Rual Mail Carrier

[Gretel]

I have looked at previous posts but still didn't find everything I need to know.

Mail carrier gets 1099-Misc and also brings in his contract and tells me that the items related to car reimbursements are tax free. But the numbers don't add up to come to the conclusion these reimbursements are indeed tax free or included in 1099. There are also items on there for payroll taxes, which I don't understand.

Here is a simple break down:

Auto expenses 15,000
Wages 1,000
Fringe Ben 300
Soc Sec & UE 300 (on wages & fringe ben., used rough rounded numbers only)
Supp.Wages 24,000

Total contract amount 40,600 but 1099-Misc shows 37,500. ????

[ChEAr$]

I have looked at previous posts but still didn't find everything I need to know.

Mail carrier gets 1099-Misc and also brings in his contract and tells me that the items related to car reimbursements are tax free. But the numbers don't add up to come to the conclusion these reimbursements are indeed tax free or included in 1099. There are also items on there for payroll taxes, which I don't understand.

Here is a simple break down:

Auto expenses 15,000
Wages

Lots of unanswered questions here. Does client have a regular W2 from USPS?

Or does he operate under contract with USPS to pick up from main office in, say, Billings,
and then take the bulk mail to a smaller post office?
Or does he deliver the mail to individual mail boxes like a regular W2 employee does?

I have had both. and the fellow who was in business for himself, drove his truck over to
state capital every night and hauled the mail back to the post office in his home town.

[Gretel]

I am delighted that you have experience with this, Harlan.

No W-2, just 1099-Misc., picks up mail from our local post office and delivers to assigned/contracted route, about 50,000 miles a year.

[ChEAr$]

I am delighted that you have experience with this, Harlan.

No W-2, just 1099-Misc., picks up mail from our local post office and delivers to assigned/contracted route, about 50,000 miles a year.

If he's claiming to have driven 50,000 business miles a year, and the 1099misc is all he has for $15,000, AND if he claims it includes reimbursement for vehicle expenses, then he's lying.

Send him on his way.

Wait! Now you've edited your first post with added figures. Need to read it again.

[ChEAr$]

Is the contract with the United States Postal Service? and is the 1099 misc issued by
the USPS?

[Gretel]

Yes and yes. I have all the details from the contract, even the miles. It's a full page of small print, I just simplified and posted summaries.

[ChEAr$]

Don't think I can do you any good on this one, but at least you know you have to start with
the 1099 -misc for $37,000 plus dollars and go from there on schedule c.
If you have his assurance that the 37,000 includes vehicle reimbursement, that means he
only netted about $ 10,000. Let your conscience be your guide.

[Gretel]

Thank you, Harlan. I have known this person for years and also his family, even though I never did his tax return. He is very honest, besides all details are spelled out in his contract. I don't have any doubt that his net income was low.