Are you an independent contractor or an employee? Many of the Workamper or other seasonal positions are structured for employees. There are some for contractors, though. What is the difference?…. A great deal when it comes to tax time. For an employee, the employer sets the hours of duty, generally furnishes all the tools or equipment needed to accomplish the job, as well as all the materials and how the job is to be done. The employer, upon payment for these services withhold all taxes necessary: Federal / State income taxes, Social Security and Medicare taxes and disability insurance depending on in which state the work is performed. California comes to mind now as well as some others. The employer then issues you a W-2 during January of the following year.
An independent contractor however is a self-employed individual with their own business. The contractor will establish, with the “employing” business, an agreement to perform some duty, build a shed, install wiring, etc; for a set price or sometimes at an hourly rate. The contractor will give the business an invoice for the work done. The contractor furnishes his own tools and equipment to accomplish the job. The employing business will send the contractor a 1099-Misc for Non-Employee Compensation for the earnings. The employing business sometimes may withhold Federal income taxes but never Social Security / Medicare tax. This is where the danger comes in. These earnings are subject to Self-Employment tax and you are responsible for payment on your Individual 1040 tax return.
If you think that you are working as an employee but taxes (FICA & Med) are not being withheld, you may be in for a big surprise when you file your income tax return. Even though your earnings are not for you to owe any income tax (after Capital losses, Rental losses, Itemized or Standard Deduction and Personal Exemptions) you may still owe Self-Employment tax (think Soc. Sec. Tax). If you don’t have enough withheld from your “other jobs” or from a pension/IRA you may owe a large amount, with possible penalty if you have not made estimated payments.
If you find yourself in a Workamper job where the employer is not w/h taxes and is treating you as a contractor that’s fine if that is what you intend. If it isn’t and you think that you may be in trouble at the year’s end….send me an email. You may not be able to alter the situation but you could prepare now for April 2014.
Individual taxpayers seeking new jobs may incur a variety of expenses, including costs directly associated with moving to a new job location or those specifically related to the job search. Many of these expenses are deductible, but the rules are strict, and expenses must be carefully documented and substantiated. You may be able to take advantage of these deductions, if you plan carefully.
Any moving expenses you may incur, including expenses of traveling to the new location and transporting household goods and personal effects, are deductible so long as you meet certain requirements relating to when you begin work at the new position and how far the new job is from the old job and your old residence. The move must be over 50 miles away to your new job. These expenses are deductible even if you are seeking employment for the first time or in a completely new field. Also, qualified moving expenses reimbursed or paid by your employer are considered nontaxable fringe benefits.
You also may be able to deduct the expenses you incur in searching for a new job, including the costs of a headhunter or employment service, and the expense of preparing your resume. These expenses are deductible so long as the job being sought is in the same line of work as the old job, even if you are unemployed at the time of the job search. Further, the job search does not have to be successful in order to qualify for the deduction. However, job hunting expenses for a first job, or related to changing to a new career, are not deductible.
Although these are just a few examples, there are many more tax issues that you should consider. We would like to meet with you to discuss your overall tax planning strategies and how you can benefit from these deductions. Please send me an email at your earliest convenience to make a telephone appointment.
I have just returned from Heber Springs, AR and the April 2012 Workamper Rendezvous. It was a week long session of classes and seminars, lunches and dinners for the experienced Workamper and for the Workamper dreamer: RV maintenance, RV safety and security, RV driving techniques, resumes tailored for the seasonal RV’er and my gerere, filing multiple state returns and duductions that may – or may not- be available to the RV’er. They were all absorbant minds open to knowledge and education and eager to learn. While very experienced both as a RV’er and as a Workamper, myself, I enjoyed watching and participating in the networking with everyone on techniques and skills. Steve Anderson, Chief Dreamer of the Workamper organinzation, is laying the foundation for a close knit family who enjoy meeting and sharing with one another their background and experiences.
As I visited with the attendees, I was amazed at the confusion and lack of knowledge that people have about our tax laws and how it pertains to them. I guess it demonstrates how complex and complicated our tax laws have grown. For some, because their income is purposefully or by circumstances limited, the tax laws do have little impact on their lives. Other’s, even though way short of the upper 1% (try the upper 75%); knowing what Uncle Sam will do to them taxwise, and planning to minimize that impact, can be as important as getting a 25% raise.
The tax season rush is over for me, for now, and I can get back to writing again on this blog. I’ll go back to writing about my experiences and some tax comments and tips.
The regular tax filing season for the 2011 1040 individual return is about over. The deadline is next Tuesday April 17th. The deadline is usually at midnight on April 15th. When ever the deadline falls on a weekend (Sunday this year) however, the deadline is moved to the next business day. Normally that would be Monday, April 16th, BUT…that day is a holiday in Washington, D.C. That is Emancipation Day, the day in 1862 that President Abraham Lincoln signed the Emancipation Act which freed the slaves in the United States. So, we get an additional day to suffer. Unless you have already filed your return. In that case you may set back and watch with amusement as those who have not filed yet struggle through the weekend. But, please don’t wait until Tuseday afternoon.
If you have not filed yet and would like help, you may contact me through this web site: george@RvTaxMaster.com or my other web site which is dedicated to all idividual and businesses: george@BusinessAndTaxPlanning.com. It’s not too late!
