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Old 06-02-2010, 01:46 AM   #1
Ernest
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Default Just got my first mechanic job! What can I write-off?

I'm pretty psyched about finally learning my trade, gathering more skills and tools. I've been told I could write-off my recent work boot purchase. Does this mean I can completely write-off a Snap on toolbox?? What do you guys write-off?

Last edited by Ernest; 06-16-2010 at 11:42 PM.
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Old 06-02-2010, 03:32 AM   #2
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Default Re: Just got my first mechanic job! What can I write-off?

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I'm pretty psyched about finally learning my trade, gathering more skills and tools. My employer is 1099'n me, so I'm essentially an independent contractor. I've been told I could write-off my recent work boot purchase. Does this mean I can completely write-off a Snap on toolbox?? What do you guys write-off?
Anything and everything related to working in the trade. Work boots, write them off. Toolbox, write it off. Training courses and material, write them off. Union dues, write them off. Membership fees for professional groups, write them off.

You get the idea, but make sure that you have enough other things to itemize on your taxes that writing off working expenses is worthwhile. Otherwise take the standard deduction.
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Old 06-02-2010, 04:18 AM   #3
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Default Re: Just got my first mechanic job! What can I write-off?

Also, make sure you bring enough business to the shop to justify your existence. We has a friend whose employees and independent contractors did so much work "off the clock" for their friends that it didn't being in enough $ to justify their pay. He couldn't find guys who wanted to really work hard to maintain/build the shop and had to close. A real shame.
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Old 06-02-2010, 05:18 AM   #4
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Default Re: Just got my first mechanic job! What can I write-off?

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Originally Posted by Ernest View Post
I'm pretty psyched about finally learning my trade, gathering more skills and tools. My employer is 1099'n me, so I'm essentially an independent contractor. I've been told I could write-off my recent work boot purchase. Does this mean I can completely write-off a Snap on toolbox?? What do you guys write-off?
Consult with your tax advisor.

Some things are depreciated rather than used as a "write-off". As a durable item, that expensive toolbox surely falls into the depreciation catergory. Expensive power tools do, too.

While "hand tools" fall into the write-off column, I bet if you dump $10k into "hand tools", the lot will be depreciated rather than written off.

Things that are depreciated and sold before depreciation is done can get sticky.

Boots, uniforms, etc fall into the write-off catergory. Safety gear like earplugs and glasses.

You might want to set up a business and business name and take additional write-offs, especially if you are providing your own insurance (marine (tools), health or liability). Opens the door to a home office and home shop, with the added tax advantages.

As a 1099 contractor, you are paying both sides of Social Security and medicare... that adds about 7% to your tax burden until you hit $80k.

You do not have unemployment insurance or disability insurance unless you pay for it (as in get your own policy)- you are self employed. You probably don't have health insurance, either... or a retirement plan unless you fund your own.

Medical bills are the number 1 cause of bankruptcy in the USA.

There are numerous specific rules defining an "independent contractor". Many businesses call what are really employees "independent contractors" in an effort to avoid benefits like workers compensation insurance, taxes and fair wages. Here's a hint: if the shop owner is telling you what to do on a daily basis, you are an employee. It is in your best interest to follow up on this stuff.

Hopefully, the 1099 amount is enough.

Good luck, and consult with a tax professional.

Last edited by danski0224; 06-02-2010 at 05:21 AM.
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Old 06-02-2010, 05:55 AM   #5
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Default Re: Just got my first mechanic job! What can I write-off?

What danski0224 said. I've been on both sides of this.


If you work in his building, under his insurance, and for his customers and his business hours then it's illegal for him to pay you with a 1099 (much cheaper for him though). You are NOT a sub-contractor. Most, if not all Auto/truck work is not sub-contractor.

AND if the IRS picks it up, they will penalize YOU for it also. Plus, most people (I'd say 99%) are not capable of setting aside the money they will need at the end of the years for the tax liability, which will be more than you can write off without collecting more than an hourly rate (typically the best you can do on flat-rate is 1/2 of the labor rate) and a parts mark-up, and consequently without the big deductions like big equipment, building expense, the stuff your BOSS deducts.....

I don't mean to pop your balloon, I just hate to see people get buried in taxes they can't pay for no other reason than that the employer is greedy and won't do it correctly. And make no mistake, you WILL get behind. If you deduct things legally, it'll flabbergast you how much you'll owe at the end of they year. Again, I've been there.. for like twenty years...

