, burned, worn out equipment mainly that he buys at online auction, from rental companies and who knows where else. He also fixes wrecked cars, RVs or just about anything that will make a dollar. All his workers are on 1099s and no I'm not getting paid enough to be on a 1099. This is only temporary for me. My cousin (he is also temporary) wanted and needed my help and work back home wasn't really keeping up after I quit driving so here I am.
 
I have no idea what GA has for laws in this situation. The business is rebuilding wrecked, burned, worn out equipment mainly that he buys at online auction, from rental companies and who knows where else. He also fixes wrecked cars, RVs or just about anything that will make a dollar. All his workers are on 1099s and no I'm not getting paid enough to be on a 1099. This is only temporary for me. My cousin (he is also temporary) wanted and needed my help and work back home wasn't really keeping up after I quit driving so here I am.



Sorry for some reason I got the jist that this was construction . Your probably OK it's just that you should be making good money if you are getting 1099'd. Good luck
 
No, you are right, it is construction that my cousin and I are doing, sorry for the confusion. Right now we are finishing up a 40'x100' steel shop building where the guy will move most of his operations into. I was just mentioning what his business is. My cousin built a house for him also and I got here on the tail end of that. I also helped finish up a '24x60' shop on the house property.
 
Your employer is walking on a razor blade. There is a thin line between an employee and a contract business. It is one of those if it walks like a duck it is a duck. He may be avoiding not only taxes, but workmen's comp and insurance. Does he use your business name or your personal name on the 1099? Does he require you to come to his property at a certain time everyday, like punching a time clock? Can you work the hours you want or do you work a set amount of hours everyday? Who makes decision on what you do everyday? That said you are not responsible for his decision to 1099 you or calling you a contract employee/business, but he could be fined and be made to pay costs for employing you.



If you are truly a business doing contracting, do you have a license, insurance, and workmen's comp? If you get hurt on the job who is responsible? If someone is hurt because of something you built (to code or not), who is responsible? Do you need permits?



I know it is just away of making money and there are way too many rules, but once you are in court or hurt everything changes. #@$%!



I am not saying I have not done what you are doing, just be careful. Good luck.



Cary:cool:
 
We are free to do whatever we want, there is no punching in or anything like that. I do realize the dangers with no insurance or workman's comp and believe me its something I think about. No we are not licensed nor do we have a business name. Everything is in our personal names. It's my understanding that we don't need a contractor's license to do what we are doing, under the current law but that's supposed to be changing here soon from what I hear. We are trying to do our best as far as code and all that. Things do get inspected by the state guys and signed off so all should be fine there.
 
Does the employer pay you by the hour or week or did you and your cousin contract to build the building for an agreed price? Is he paying you by check or in cash? If checks, do his checks use a business name or simply personal checks?



From the few details you've shared it seems you are working for an outlaw. Tax dodge schemes like the one you are apparently in are common. The IRS has a standard set of questions used to determine if you are an employee or contractor. My guess is you are an employee but being cheated out of the required employer social security contribution and worker's comp coverage required. The employer is not withholding and paying your social security and income tax payments and you are not making quarterly reports and payments either so a big problem for you is developing. Not a good situation to be in.
 
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