As a fleet owner should you give your drivers a 1099 or W-2 Form? We hear this question a lot from drivers and fleet managers alike. You might think you have a ton of time before the tax season, however, now is the time to get your documents in order. The last thing you want is the IRS on your case about the classification of your drivers.
While we do tend to focus on Form 2290, we understand the personal taxes of a professional truck driver can make a huge difference for both companies and drivers.
Do Your Drivers Need a 1099 or W-2?
Misclassifications continue to be a subject for concern among both companies and drivers, so it is a point that needs particular attention. So how should your fleet approaches classification?
When you bring on a new driver, you should determine if they are a full-time employee or an independent contractor. This should be priority number 1!
This will determine if they will receive a 1099 or W-2. Now, we’ve heard stories from some drivers where companies won’t discuss employee status until tax forms are due, but we suggest clear and open communication with your drivers from the very beginning.
Some fleets might be tempted to put the burden of taxes on drivers and send them a Form 1099, but that route can only be traveled with specific conditions geared towards independent contractors.
My point is that treating a full-time employee as an independent contractor will lead the IRS to your front door. Plus, the IRS get their money one way or another. Might as well keep your classifications kosher.
Independent Contractor or Company Driver?
The status of your drivers needs to be determined before the hiring process even starts. There are specific guidelines set by the IRS on what classifies as a contractor and which 1099 to file.
If you’re an independent contractor, you will have to cover your end of government expenses, but you also have more choice in how you haul.
Don’t Wait Until The Last Minute
If you have any questions about your business tax forms, contact our sister product, TaxBandits. It is their mission to help your business save time and money this upcoming tax season. Their bilingual support team is available via phone, live chat, and email. Click here to learn more.
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