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Everything You Need to Know About the Fiscal 2021 Transportation Funding Bill

At the end of July, the U.S. House of Representatives passed a package of fiscal year appropriations bills for 2021 with a 217 to 197 vote. The six bills address urgent national priorities and supply funding for federal agencies, including the departments of Commerce, Defense, Energy, Education, Health and Human Services, Housing and Urban Development, Justice, Treasury Labor, and Transportation. The $1.3 trillion bill package still needs to survive the Senate, but the overall goal is to provide funding for “96% of the government for the fiscal year 2021.”

The portion of the package for the Department of Transportation includes a request for a $107.2 billion budget for 2021. This amount will be broken down and allocated to various sub-departments within the DoT. In this article, we’ll go over what you can expect to see in 2021 if the bill passes through the Senate and how it will affect the trucking industry.

DoT Bill Breakdown

For the 2021 fiscal year, the DoT would be allotted $21.1 billion more than it received in 2020.

If the bill passes in the Senate, it will include:

  • $62.9 billion for the Federal Highway Administration
  • $18.1 billion for the Federal Aviation Administration
  • $1.3 billion for the National Highway Transportation Safety Administration
  • $3 billion for the Federal Railroad Administration
  • $18.9 billion for the Federal Transit Administration
  • $1.2 billion for the Maritime Administration

Aside from the $107.2 billion budget, the Department of Transportation hopes to receive an additional $26 billion “to strengthen and make more resilient our nation’s aging infrastructure” in light of the current economic climate. This amount would include National Infrastructure Investments and a budget for the DOT Office of Inspector General, to name just a couple.

To see the budget highlights in its entirety, click here.

What This Means for the Trucking Industry

The trucking industry is rapidly expanding, and there has been an extensive amount of care when it comes to growing and improving the trade. Earlier this year, the DoT announced its plans to add more upgraded truck stops across the nation. And while this may feel like a minor change, it will ultimately provide comfort and be a convenient perk for truckers conquering longer hauls.

The 2021 budget for the DoT would also be used to expand and rehabilitate the communities that serve the trucking industry. House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies Chairman David Price said:

“Our nation is facing an infrastructure crisis, with crumbling roads, aging transit and rail systems… Meanwhile, COVID-19 is ravaging communities, revealing and deepening existing disparities… [This bill] continues to build on bipartisan progress in recent fiscal years to increase funding for all modes of transportation—highways, aviation, transit, bike and pedestrian projects, rail, and ports—while improving safety and focusing on resiliency across all programs.”

As mentioned above, a significant plan for improvement is constructing and reconstructing infrastructures. Improving infrastructure in rural areas (where a majority of trucking fatalities occur) can lead to a safer work environment. Bettering foundations in urban areas also has its benefits. It could ultimately lead to less work-based hazards, reduced traffic, and fewer accidents, which leads to greater efficiency and steady economic growth. The increased funding for state and local governments also allows them to improve their local transportation systems and safety; this could boost public relations and enable lower-income communities to rehabilitate their areas. These changes will culminate in growing our nation’s communities and paving the way for more trucking companies to open up, create more jobs, and expand our nation’s economy.

What Can We Anticipate For 2021?

As of right now, the bill isn’t officially passed, and therefore we cannot say for sure what is to come, especially in light of COVID-19. The energy surrounding this bill is hopeful, though. House Appropriations Committee Chairwoman Nita M. Lowey said:

“This bill represents a forward-looking vision to rebuild our nation and strengthen our communities. Together, we can modernize our transportation systems, expand access to safe, affordable housing, and support our most vulnerable neighbors… With this bill, we are laying the foundations for sustained economic growth and expanded opportunity for every American in every corner of our nation.”

If the Senate passes the bill, you can anticipate positive actions for not only the trucking industry but the communities that benefit from it as well. Check out our blog to stay up-to-date on the latest developments for this story. If you want to kickstart your trucking career, contact us today to see how we can help you.