And yes. I have my own shop, I have one guy working for me, and I pay him as an a employee, not on a 1099......
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Old 06-02-2010, 06:10 AM   #6
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Default Re: Just got my first mechanic job! What can I write-off?

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Consult with your tax advisor.

[...]

Good luck, and consult with a tax professional.
What this guy said- if you are on here asking, you need one period.

One thing apart from checking what you can and cannot claim, is the employee/ contractor issue that has already been raised here- there can be a fair bit to it, including hours, uniforms, orders from the boss, allowances, insurance and so on, but before you can call yourself a contractor, you need to check that.

Way too many bosses hire 'contractors' as a way of shirking their responsibilities as an employer, and the last thing you want is the IRS landing you with a bill... creditors understand, government bureaucracy doesn't.
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Old 06-02-2010, 06:53 AM   #7
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Default Re: Just got my first mechanic job! What can I write-off?

As fubar noted, the IRS will consider you an employee. If you are working in his building, under his direction, only during his business hours, for his customers, using his shop equipment (lifts, compressed air, etc.) you are an employee. Some guys have tried to get around this by charging "rent" or part of the "utility bills" but if he is doing the billing and you are working for him based upon a percentage of the bill, you are not a "contractor".

If you go to his shop, pick up a car, take it to your shop, give him an estimate, fix the car and deliver it back to him, you are a contractor. You can also contract by the hour but still must have your own place of business.

The only way he can do what he is trying is to own the building and rent areas of the shop to contractors. He cannot solicit business, collect the money for completed jobs or be involved in the conduct of the repair business whatsoever. He will at that point be a "landlord" and not an employer.
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Old 06-02-2010, 09:24 AM   #8
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Default Re: Just got my first mechanic job! What can I write-off?

Lots of A+ advice in the previous posts. When I was interviewing people for a job a few years ago, one of them asked me to hire him an an independent contractor and pay him in cash. I thanked him for coming in and later threw his application in the trash. I'm not going to ruin my business because somebody wants to break the law.

A friend of mine was working for a tree removal company and they were all being 1099ed. He liked it as he was paid cash and no taxes taken out. Then midway through the next year, the IRS audited his boss. Company went out of business and my friend was on the hook for a lot of money. The income taxes were bad enough but the FICA taxes were the real biggie. The IRS has no mercy when it comes to FICA taxes.

The fact that your boss wants to pay you as an independent contractor would raise a red flag with me.

Good luck.

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Old 06-02-2010, 06:34 PM   #9
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Default Re: Just got my first mechanic job! What can I write-off?

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Originally Posted by Ernest View Post
Does this mean I can completely write-off a Snap on toolbox??

Go here
www.irs.gov
read, learn, enjoy.
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Old 06-02-2010, 06:36 PM   #10
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Default Re: Just got my first mechanic job! What can I write-off?

You are an employee,unless you are working for someone else too.The IRS will pick up on this.
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Old 06-02-2010, 07:05 PM   #11
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Default Re: Just got my first mechanic job! What can I write-off?

Watch your ass on this stuff. Very good advice has been given.......take it. See a CPA/ tax advisor and tell him the whole story.....or you could get screwed, blued and tatooed come tax time.
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Old 06-02-2010, 07:19 PM   #12
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Default Re: Just got my first mechanic job! What can I write-off?

Never been in this spot or had to add up the numbers, but if you're not taking home close to DOUBLE what your buddies that get W2s are taking home you are probably getting screwed.

When we were in high school 4 of my friends worked summers for a local painting business. They were making double what I was making, taking it home in cash every week. They thought they were cutting a fat hog..........till the IRS figured it out, then it wasn't so cool anymore.
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Old 06-02-2010, 07:23 PM   #13
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Default Re: Just got my first mechanic job! What can I write-off?

here is what i think.

work boots
work pants and work shirts (if you buy them or rent them)
toolbox and tools
massages for your back and what ever else
vacation
anything, as long as it is work related or used at your work (bbq and mini fridge)
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Old 06-02-2010, 07:56 PM   #14
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Default Re: Just got my first mechanic job! What can I write-off?

who pays the comp bill ? another screw job
what happens when you don't get your check ? gunfire ?
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Old 06-02-2010, 08:08 PM   #15
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Default Re: Just got my first mechanic job! What can I write-off?

tax expert here. Lots of good advice already stated. On the flip side, the 1099 thing could work out to your advantage if you do in fact have a LOT of legit write offs. A lot of mechanics lose all their deductions to the standard, being self-employed you can offset your self-employment income directly with said expenses.

the 1099 thing isn't automatically "caught" and "reversed" to a w2 as implied. It's truly a gray area and the rules have changed many many times over the years.
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Old 06-03-2010, 10:40 AM   #16
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Default Re: Just got my first mechanic job! What can I write-off?

