The IRS andContracts for Drivers

[Olko]

Hi Frank and Welcome to Expediters Online

In our recent search for an owner to drive for, we encountered a couple of owners who proposed something we found interesting, but wondered if it was legal. We mentioned this plan to the owner we decided to work with, but he was not familiar with it, but wanted us to check it out.

Here is the Plan. We would be payed a percentage of the truck pay for all loads, we would pay tolls and fuel, and be paid on a 1099. The owner would be responsible for all repairs, plates, fuel taxes, qualcom, inspections, truck payments, etc.

The questionable part is the contract we would have with the owner. They proposed writing it as if we were leasing the truck, which would allow us to take the standard mileage deduction, instead of the actual fuel and toll costs. We estimate this would allow us to claim aprox. .10cpm more than our actual costs.

Is this legal? Can the owner file his taxes, and take the same deductions for his expenses, with either way the contract is written? Would there be any additional advantage for the owner to write the contract this way. Are there any other legal questions I have not addressed?

I thank you for any information you can pass on concerning this matter.

 

[Fkatz]

Olko,
Since I am an owner also, it would depend upon weather he has 1 or more trucks that he is leasing. it also depends on the type of truck weather a B, C, D, or E unit.
If he only has 1 truck that he is leasing then depending on type
1 "B" Cargo van the standard mileage rate is acceptable
2 "C" Cargo van or Pickup with 10-14 ft box mileage is acceptable
3 "D & E Straight trucks and Tractor/trailers cannot take mileage for a deduction at all must use actual expenses. PERIOD.

If he has one or more trucks he must use actual expenses for the second and so on.
But when it come to Owners, it would depend upon there accountants/or tax preparers and what they do. If they are audited it should not reflect your deductions.
remember you become an independent contractor sub-leased on to a company, and have to file a Sch. C Profit or loss from Business.
It would also depend on how the truck was deducted in prior years, if he used Actual or mileage.

But as far as you are concerned in preparation of your own taxes
Keep a record of the mileage, If it is a B or C unit. You can take the mileage. other wise you lose out on the mileage deduction, but you are able to take the actual cost of fuel tolls, hotels, and any other items that you spent for the truck for your personal use.
Cleaning item, TV/vcr, cb, and etc.

Plus keep your log books, for C, D, & E units, this is your proof of your diem allowance for being out. If it is a B unit make sure you have a record of all the days that you were out on the road. Since a b unit does not have to log. But I would keep a log book anyway, cause certain states require you to go thru the scales, and one of them is Alabama, and u must keep a Log book if stopped there.

If you have any other questions you can give me a call at
1-704-739-4039 and I will be glad to help you.

thank you
Frank Katz