Tax question for anyone with direct knowledge

[Scott V2]

I am currently a straight 1099 representative for a industrial sales company. I claim all of my expenses including 36k-40k annual mileage. I will get to claim 55.5 cents per mile this year as an exemption.

The company I represent is forcing all of us to become employees of the company at straight commission without any expense account. I will be doing the exact same thing I do now, except the company will be withholding taxes.

I think something is stinking badly. No one official will comment on how our business exemptions will change. I am thinking they will and not to my benefit.

Does anyone know how much mileage you can write off as a straight commission employee vs: being a 1099 independent agent? Is there a difference in the per mile amount as well?

I thought I would ask here first before shelling out $$ for a consultation with a tax preparer.

[martin35]

Ask the IRS they have the last and latest word and it's free if they don't audit you.

[Greensborobob]

Any expenses that are currently deductible will continue to the extent that they are not reimbursed by the company.

In your example if the company gave you $.30 per mile you could deduct the remaining $.255

[SWOHFAL]

As an employee, I would think that if you have a fixed office location that you are expected to work from, the mileage from your house to the office might not be deductible. However, who is to tell the IRS that you don't work from home?

[gunplumber]

There is considerable advantage to having workers classed as independent contractor versus employee. It is possible that the IRS has decided that you are an employee and not an independent contractor. Some things to consider are the degree of control the company has over you. Quotas, goals, method and type of payment, benefits. There is no hard and fast rule. If you do not provide those same services to other companies, and the company for which you work has a good deal of control over how you do your job, then it is a good chance you are (to the IRS) an employee, not a contractor.

Commuting miles are not deductible. Commuting is from your place of residence to your place of work and back. If you are traveling from your place of work to other locations, those are deductible, less any prior compensation.

I am not a CPA - "I do not give legal or accounting advice". However I am a business owner and I have had independent contractors, and I have been an independent contractor for companies like Dillon, Ruger, and HK, etc. HK Sends me a 1099 every year. Because I provide the same service to multiple companies, and HK pays me only for the work I complete, and has no control over the method I use, I am clearly an IC. Were I to take my same skills and go to HK, and do the work there, with their tools and equipment, I'd be an employee.

[def90]

Well.. before you were responsible for your complete share of FICA, now at least you will only need to pay half of it, the company pays the other half.

If this company previously payed you as a 1099 and they were the only company you actually worked for, technically in the eyes of the government and IRS you are/were a full time employee of that company. My guess is that their lawyer/accountant told them that they cannot do that anymore or they will get their asses handed to them by the IRS and the Feds.

[Scott V2]

I will bottom line lose 15-20% pay for the "adjustment" needed to pay for the employee status, far greater than them paying half of FICA.

This is two-fold. Apparently IRS is assessing fines for IC companies now. The bigger and unstated reason is the corporate ownership. Older IC agents cannot be made to toe the line. Making agents employees changes account ownership status from the agent and places it in control of the company. You can guess what the next step is.

[SWOHFAL]

So make sure you have a list of your accounts so you can poach them if/when you jump ship to the competition; probably there is a clause in your new employment contract with a non-compete provision.