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OK so what is the chatter over $20k with uber drivers? That is never been the case then.
The OP stated that gig workers didn't get a 1099 until they were paid $20k. That's just plain wrong. I've been responsible for sending 1099s to vendors that met the requirements for receiving one. The threshold was, and is, $600.
That is $32,760 that I got to deduct over 2 years.
Yes, it does come close to eliminating taxes.
In that case, you were not making any real money. The IRS mileage rate covers fuel, depreciation, maintenance, tires, etc. You might have been cash flow positive, but you weren't making any money.
You are mistaken, it was nail on the head. Too many get fixated on taxes and think they have won the game, when all they did was move their money from their left pocket to their right pocket. An independent contractor like a plumber is not the same as a gig worker. Gig workers are no different than those working part-time as W2 employees at McJobs, and should have the same protections and benefits. This discussion over mileage as a benefit is laughable. I don't see anyone here offering to rent their car out to Uber drivers or taxi companies, no, because it would be foolish. You work for a company they provide the vehicle, the fuel, repairs and insurance. Too many articles about Uber drivers not making any money and having to work way more than 40 hours a week to barely keep their head above water. This is because they are not being allowed to get fair treatment same as the part-time W2 employees at McJobs. As a plumber, you can charge what you want because you are an independent contractor, Uber drives can't do that either. People calling them dumb and stupid for waiting to get the same benefits other employees is totally wrong and being unfair and it is disgusting.
Basically all these gig workers that does some gig like delivery or driving want to be reclassified as employees instead of independent contractors shows they don’t know anything about finance and business.
If they are reclassified as employees they will lose all of the benefits of being an independent contractor such as the ability to deduct their car payments as work expense. Car repairs are no longer qualified deductions. You lose a ton of pre-tax expenses.
As an employee you automatically lose the ability to deduct your business expenses. These idiots are probably not filing any taxes due to the 1099 - $20k threshold.
As an employee they will have to send you a W2 and you must file taxes and you will lose more money for just some benefits such as health care and paid vacation.
As a 1099 contractor you can deduct all your healthcare expenses against income before tax.
It goes to show, all the misinformed gig workers forcing companies to take you in as an employee and they will end up regretting it big time. They will lose the ability to set your own hours, since employers can define your work place and hours.
Employers have more control over employees. This is such as stupid move.
These gig workers are uneducated, entitled, and low knowledge. As a full time independent contractor I enjoy all my business expense deductions and I get to keep more money than employees do.
Car payments were never deductible. You have the option of deducting either mileage or actual car expenses, but the principal portion of the payments has never been considered an expense, only the interest and the depreciation.
About employers having “control†- Uber and Lyft do have control over workers just as much as an employer would, because they make the rules and can cancel your account for violating those rules. The contract cannot be negotiated as it is a standard form contract. Thus becoming an employee does not take away any freedom or control, because you never had that in the first place.
Being an employee also does not necessarily mean you lose flexible hours. Generally if an employer sets the hours, that is going to be based on when the consumer demand is there, with employee preference also being a factor. Which is exactly the same as what happens with a gig job. If you want to make money, you have to work when there is unmet consumer demand, otherwise you won’t get paid.
So I think you are exaggerating the distinction between employee and contractor to a degree.
Car payments were never deductible. You have the option of deducting either mileage or actual car expenses, but the principal portion of the payments has never been considered an expense, only the interest and the depreciation.
About employers having “control†- Uber and Lyft do have control over workers just as much as an employer would, because they make the rules and can cancel your account for violating those rules. The contract cannot be negotiated as it is a standard form contract. Thus becoming an employee does not take away any freedom or control, because you never had that in the first place.
Being an employee also does not necessarily mean you lose flexible hours. Generally if an employer sets the hours, that is going to be based on when the consumer demand is there, with employee preference also being a factor. Which is exactly the same as what happens with a gig job. If you want to make money, you have to work when there is unmet consumer demand, otherwise you won’t get paid.
So I think you are exaggerating the distinction between employee and contractor to a degree.
The OP doesn’t actually *know* the distinctions. Most places I’ve worked that require travel as part of the job pay mileage, so you actually get an increase in pay if you are using your own car to get somewhere.
My mom was a 1099 contractor for decades. She did make a lot more than she made when she was salaried, but it was also not constant. The quantity of work varied dramatically and some weeks she’d barely have anything to do. Other times, she had no shortage of work to do. She was the 2nd income in the home, so it wasn’t a huge deal. However, for other people who do not have a second steady income, it was difficult as they were dealing with some months with very low income. I have another friend who is technically able to work at that place and used to do 3.5 days at a second job and 1.5 days there, but the benefits were better at the 3.5 day place and she always got paid the same amount. So she ended up switching full time to the other job while her husband is still at the other place.
If you are head of household and your family depends on you to provide food on the table,roof over their head and dare we ask-health insurance,being an employee is more secure than hustling as IC.
Ok, you seem really confused. Is this IC position your first job?
You still need to pay taxes as an IC. You actually need to pay more, because your employer (if employed) pays part of those taxes for you. Since you have no employer, you pay more towards social security/medicare. Yes, you get more cash in hand when you're an IC, but then you have to pay more of it back in taxes than you would at a W2 job.
You seem to be aware that you have to pay taxes because you're deducting travel expenses, but you don't know that you pay more in self-employment taxes than you do in payroll taxes?
The typical person driving for Uber or Doordash isn't likely to transition into a salaried position; if they leave, they'll be hourly workers. So the "exempt from overtime" thing is not an issue. If you currently drive as an IC, you aren't making time-and-a-half over 40 hours anyway, so it's not a relevant point at all. Do you have some reason to believe that these drivers are going to be offered salaried positions? It's far, far more likely that they'll be offered hourly positions.
It's well-known that ICs need to charge substantially more than they'd make as W2 workers because they don't get any of the perks of employment. Regardless of whether you personally want to take a vacation, having sick time, PTO for whatever you want to use it for, partially subsidized health insurance, holiday pay, etc, are all benefits that you have to account for if you're an IC. If you get sick and you have to take a week off, you get zero if you are self-employed, whether or not you *wanted* to be sick and take the days off. When I was a freelancer, I charged upwards of $60... as an employee, I make just over half htat.
If you're making $60/hr as IC and suddenly you got a job as an employee making over half. Obviously you've found a higher paying JOB. That is not an apple vs apple comparison.
I've met alot of folks making 6 figures easily as IC because they get to keep more $$ and if they were to take a desk job doing the same thing they would not get 6 figures.
That's the problem you don't understand is that being IC allows for more people to keep more money. The problem with being IC is that you have to do your own finances. All these folks doing doordash, uber, etc they cannot be W2 employee for Uber to manage them nor be profitable enough. It's a huge problem.
There's no way Uber can direct W2 drivers to work 40 hrs properly and hire enough managers. A lot of people that does these gigs are not suitable as employees.
've met alot of folks making 6 figures easily as IC because they get to keep more $$ and if they were to take a desk job doing the same thing they would not get 6 figures.
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those IC making 6 figures,they dont get paid vacation,holidays,health insurance,401K and if their equipments break down,either they fix it or pay someone to do so,some places have subsidized lunch and free coffee,.
In that sense,they are making less and working harder. they also get raises and promotions.and year end bonus,xmas party and free turkey
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