TRC-
Non-taxable rigpay was the brainchild and initiative of Local 798. Some years back, in the early 2000 decade, 798, who hold considerable political clout, put a special tax initiative through that allowed for non taxable rig pay, then at $15 hr, with the argument that that, was the "cost" per hour to operate the rig. Many non union companies adopted this initiative and didn't send 1099s to rig welders for their rig pay. What a lot of rig welders don't understand is that non taxable/non reported income is to cover the entire cost of operating their rig and hence, they are not allowed to additionally expense fuel/repairs/maintainence, ect. It is unlikely at best most acountants who do not specialize in doing taxes for union rig hands will have any knwledge of this initiative. If rigwelder.com is still operational, there is a thread discussing the issue with specific citings of the initiative and laws covering it's application. I have read it myself but chose not to apply it after analyzing it, because by claiming my rig pay- and you don't need a 1099 to do that- I can expense at least as much as I would make by not claiming it and there is enough left over to cover a $13,500 per year contribution to my SIMPLE IRA. It's not unlike per-diem. If you are paid per-diem you use it to cover out of town living expenses. You can then expense the cost of hotels and meals, which then zeroes out the per-diem so it is not income. Rigpay exemption kind of works the same way and with a little investigation you can read the inititative for yourself and get ti to your accountant to decide what is the best way for you to apply it.
I understand, I was wanting to do something similar and is why I asked my accountant. He just didn't know. $600 per week non taxable? That's a good chunk of change! Definitely worth finding out about that's for sure. In my situation though don't get enough to concern myself with digging deeper, you on the other hand, well worth it!
Just because you do not get a 1099 DOES NOT mean that you do not (at least you are SUPPOSED to) report it. If you go out and Mow yards on the weekends, You are SUPPOSSED to report the Income. Is this discussion about the Legalities of what is Taxable or What we ALL get away with ? IF anyone here thinks that there is Truly Non-Taxable Income in a Rig Welders Situation, it is simple to answer you question. Skip all of the questions to your CPA's. Just pick up the phone and call the IRS. Get a Live Agent on the line and ask them. I am pretty sure that none of you will like the answer
I do not purport to expertise in the question regarding tax exemptable rig pay, but in order to better inform this thread with accountable evidence that may be used to formulate an opinion based in facts, I would suggest any interested party to this conversation investigate and present to their accountant the IRS Revenue Procedure 2002-41. Tracing that through google will bring you to the IRS website and scrolling down you can read the statue for yourself before establishing your opinion. Does it seem so outlandish or unthinkable that of the countless loopholes Big Business has had their legislative representatives create for them in exchange for contributions to their office that a tax loophole for union pipeline welders might not also have been negotiated by one of the largest and politically connected United Asociations in the United States? It doesn't seem so to me.
I just claim and pay taxes on everything, the honest man in me I suppose. Even after paying the IRS $5000 last year they sent me a letter wanting $34 more dollars!! Just laughed, wrote the check and moved on. Had a guy pay me in cash, he said, this will make it easier to hide, gonna claim that too, keep the IRS happy with me and hopefully keep them out of my life.