Not a tax expert, but.... I did sleep in a Holiday Inn Express last night! Always wanted to say that!

When I worked in the Corp. world, Big Blue, any of the independents I talked to said that in order for things to equal out, you need to be paid about twice as much as an independent contractor just to cover your expenses such as self employment taxes, workmen's comp, fund a pension or IRA, medical ins., and other things ofter covered or contributed to by the boss, and to help cover the idle time.
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Old 06-03-2010, 10:55 AM   #17
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Default Re: Just got my first mechanic job! What can I write-off?

When I was a tech I was able to write off uniforms, shoes, and all tools including my box. You can write off a computer if you use it for online repair manuals, and ASE test fees. Look at waterloo boxes, just as nice and alot less $. I had a place in my box that I put all my receipts from tools and was amazed at how much I bought my first year.

Since you are new to this field your employer may be taking advantage of you by 1099ing you. I would try to get out of that.
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Old 06-03-2010, 11:26 AM   #18
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Default Re: Just got my first mechanic job! What can I write-off?

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Originally Posted by grcthird View Post
When I was a tech I was able to write off uniforms, shoes, and all tools including my box. You can write off a computer if you use it for online repair manuals, and ASE test fees.
As a general rule, you can deduct disposable items (cleaners, paper towels, etc.), clothing related items (including safety items such as steel toed boots), fees and subsciptions (alldata, ASE tests, etc.) and other items like rent and utilities.

Long term purchases (property) can be depreciated (not deducted) over a time period set by the government. That time period can range from 3 years to 15 years or more depending on the item. Some things mentioned here that fall into that catagory would include hardline handtools, scanners, toolboxes, jacks, and computers.

One thing to remember. Get your tax info from a pro, not from someone that stayed at a Holiday Inn last night or another idiot on the internet like me.....

It's your butt that will be having a cozy meeting with the IRS, not ours if something is wrong. Having had a problem with those bloodsucking agents one time in my past (30+ years ago) was enough. It is not any fun.
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Old 06-03-2010, 03:09 PM   #19
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Default Re: Just got my first mechanic job! What can I write-off?

If you go up to the service desk and pick up an RO,you're an employee.If you bring in your own work,and collect all the money,you're a contractor."Renting" a stall and getting a portion of the labor isn't gonna cut it with the IRS.Worse if you're hourly.Remember,YOU are responsible for any discrepancies.
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Old 06-03-2010, 03:56 PM   #20
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Default Re: Just got my first mechanic job! What can I write-off?

FWIW - you can Section 179 up to $250,000 worth of appropriate items so screw depreciation. Here's a test:
"
Section 179 of the United States Internal Revenue Code (26 U.S.C. 179), allows a taxpayer to elect to deduct the cost of certain types of property on their income taxes, as an expense (rather than requiring the property to be capitalized and depreciated). This property is generally limited to tangible, depreciable, personal property which is acquired for use in the active conduct of a trade or business.[1] Buildings are not eligible for section 179 deductions.[2] Depreciable property that is not eligible for a section 179 deduction is still deductible over a number of years through MACRS depreciation according to sections 167 and 168. The 179 election is NOT mandatory, and the equipment may be depreciated according to sections 167 and 168 if preferable for tax reasons.[3] Further, the 179 election may only be taken for the year the equipment is placed in use and is waived if not taken for that year.[4] However, if the election is taken, it is irrevocable unless special permission is given.[5]"


The test - if you can read that and understand it, you can work your taxes. If not - you best hire someone right off to handle your business. There are plenty of legitimate expenses that generate business deductions. Done correctly, you're good to go. Screw up and the revenuers will eat you alive. Document the hell out of everything, toss no scrap of paper, make copies of all transactions, repair orders, paperwork, time records, etc, file it and be ready.

Also - if you are "in business for yourself", then you best check with your local tax accessor about business taxes and check with the county about any required license and fees. Here, we have "business personal property tax" and you are required to report Fair Market Value of all items used in the production of income, then pay the going property tax rate (city, school and county) on those items.

I'm not a pro, but I smell a rat with the 1099 stuff. If the IRS thinks your new boss is dodging payroll taxes with a "1099 contractor" play, hell will come to breakfast for him.
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