Discussion:FICA for a limo driver
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Discussion Forum Index --> Tax Questions --> FICA for a limo driver
| 14 June 2009 | |
| Client is a limo driver for an airport limo service. These are pre-arranged pick-ups. Not a metered cab. He drives a company vehicle when working.
His salary was 20% of the book and 17% tip. Everything is billed through the company office. It's rare that anyone pays cash for these rides. In last week's check, there was a note from the boss that from now on all drivers will receive 17% book and 20% tip. It's still the same 37% of the ride. The client showed this to me and asked why would this be changed after so many years. They are saving money on p/r tax. The other thought that occurred to me was that there was a complaint to the labor dept. The company had always billed customers 20% for the tip and only remitted 17%. They claimed that the difference was going toward the employee's share of FICA. Any other comments or thoughts that I may have missed. | |
| 15 June 2009 | |
| Why is the employer exempt from matching the FICA on reported tips? Is this a new law? | |
| 15 June 2009 | |
| If it is still 37% of the ride, the same amount will be reported for FICA purposes. It would save on workers comp. | |
| 15 June 2009 | |
| Not sure that it would save on W/C since the same amount is being paid by the employer in any case. | |
| 15 June 2009 | |
| Blrgcpa writes: The client showed this to me and asked why would this be changed after so many years. They are saving money on p/r tax."
While no one can be certain, it wouldn't surprise me if it has something to do with the new NYS sales tax requirement for limo rides. The "employer" may be trying to shift the collection & reporting to the "independent contractor". | |
| 16 June 2009 | |
| The drivers are now collecting sales tax for intrastate rides according to the pick up point. Rides that end in another state do not have the slaes tax.
The driver in question is an employee and not an independant contractor. To be an independant contractor, the driver would have to own the vehicle. | |
