Comments By Eddie F.

One thing you have to remember as I did, used to be a contractor lease OP, not only does the 1099 says what you made for the year but it's what the company says it's paying you and the amount on the 1099 is what the company is reporting to the IRS that it's paying you.

So when you file taxes your reportable income on your tax form has to match up to the 1099 on your end and has to match what the company has reported. Your not going to be able to hide what you made for the year if it's done in contractor status.

Thank you, Guy. All someone can do is check the accuracy of the income they received that the 1099 shows, to make sure it matches up with what the driver recorded.

The one advantage of 1099 income is quite a bit more can be sheltered with the "Solo 401K account" than an employee with the IRA account. For 2015, $18,000 can be contributed to the account, or $24,000 if the person is over age 50. That money can be spent on American Gold Eagles, and many other things.

One-Participant 401(k) Plans

All things considered, it looks like someone is better off as an employee.

Guyjax explains:

This is not the case here. The company in question transports trucks but does not have any themselves and this company is contracting drivers for their service since they do not have trucks of their own.

So this is simply a casual/pick-up job if you want it? In that case, if you make less than $500 (I think) you don't have to worry about getting a 1099 (or any other documentation)?

Thanks, Errol - the cutoff for getting a 1099 is $600.00

The one thing you can do with 1099 income is open a self-directed retirement account, such as a "Solo 401K account" or "IRA with LLC". That way, the money in that account doesn't have to sit in a bank, but can be used to purchase precious metals, real estate, and other non-market assets. California residents should go with the "Solo 401K account", because if they have the LLC, California will nail them for the $800 per year "franchise fee". Plus, you can shelter a lot more income with this arrangement then you can with an IRA.

Just make a search on this web site for "1099". You'll get topics like this: Employee vs Independent Contractor.

I think your post says you want to get the job, then get the state Dept. of Labor involved:

But I was wondering if the contractor status could be challenged somehow, with the State Department of Labor or others.

The best advice is right here:

The quick and dirty solution is just to find a job with someone else, where the driver is considered an employee.

... because you are and employee! Most trucking "1099" jobs are illegal, unless it's your truck you bring to the party.

This is not the case here. The company in question transports trucks but does not have any themselves and this company is contracting drivers for their service since they do not have trucks of their own.

Good catch there, Guy. Thank you. Yes, the driver is contracted to transport vehicles that are not the employers. Makes sense now.

This is generally the sweet trap people get into with 1099's:

Wow! All my money now, then I'll just pay my income tax in April next year. So, at tax time on April 13 (You get them done at the last second!) you kindly send the IRS a check for about 25-35% of your annual pay, plus "self employment tax" that nobody ever told you about, plus penalties for not getting those quarterly payments in (also, that nobody told you about.) Then you need to calculate those quarterly estimated payments then begin sending them in.

Workmen's comp you thought the owner paid for you? Independent contractors are on their own, so don't ever get hurt on the job. You 're paying 100% of your own health insurance ($250/month maybe), right?

Unemployment insurance? Hey, you are an indepensent contractor, so you work as you choose. One job stops, quick, get another!

Thank you, Errol. It keeps getting worse and worse, doesn't it? As bad as being an employee sounds, it sure beats being a (cough) "independent contractor that is really an employee".

Also, don't forget as a self-employed contractor, you will need to make quarterly estimated tax payments to Uncle Sam at the IRS.

Thank you, Ralph. And if you're short on your estimates, you might face a penalty, also. The bad news keeps getting worse!

Just make a search on this web site for "1099". You'll get topics like this: Employee vs Independent Contractor.

I think your post says you want to get the job, then get the state Dept. of Labor involved:

But I was wondering if the contractor status could be challenged somehow, with the State Department of Labor or others.

The best advice is right here:

The quick and dirty solution is just to find a job with someone else, where the driver is considered an employee.

... because you are and employee! Most trucking "1099" jobs are illegal, unless it's your truck you bring to the party.

Thank you, Errol. Unfortunately, illegal 1099 jobs are all too common. Good idea about talking to the State Department of Labor. DOT might also want to know about situations like these. Thanks also for the link to "Employee vs. Independent Contractor" discussions.

I think you maybe a bit confused about a contractor in the trucking industry.

You can only work for them.... Yep. They want to make sure you are not working for a competitor also while working for them. Makes perfect business sense... Perfectly legal if you sign the contract. It's called a No Compete Clause. People put this in contracts everyday.

No workmans comp insurance and you pay your own social security? Welcome to being a business owner cause that is what a contractor is.

You would be moving someone else's freight (a truck). The bond they ask for in a basic damage coverage in case you damage the truck. Again perfectly legal.

Thanks for the explanation, Guy. It's a sweet deal for the employer, but not so sweet for the employee/contractor.

There's a bunch of guys on this website that have knowledge on 1099 situations. Hopefully they will reply. Of course my advise is worth exactly what you paid for it. And I'm not a lawyer.

Thanks again, Jetguy, let's hope that the others who are more familiar with 1099 issues will reply. You're right that it's best to avoid trouble whenever possible. If they hammer the new employee (contractor) with financial liability from the start, my guess is that it won't get any better down the road.

The fact that the driver will only work for this carrier, plus the fact that the carrier controls what the driver does, argues that the driver is really an employee rather than a contractor.

A lawyer explained this to me- on a business I started- I believe you are right.

The quick and dirty solution is just to find a job with someone else, where the driver is considered an employee. But I was wondering if the contractor status could be challenged somehow, with the State Department of Labor or others.

Challenged somehow? I understand that these rules you stated are IRS rules. So this would be the IRS's responsibility. I see alot of litigation if the IRS did this- could end up in court.

When I see problems, I get away from bad situations.

Thank you, Jetguy. Maybe it's best to let the IRS know about this situation, and see if they later re-post the ad (on Craigslist) as hiring employee drivers.

Hi folks,

I saw a job that I think would be perfect for me (ferrying tractors (no trailers) from point A to point B, and returning to point A in a different tractor). No forced dispatch, work only when you want, etc.

The only problem is that they make you work as a contractor, not as an employee. Which means twice the social security tax, no workers' comp insurance, and worst of all, potential liability - (they require that you post a $1,500 cash bond, but I was unable to find out just yet how much worse it could get).

The big question is: this may not be legal: the IRS has laid out steps to employers to determine if an employee could, or could not, be considered a contractor. The fact that the driver will only work for this carrier, plus the fact that the carrier controls what the driver does, argues that the driver is really an employee rather than a contractor. The IRS could come back on the carrier and demand that they pay employment taxes, etc. (I saw this article on Legal Zoom, which gives additional detail on the subject: https://www.legalzoom.com/articles/employee-vs-independent-contractor-what-employers-need-to-know

The quick and dirty solution is just to find a job with someone else, where the driver is considered an employee. But I was wondering if the contractor status could be challenged somehow, with the State Department of Labor or others.

If any of you have thoughts on this situation, please let me know. Thanks.