Lesson 4 — What Comes Out — Deductions, Occupational Insurance, and Escrow
Lesson 4 — What Comes Out — Deductions, Occupational Insurance, and Escrow
Your gross is not your take-home. Know every deduction before the first check, not after.
Gross is not take-home
The pay number on the offer is your gross. Things come out before it reaches your account. Know them up front so the first check is not a surprise.
Occupational accident insurance
On a 1099 contractor seat, you are usually not covered by workers' compensation. To cover an injury on the job, the carrier carries occupational accident insurance and deducts a set amount from your pay each week — for example, $49 a week. Ask the weekly cost and what it covers. It is important protection, but it is money out.
Escrow
Escrow is a refundable deposit the carrier holds. It is built up by taking a set amount from your first several checks until it reaches a target — for example, a $1,000 escrow built as $250 out of each of your first four checks. It covers things like damage, tolls, or fees, and what is left is returned to you after you leave and give proper notice (commonly two weeks). Three questions to ask:
- How much is the escrow target?
- How is it collected — how much per check, and for how many weeks?
- Exactly when and how do I get it back when I leave?
The 1099 tax reality
On 1099, nothing is withheld for taxes. That money is yours until tax time — and then it is owed. Set aside a meaningful share of every check so you are not caught short, and expect to pay quarterly. Talk to a tax person before you start; it is cheaper than a surprise bill.
Reading the check
Do this math on the offer before you accept:
- Start with gross (your miles × your rate, or your guaranteed floor).
- Subtract the deductions — occupational insurance, the escrow build-up, and anything else listed.
- What is left is your take-home for that week.
Your recruiter can walk you through these. If a number is not pinned down yet, that is normal — a seat can still be coming together while you talk — so just ask, and the two of you will have the full picture before you start.
Good questions to go over with your recruiter
These are not a test for the recruiter. They are how you and the recruiter make sure the seat fits before you start.
- Which deductions apply, and roughly what does each one run?
- How much escrow, how is it collected, and how do I get it back when I leave?
- Is this seat 1099? If so, what is a good amount to set aside for taxes?
📋 Sample Quiz Questions (Preview)
Five questions cover the lesson above. The actual quiz requires a login to record a grade — these previews are open to everyone.
1. Why might a carrier deduct for occupational accident insurance on a 1099 seat?
Why: On 1099 you usually have no workers comp. Occupational accident insurance fills that gap, and the premium is deducted weekly.
2. What is escrow?
Why: Escrow is refundable. It is built up from your first checks and returned (minus legitimate charges) after you leave and give notice.
3. On a 1099 seat, what should you do about taxes?
Why: Nothing is withheld on 1099. Reserve money each week and plan for quarterly payments. A tax professional is worth it.
4. How do you find your real take-home from an offer?
Why: Take-home is gross minus deductions (occupational insurance, escrow build-up, and anything else). Do this before accepting.
5. Why is it worth going over the deductions with your recruiter before you start?
Why: Going over the deductions together means no surprise on the first check. If a number is still being finalized, that is normal — just ask so you both have the full picture.
End of preview. The actual quiz requires login to record a grade.