How do i show tax if I am a taxi driver and didnt get a w2 or 1099?

Question

I have a friend who works for a taxi company and gets paid by a check that doesnt have any tax taken out. Also, at the end of the year he never recieves a 1099. Is there any reason why the taxi company would not provide a 1099 ?? Is it illegal for the taxi company to not give a 1099? I am very confused about this. Is there some type of exemption if you are considered as a indepent contractor or self employed for the employeer to not give some type of 1099? I am very frustrated about this. Thanks for all the help!

He drives his own cab so therefore it would be a independent contractor or self employment. He pays for his own gas and automotive expensives. I don't know what to make of the situation.

Also they deduct $500 per week as a lease but it is not shown in the check he recieves. The check only shows his name and the amount.

Answer 1

In many cities, taxi drivers act as independent contractors. They lease their cabs from the company for a fixed-rate per shift, and pay for all their own expenses such as gas and tolls. They keep all of the money that they collect, including tips. The money left over after they pay their taxi lease and other expenses are their earnings for the shift.

Under these circumstances, the driver files a Schedule C at the end of the year just like any other business would. There is no 1099 or W2 issued by the taxi company because they have never paid the driver anything.

Edited based on your Additional Details:

It sounds like your friend does indeed act as an independent contractor as I have described, however there seems to be a twist if he is receiving a check from the company. Perhaps he turns in his earnings at the end of each shift, and then they turn around and write him a check for the total amount less lease. I still don't think the company would have to issue him a 1099 as they are not paying him, but simply acting as a conduit for the money from the customer. I could be wrong on this.

In any case, if he is an independent contractor, he still needs to file a Schedule C at the end of each year. He should also be filing quarterly estimated tax payments with the IRS so he has the money to pay when the time comes.

Answer 2

Taxi Driver Tax Return

Answer 3

If he's driving his own cab and just getting calls from the taxi company, they probably don't have to provide him with a 1099. If he is leasing the cab from the company, then they should be providing the 1099. But whether they do or not, he is still responsible for paying his own taxes.

In any case, he needs to keep good records of his income each shift, and his expenses, and report the income and expenses on a tax return and pay what he owes. He should file quarterly estimated returns, and pay in the estimated amount of tax that he'll owe for that quarter's income.

Why are you so frustrated about HIS tax issues?

Answer 4

Your frustration comes from trying to categorize the taxi driver as either an employee or a subcontractor. He is neither.

A W2 is issued by an employer to an employee who provides a service to the employer. A 1099MISC is issued by a business to a person who is not an employee but who performs a service.

Neither of these situations applies to the taxi driver. The taxi company is doing nothing illegal. It is providing equipment and dispatch services for the lessor.

The taxi driver is self-employed but does not receive a 1099MISC. There is nothing wrong with this. He would only receive a 1099MISC if he were performing contracted services, which he is not.

The taxi company will have a record of receipts from each driver, and the IRS may choose to examine those receipts. The drivers need to report their fares and tips, and deduct expenses, on Schedule C.

Answer 5

why would a taxi driver be a contractor and not an employee - he's using the company property, has a work schedule - he should be having taxes taken out and getting a w-2. There is nothing being paid into social security for him - he won't get any social security income. Worst cased scenario, d\file a schedule C and as\ct like you got a 1099 - at least you'll be paying into the social sec system. I would report the taxi company to the IRS-something sounds fishy

Answer 6

In deed it is illegal for any company that is paying a contractor, like taxi drivers, not to send a MISC-1099. You must ask again, or report this activity to the IRS. What this amounts to is unreported income, imprisonment is the end result, so choose carefully what you do.

Answer 7

I think you need to call the Human Resources Department of your company and ask lots of questions.