1099 pay

[RiddleEagle18]

Any of you guys paid as contractors and get 1099's at the end of the year? Have you found any advantages in creating an LLC or something like that. What are you writing off? Cars, gas, health insurance premiums?

 

[Gulfstream 200]

Any of you guys paid as contractors and get 1099's at the end of the year? Have you found any advantages in creating an LLC or something like that. What are you writing off? Cars, gas, health insurance premiums?

you can write a lot off, and you dont need an LLC to do so....car, gas, computers, web, phones, uniforms, tips overseas, etc etc.

If you have a decent amount of income as a 1099 you should get a pro to do your taxes, many of these things are borderline and a triggers for audits....which are getting more common as the IRS needs more money!

They can also advise you if creating and maintaining a company is needed, which is highly unlikely for most part-time contractors.

 

[bizjet800]

Any of you guys paid as contractors and get 1099's at the end of the year? Have you found any advantages in creating an LLC or something like that. What are you writing off? Cars, gas, health insurance premiums?

I know some guys who do this. As far as I can tell (and I'm no expert) there really aren't any tax advantages. When you're an employee, you pay 7.5% SS tax, and you're employer pays the other 7.5%. When you're under a 1099, you pay the entire 15%. When you're both the employer AND employee, such as when you create your own LLC, you ALSO pay both. Now, you can "delay" some compensation and thus reduce your tax liabilities, but in the end, you have to pay the tax.

The real difference is the liability. Say you crash a plane, I think you're a bit more insulated from lawsuits since you're an employee, and not a contactor. Again I am no expert, just my two cents.

 

[AA717driver]

I know some guys who do this. As far as I can tell (and I'm no expert) there really aren't any tax advantages. When you're an employee, you pay 7.5% SS tax, and you're employer pays the other 7.5%. When you're under a 1099, you pay the entire 15%. When you're both the employer AND employee, such as when you create your own LLC, you ALSO pay both. Now, you can "delay" some compensation and thus reduce your tax liabilities, but in the end, you have to pay the tax.

The real difference is the liability. Say you crash a plane, I think you're a bit more insulated from lawsuits since you're an employee, and not a contactor. Again I am no expert, just my two cents.

That's my impression, too. As far as the FICA, if you're paying for your "regular" job do you have to pay for your 1099 earnings, too? Can you file for a refund for the overpayment?

TC

 

[bizjet800]

That's my impression, too. As far as the FICA, if you're paying for your "regular" job do you have to pay for your 1099 earnings, too? Can you file for a refund for the overpayment?

TC

You do have to pay taxes on all income. If you have a blend of W2 and 1099 income, any overpayments from the W2s will offset any non-payment from the 1099s.

 

[RiddleEagle18]

Thanks for the replies!! Couple more questions for ya.

Are health insurance premiums deductable?
Insurance on the truck or is that factored in by mileage?

 

[bizjet800]

If you are 1099, I am near certain you can write off 100% of you healthcare costs, including co-pays and Rxs. If you're W2, only if you're expenses are above a certain amount, 7% of gross income I think.

 

[Gulfstream 200]

Thanks for the replies!! Couple more questions for ya.

Are health insurance premiums deductable?
Insurance on the truck or is that factored in by mileage?

If attempting taxes yourself, be REAL careful if you start playing with car usage, home office, computers, etc...a $500 CPA can save you a huge headache. Im not talking about the kiosk retards at the mall with laptops and turbotax...find a CPA that works with pilots/contractors. Find one willing to sit down with your for an hour or two (whatever) and knows your situation. The "drop all your stuff off" guys aren't worth anything.

Those items you mention, along with a 1099, are audit flags, and audits are on the rise these days.

And above all, for fuks sake don't get your tax advice on flightinfo.com. Thats downright scary...

 

[bizjet800]

It's not that hard if your situation is simple: just do contract work, own one home, you keep good records and documents etc. I have done it both ways-turbo tax and tax services-and never had an issue<---- fingers are crossed!

 

[RiddleEagle18]

And above all, for fuks sake don't get your tax advice on flightinfo.com. Thats downright scary...

haha. I plan on sitting down with someone after the job is offered. Before I even consider the job im just trying to get general info.

 

[bizjet800]

As far as mileage, you can either take the standard mileage deduction, or keep detailed records on costs of insurance, gas, payments, etc. It's very difficult, especially when you use your car for personal use. The mileage is the best way to go. G-200 is right though, advice from FI will not help much in an audit.

 

[Bank-n-Yank]

I know some guys who do this. As far as I can tell (and I'm no expert) there really aren't any tax advantages. When you're an employee, you pay 7.5% SS tax, and you're employer pays the other 7.5%. When you're under a 1099, you pay the entire 15%. When you're both the employer AND employee, such as when you create your own LLC, you ALSO pay both. Now, you can "delay" some compensation and thus reduce your tax liabilities, but in the end, you have to pay the tax.

The real difference is the liability. Say you crash a plane, I think you're a bit more insulated from lawsuits since you're an employee, and not a contactor. Again I am no expert, just my two cents.

An LLC does not offer any additional liability protection in a court of law than if you were operating outside of one. What protects you is INSURANCE and a really good lawyer.

 

[bizjet800]

An LLC does not offer any additional liability protection in a court of law than if you were operating outside of one. What protects you is INSURANCE and a really good lawyer.

I sit corrected.

 

[Hugh Johnson]

My 2 cents. If you work for ONE company as a contractor, you probably won't be able to claim mileage. That is considered commuting to work. An LLC is not worth the time for a single pilot contractor. Your profile doesn't say where you are from, but a knowledgeable (sp) aviation tax guy is worth the money, and is deductable next tax year. AND, if you get audited, he has to be there with you.

It sounds like you are negotiating with a single source company. BIG DEAL is who is paying for initial/recurrent training! If you have to pay for training, get a guarantee from the company for at least the training costs. It sucks to think that you work for your first 3 months to pay for training, but that's what it amounts to.

Make sure you get paid for standby days even if you don't fly. If they expect you to be available then you should get paid. You will meet other contractors and get leads for jobs and if some one calls and you are obligated to your primary company, you should get paid.

When you are negotiating pay, REMEMBER, you are paying all the taxes. When I did it it worked out to around 40% to Uncle Sam, 14% SS, 28% tax bracket. It cuts your daily rate in half.

Buy a unbrella insurance policy. I carry 1 million with USAA for around $400/year. It might protect your house.

Good luck.

 

[ProFracPilot]

You need to be very careful if you're going to get most/all of your income from one company on a 1099, they pay for your training, etc. If you get audited the IRS will apply a "test" to determine your status. If you're deemed to be an employee, you and your (now) "employer" will have yourselves a whole new ballgame.

http://www.irs.gov/pub/irs-pdf/p1779.pdf

http://www.fabshopnet.com/downloads/irstest.pdf