What Every RVer Should Know About Taxes
Because we, as a nation and as a collection of individual states, have such a complex structure of taxation whether levied on income, sales, or property, it would be prudent for each RVer to understand as much as they can about the areas that would affect them. Every RVer, in fact every citizen, should know, at least, the basics about tax so that they may plan their life accordingly. Judge Learned Hand, US Court of Appeals – 1927-1961, once wrote:
“Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.
Commissioner v. Newman, 159 F.2d 848, 851 (2d Cir. 1947) – dissenting opinion
Because we, as RVer’s, travel in, live in, and work in more states and more situations than the average Joe (or Mary) we become subject to more issues than others, either by design or inadvertently. There is a lot of misinformation being spread about what can and cannot be deducted or of particular entities such as corporations, trusts or limited liability companies (LLC). Because of both being un-informed of the various tax laws or because of some attorney or accountant’s desire to “sell” their services for incorporation, trust formations or other legal products, some folks get involved with situations that merely complicate their lives and increase their compliance costs (filing extra returns) so much that they wipe out any tax saving that the corporation, trust or LLC was to save them in the first place.
My goal with this blog is to explain some of the tax laws, mostly on the Federal level, some on the state level where applicable, so that you, the RVer, whether a full-timer or a part-timer will know what you may deduct as to travel expenses, transportation expenses and other business expenses and how to determine how much you will save in taxes and whether it is worth your while to track and deduct these expenses.
I don’t intend to make tax preparers of you, but, I think you should know at least the basics.
When my wife and I returned from New England, after that first year getaway, in the fall of 1995, we were so full of excitement. It was like one long, long camping weekend after which we did not have to return to work on Monday. We had stopped in beautiful campgrounds on the edge lakes, toured and visited Graceland, the Hermitage, and the delicious and interesting Amish country. We spent 6 weeks in New England; trying to eat all of the lobster that had been caught on the East Coast that season and visiting every museum that we could find. It had been a relaxing trip visiting various places that we had heard or read about; places we’d seen in movies, or read about in novels or in the news or history. This trip brought this big country, the USA, to life and brought a greater depth of understanding of just what it means to be a citizen; to walk the hallways and climb the stairs that Elvis Presley, Andrew Jackson, and the founding fathers had walked. Not all in the same building, of course. We got an appreciation of the same countryside that inspired writers such as Nathaniel Hawthorn and Washington Irving. I grew up in Oklahoma and spent most of my life there. Most of the buildings there were no more than 50-75 years old. In the cities back East you often see houses and buildings 200 years old and occasionally 300 years old!
I had toured the eastern part of the U.S. before, traveling in a British sports car, solo and caravanning with other like enthusiasts. (See the blog For The Love of Ruby at “loveruby.com”.) I had been on business trips where I had flown to other parts of the country, but I had always stayed in hotels, sleeping in strange beds and living out of a suitcase. What was different about this trip, it was in a 30’ motorhome. I could sleep in my own bed at night. I had all my clothes in my closet or in my clothes chest and not have to pack and repack each day. We had our own food and cooked our own meals
in our own kitchen. We towed a small car to do all of our sightseeing with. I had my own library of books and home movies to watch; my own guitar to serenade at night while sipping a scotch or brandy from my own favorite glass. We had our own home with us. This was traveling and seeing, doing exciting new things …and still be living at home. What’s not to like.
We originally planned to do this for a couple of years, but, what if we could find some way to earn money while we traveled? Wow!
While we worked through the winter and spring (I had promised that I would come back and work for the accountant who had taken over my tax practice) we began to think of where we could go and work doing tax preparation seasonally. That spring we headed for South Texas to make contacts for the following year.
Hello! This is the initial statement for the RV Tax Master web site. It is intended to answer tax questions for RVer’s who travel and work while they are on the road.
I had a tax accounting practice in Oklahoma City for 20 years, performing monthly and quarterly booking services, tax preparation and more importantly quarterly or annual business and tax counseling for individuals and small business owners. I felt it was important to meet quarterly, if not semi-annually, to review their business activity, their
goals and objectives and determine whether they are still on track and what steps were necessary if they weren’t. This planning help the client to stay focus on their business operation, to remind them why they were in business in the first place and to not just get lost in their day to day activity of making a living and keeping the lawn at home mowed and getting their kids to little league practice.
After 20 years of working with people, I felt that there had to be more to life for myself. I re-examined my own goals and desired. I had always enjoyed traveling and seeing new places: national parks, museums, and historical places. While doing cross country touring in a Triumph sports car (see the blog: LoveRuby.com – to be online shortly), I really enjoyed the side trips and stops our Oklahoma City Triumph club would make. Although I enjoyed my work, business and tax consulting, I began to regret having to
return to work at the end of a two week trip. Finally, in April 1995, with the blowing up of the Murrah Federal office building, my wife (she worked a block away in the Federal Reserve Bank building) and I begin to feel that this life was too short to just wait for our retirement in order to do the things that we really wanted to do. By that September I found someone to take over my tax practice, sold our house, bought a 30′ motorhome and hit the road. Our initial intent was to travel and sight see all that we could of this country for a couple of years; then return to re-start our lives in another home with new
jobs or businesses. After spending the first Fall touring the eastern part of the US and considerable time spent in New England, we returned to Oklahoma City to spend the winter and make plans for the next year.