I'm not sure he is in-fact an independent contractor, since
they supplied the tools of the trade and presumably, he had
to file reports, they told him when and where to do his job,
and they can fire him/or he can quit without contractural
damages. He is probably a misclassified worker, who should
have been given a W-2. Having received the 1099MISC,
however, you have to deal with it.

Do the math. If he files the Sch C and the resulting Sch SE,
he'll pay income tax and both halves of the Self Employment
Soc Sec Tax. This Soc Sec Tax will net out at about 12%, but
he'll be able take the mileage as a business expense BEFORE
computing income tax and BEFORE computing Soc Sec Tax.
Therefore, the mileage will lower his income and Soc Sec
taxable income and tax.

If he files as a misclassified worker, he'll report the
income on Line 7, Form 1040 and pay his income tax and he'll
file Form 4137 which will result in only paying his half of
the Soc Sec Tax, or 7.65%. However, the mileage deduction
becomes and Itemized Deduction, which he will probably
loose. Therefore, the mileage deduction will neither lower
his income nor his Soc Sec Taxable income or tax, but the
Soc Sec Tax will be at a much lower rate. Do the math. This
"Misclassified Worker" filing method is provided under Rev.
Proc. 85-16 and under Sec 530 of the 1976 Tax Act (not Sec
530 of the IRC). You have to look for this one if you are a
researcher, as it is not widely known except by tax lawyers
and a few accountants/CPA's, although its been the law since
1976 (30+ years). The IRS has been trying to ignore this as
well.

Although I don't recommend this, he can file an SS-8 to have
the IRS make a determination of his worker status. This will
take time and put the IRS on notice of the dispute. The
company may get in trouble, which I would not wish on
anyone-no matter how mad you are.

Instead, do the math. If he is a misclassified worker, his
mileage becomes an itemized deduction, subject to the 2%
floor...which he will probably won't be able to utilize. If
you get a better deal using Sch C and SE and deducting the
mileage as a business expense, do that. Get TurboTax and do
it both ways. Remember, he must have a contemporaneous,
written mileage log showing the time, date, place and
business purpose of each trip. If you don't have the WRITTEN
LOG -- OR-- if its not contemporaneous, well, he needs to
reconstruct it before doing his taxes-which is still
questionable and well ..... he might be safer not taking the
mileage, and just file as a misclassified worker. The
mileage log reqirements are strict and if the log is not
completed at least weekly, the IRS can disallow the total
deduction. Good Luck!

Next time, have him turn in his mileage weekly or monthly
and get a reimbursement at the federal rate. He could take a
pay reduction for the reimbursement, and if he receives a
1099MISC, the Box 7, Non- employee Income will be lower, and
he file as a misclassified worker on the lower amount ---
thereby getting that mileage deduction before gross. Mileage
received at the federal rate does not need to be reported as
income and the mileage deduction does not need to claimed as
a tax deduction...a nice place to be, if you have to be a
misclassified worker.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

I'm sorry for the delay in responding; this post didn't show
up on the board for a while, and I didn't think it was going
go. I'm glad I decided to come back and check.

To summarize/clarify: He files Form 1040 and attaches
Schedule C-EZ to report both the 1099 income and the mileage
expense. Plus, he has to complete Schedule SE for the
self-employment tax. Right?

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"OldKnitter" <MsHaney[at]gmail.com> wrote:

- quote -

file schedule C - thats where business income & expenses are
reported

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] > > -----> real address on hobokeni or hobokenx <-----

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

OldKnitter wrote:

- quote -

He reports his income from the 1099 on Schedule C-EZ. He can
deduct his business mileage on Schedule C-EZ. See IRS Pub
334 (Tax Guide for Small Business) starting on page 31.

--
Alan
http://taxtopics.net

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"OldKnitter" <MsHaney[at]gmail.com> wrote

- quote -

He's considered self-employer. Use Schedule C to deduct his
"business" miles and other expenses.

You'll need to use the "long" 1040 form for that schedule.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"OldKnitter" <MsHa...[at]gmail.com> wrote:

- quote -


Schedule C and Schedule SE.
See http://www.irs.gov/businesses/small/index.html
for information on small business taxation.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

This is my son's situation, but I've offered to see what I
can dig up.

He worked as an independent contractor for about two months,
early in 2006. The entire job consisted of methodically
driving up and down streets, checking the strength of
wireless signals. The company provided him a GPS-like
device for recording this information.

The company issued a 1099 for the hours he worked, but he
had to pay all of his own vehicle expenses.

Where/how can mileage be deducted on his income tax return?
What IRS publication covers this?

Most of his 2006 income came from a "traditional" job for
which he received a W-2.

Can this mileage be taken by filing any kind of return other
than the standard 1040?

I haven't had any luck so far researching this on my own, so
I will be appreciative of some help.

Thanks!

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >