tax question! i have a tractor hauling goods crossing states. I lease the equipment as well as our driver to a
Tags:lessee,
2
and yield a motorist to a lessee, a conduit who books loads as good as educated a motorist where to collect up or unpack a hauls. my subject is during a finish of a year do i emanate 1099 or provide my motorist as an employee, for whom i would have to squeeze workman com as good as upon condition that alternative benefits. could any one strew a little light upon this issue? thanks
Related solution post:
- California Lemon Law for a Tractor?
- tax help, hairdresser who didn't pay federal income tax?
- Being able to write off auto lease for nursing job?
- Being able to write off auto lease for nursing job?
- I signed an apt lease in AZ today; now I want out. Is there a lemon law that protects me? Any recourse?
If the lessee pays you for the driver’s work, and you tell the driver where to go and what to do, he would most likely be classified as your employee. Worker’s compensation is another matter entirely. In Georgia, for example, you do not need worker’s compensation unless you have at least three employees, including officers.
To treat your driver as a regular employee he/she would have had to fill out a W-4 for the past tax year (or this year depending on when he/she started). As well, during or at the end the year you have to file withholding taxes (form 941) for this and other employees. If you decided to do a 1099 then you must produce a contact for that employee for the filing tax year. In both cases you if this person worked for you in 2005, the deadline to file the W-3(regular employee) 1099, form 941 and submitting payment to the Social Security Administration was January 31st.
If this was for the 2005 tax year, to avoid penalties and trouble from the IRS it is better to list the work as services rendered from a vendor and create a receipt listing work done and payment received by the driver.
In the future, it is a little more tedious, but better to have all employees who receive any benefits to file a W-4 with your company and handle their withholdings. That way at the end of the year, the accounting is easier as well as contractors claiming false information back tot he IRS and getting you in trouble. As well, you can easily deduct any co-pay for the insurance premiums from the employee pre-tax saving them and you money in the long run.
You should never rarely ever offer benefits to 1099 contractors. Simply purchase liability insurance which cover contractors.
Pick up J.K Lasser’s Small Business Taxes 2006 for more detailed help on all your small business tax needs.