Im Gipper said:

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DamnGood86 said:

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one safe place said:

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...Nor her car.

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An independent contractor is not allowed to write off business use of a vehicle?

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Not an accountant, but I don't think driving to and from the restaurant where she works is deductible as it's considered her commute.

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If W2 correct. If 1099 you can write it off.

As far as the poster saying she doesn't need a home office, where do you suppose she does all her tax prep, work planning, scheduling. Hell I forgot cell phone, but a large portion of that could be wrote off too.

W2 employees get the shaft and have no write offs. 1099 gets to use the entire tax code to their benefit.

VegasAg86 said:

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TRADUCTOR said:

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This is how you set off the audit me please in red flashing lights.

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They aren't adding 87,000 IRS agents to go after billionaires.

If your position allows you to qualify as a 1099, there is no doubt there are many advantages. No way could a line cook meet the requirements. Now, if she were to setup a catering business on the side, she would be able to get some deductions.

Charles Givens was preaching the "run a side business out of your home for the tax advantages" 35 - 40 years ago. It's still a great idea.

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Not her decision on how she's paid. The employer would be at fault. When she was paid as 1099, she should have consulted an accountant and put a plan in place.

I'm 1099 and I'll never willingly going back to W2. I had to go to great pains to ensure that I am not misclassifiws as an employee. I can't even listen to much past 10 minutes of this. She doesn't know what she's talking about and seems like she is making excuses.

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If W2 correct. If 1099 you can write it off.

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Perhaps YOU can write it off in your situation, but in hers, she most certainly cannot. Confirmed this am with my tax guy.

Travel expenses must also be incurred "in the pursuit of a trade or business." IRC 162(a)(2). To be characterized as such, a taxpayer must travel beyond the point where he commutes on a daily basis to execute the functions of his office. Flowers, 326 US at 473.

Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses.
https://www.irs.gov/publications/p463#en_US_2020_publink100033918

Driving to a restaurant to prepare food is traveling from home to a regular place of business. She really cannot get around that!

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As far as the poster saying she doesn't need a home office, where do you suppose she does all her tax prep, work planning, scheduling.

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If that is what she is doing from her "home office" then she definitely cannot claim that as deductible.

I think everyone here would agree that for a business owner or true contractor, 1099 is far superior. But for this lady? No so much.

Don't forget about self-employment tax and better make those quarterly ES payments timely or you're really hosed.

On top of that, employee vs. contractor is a hot button issue for the IRS right now.

Independent Contractor or Employee?

WoMD said:

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Im Gipper said:

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DamnGood86 said:

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one safe place said:

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...Nor her car.

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An independent contractor is not allowed to write off business use of a vehicle?

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Not an accountant, but I don't think driving to and from the restaurant where she works is deductible as it's considered her commute.

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Ive been doing it for years, approved by my CPA per the rules in place. If she is an employee, then no, that can't be deducted though.

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True Commuting is not deductible. And I hope your accountant knows that or an audit is going to be real fun for you.

In this example, she has one primary job location where she performs her daily tasks. That makes any miles driving there nondeductible commuting. A true contractor would be driving from their "office" to many different locations every day.

Im Gipper said:

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WoMD said:

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Im Gipper said:

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DamnGood86 said:

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one safe place said:

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...Nor her car.

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An independent contractor is not allowed to write off business use of a vehicle?

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Not an accountant, but I don't think driving to and from the restaurant where she works is deductible as it's considered her commute.

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Ive been doing it for years, approved by my CPA per the rules in place. If she is an employee, then no, that can't be deducted though.

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Do you work preparing food in a restaurant?

I bet you have a home office, don't you? That allows a 1099 to deduct travel between various locations.

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This

I was a consultant for 20+ years in oil/gas with all 1099 income. Yes, there are tax advantages, also comes with added record keeping and accounting costs. Ran a cost breakdown between 1099 income vs. W2 income with standard company perks offered all employees(ie. health insurance, 401K, etc.). Very hard for most individuals to overcome hurdle to make 1099 income more profitable unless it is a side gig or a working spouse with those benefits.

I think the real advantage of being a 1099 is all your work in short-term. You move from contract to contract, picking and choosing the work you want to do. You've probably spent years building expertise in a very specific area, and you are able to command top dollar for your services. The downside of not having benefits and a predictable payday are offset by the freedom to chose when and where you work.

revvie said:

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I was a consultant for 20+ years in oil/gas with all 1099 income. Yes, there are tax advantages, also comes with added record keeping and accounting costs. Ran a cost breakdown between 1099 income vs. W2 income with standard company perks offered all employees(ie. health insurance, 401K, etc.). Very hard for most individuals to overcome hurdle to make 1099 income more profitable unless it is a side gig or a working spouse with those benefits.

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Also this. Sometimes, the trouble is not worth it.

1099 you pay 8% more tax than an employee.

TRADUCTOR said:

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1099 you pay 8% more tax than an employee.

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The benefit comes in the deductions as they reduce your taxable amount for both income and FICA/SS. Potentially, the deductions could be enough to reduce the overall tax burden. However, these deductions must be reasonable for the work you are doing.

So again, is it enough that its worth the trouble? For some, yes... for those that know nothing about taxes, probably not.

I am commenting without watching the video, but responding to some of the comments and speaking as someone who has W2 and 1099 employees...

The employer generally decides how an employee gets paid - W2 vs 1099. And when I say "decides", I mean looks at the IRS guidelines based on the job type and work performed and follow those. They changed them up pretty significantly about 5-6 years ago (pre 87,000 new IRS agents) and there isn't much wiggle room to actually make a "choice".

Is it cheaper for the employer? No. Yes, I pay less in payroll tax, but I have to pay a higher rate to the contractor than a regular employee.

Also, 1099 does not mean you don't pay into Social Security. That comes out of your 12% Self Employment tax.

Assuming everyone (Employers of W2 and 1099 employees) files and pays their tax per IRS guidelines, then for the most part W2 vs 1099 really just shifts the payment and paperwork burden from the company to the individual.

A few select jobs might have enough allowed expenses to make it more advantageous to go 1099, but you still have to overcome the extra SE Tax. And it really depends on what you would be paid W2 vs Hourly and if that hourly rate is enough above to justify the added tax and administrative burden.

If Trump is elected, I want my salary and benefits to be in the form of tips.

I think the real discussion here isn't what form you receive at the end of the year, it's the kind of work you have - contractor or regular employee. That itself determines if you get a 1099 or a W-2. And you have choice for which kind of employment you seek.

In the case of the woman from the video, she clearly was a regular employee and should have been getting a W-2.