Pros and Cons of Employer-Paid CDL Training

Believe it or not, it’s both legal and entirely feasible for anyone in the U.S. to receive a Class A Commercial Driver’s License without any help from a private trucking school. This information can be hard to come by, however, as there are dozens of private trucking schools in most states who make a profit by convincing greenhorns the best way into trucking is through their particular programs.

What You Need to Get a CDL

That being said, there’s a lot of information and many steps required for anyone looking to acquire a CDL. As a result, going the lone-wolf route might not be in the best interest of someone looking for step-by-step assistance. If you’re attempting to get the license alone, you’ll have to do a great deal of research in order to learn what’s needed to pass the written test and then pass the truck inspection that’s required for acquiring a CDL in most states, which can be a challenge for some. The process of obtaining a CDL shares similarity with the process of attaining a regular driver’s license, with different requirements to qualify. Federal regulations require you to be at least 18 years of age before attaining a CDL. But, in order to drive a commercial vehicle across state lines (interstate travel), or haul hazardous materials (HazMat), federal regulations require you to be 21 years of age. To apply for a CDL, you must have a Social Security number assigned to you to verify your citizenship, a conventional driver’s license from your local Department of Motor Vehicles, one year of driving experience, and a good driving record.

Depending on the state where you’ll apply for your CDL, it’s possible your DMV has already published a guide to getting your CDL, like this one created by the state of Texas. Make sure to check your DMV web page concerning CDLs to see if it’s published a similar resource for your state.

To make a long story short, the cheapest way to get your CDL will always be to do it yourself, without putting money down on a private program. On the other hand, there are still potential benefits to the other two options available to new drivers, which are to: 1) Attend a private CDL training program, or 2) Participate in Employer-Paid CDL Training.

The Potential Benefits of Private CDL Training Programs

Many CDL training programs have connections in place that can make it easier for recent graduates of the program to get jobs with carriers. There’s also a very high demand for truck drivers in most states, so most individuals who receive a CDL shouldn’t have too much trouble finding employment in general. With that in mind, tuition for driving school can range from $3,000 to $6,000, making it a significantly larger investment than applying for a CDL on your own, and the most expensive way to get into trucking on average. While many students find it relatively easy to get student loans for their CDL program, interest rates in America have been on the rise in recent years, making private programs a pretty large price to pay for the convenience.

Employer-Paid CDL Training

These programs are more difficult to generalize about, as they’re slightly less well-regulated when compared to true-to-form private driving schools and can differ widely when it comes to day-to-day life in training. While you won’t have to put any money down up front in order to get your CDL, in most cases, receiving training from an employer comes with a requirement that you work for that same company for a minimum amount of time, and being terminated from that position or accepting another can come with financial penalties. If you begin, and then fail to complete Employer-Paid CDL training, it’s likely you’ll have to pay whatever amount that company values the cost of training.

The long and short of this is Employer-Paid CDL training can be an inexpensive and efficient way to get into trucking, but it also carries a great deal of risk. Prime Inc. is a huge trucking company in America that trains thousands of drivers every year; recently, it had to pay $28 million to drivers who participated in their paid apprenticeship program as a result of unfair underpayment to new graduates of their program.

Lawsuits like this aren’t overwhelmingly common, but participating in Employer-Paid CDL training programs inherently gives a lot of power to the employer and can make it difficult for new drivers to have a good understanding of what employment could look like with other companies, essentially reducing their access to the financial cushion afforded by the free market. In general, if you’re seriously considering Employer-Paid CDL training, it’s highly advised that you get a hold of someone who’s participated in that same program before you enroll.

How You Can Get Started

If you need private financing for a truck after you’ve finished your CDL program, consider contacting us at Mission Financial, where we can offer you a direct loan at a competitive rate. Make sure to visit our blog to keep up with recent trucking news as well.

Tax Update for Owner Operators and Fleet Owners

IRS Brings Back Form 1099-NEC

The IRS form known as 1099-NEC is returning for the 2020 tax year. The 1099 form has been in use for a long time—it’s the tax form used for independent contractors to report their taxable income. The NEC variant hasn’t always been in use, however, as it was replaced in the early 1980s by an updated, more robust version of 1099 MISC. This year, the form you’ll use to report information about your income as an independent contractor has changed. In this article we’ll describe why that is and what you need to know to be prepared. Filing taxes correctly can save you a lot of time, money, and headache—so make sure to do your due diligence and brush up on what’s new for 2020, and read our other tips for trucking success once you’ve made a plan for this tax season.

Supposedly, the revival of this tax form is in response to the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), which now requires businesses to file new information returns that are specific to their 1099 (aka non-employee) workers by January 31 of each year. The PATH Act created new problems with the IRS and its ability to process data, because the due date for 1099-MISC forms those same workers would have to file wouldn’t be due until March 31. In order to skirt this issue, the new version of 1099-NEC, available on the IRS website, contains a new box for indicating non-employee compensation (NEC). Note, the 1099-NEC form isn’t replacing 1099-MISC. Rather, it’s a supplemental form that deals with NEC. As we’ll explain later, 1099-MISC is used to report many different types of miscellaneous income, and for that reason, it still remains in use for employers, businesses, and non-employed contractors alike.

How This Affects Fleet Owners and Drivers

If you work for a fleet or are a fleet owner yourself, it’s important to acknowledge this change. If you’re an operator, this will be the form you’ll have to fill out and supply to both the government and your contract supplier, which is slightly different from the 1099-MISC you’ve likely filled out in previous years and will have to fill out again this year. If you’re a fleet owner, this will be the form you’ll have to issue to your independent contractors in 2020.

Form 1099-MISC, which most seasoned owner/operators should be familiar with, is what’s called an information return businesses of all kinds use to report payments to outside independent contractors. This form is also used for other types of income payments like royalties and rent payments, which only applies to certain types of businesses. Any contractor who makes more than $600 from one particular source will receive a 1099-MISC from that source. For the most part, the 1099-MISC is filled out a lot like form W-2, except it has extra boxes for giving information about non-employed contractors.

The 1099-MISC form is an information return used to report types of payments made to independent contractors. Payments included can come in the form of royalties and rents as well, but for most O/Os, this form will be used to assess what you owe based on what outside businesses paid you during the last fiscal year.

Here’s a full list of income types that can be reported on a 1099-MISC:

  • Royalties
  • Rent
  • Fishing boat proceeds
  • Medical and health care payments
  • Substitute payments in lieu of dividends or interest
  • Crop insurance proceeds
  • Excess golden parachute payments
  • Gross proceeds paid to an attorney

So, What Do You Report on 1099-NEC?

1099-NEC is for reporting non-employee compensation. These include the following taxable payment types to independent contractors: fees, commissions, prizes, awards, and other forms of potentially non-monetary forms of compensation for services rendered. For every 1099-NEC, there are multiple copies that need to be sent to the proper parties.

Use this checklist to make sure your 1099-NEC copies get sent to the proper places:

  • Copy A: Send this copy to the IRS
  • Copy 1: Send to your state tax department, if your state collects income tax
  • Copy B: Send to your independent contractor
  • Copy 2: Send this copy of the state return to your Independent contractor
  • Copy C: To be kept for your business records

Have More Questions about Taxes?

Taxes can be difficult to manage, which is why we make a point to keep our readers updated on the latest changes to tax code and different financial strategies for owner/operators. If you’re interested in what truckers have been doing to find enough capital to stay afloat during the coronavirus pandemic, read our blog on short-term financing. Keep up to date on the state of trucking in America by reading our posts on supply chain and employment topics, which you can find here. If you’re new to trucking, and want to get started with your own fleet or your own rig, contact us with any questions you might have and we can help you get started in a brand new career.

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