# AB5, interesting read for taxes.....



## WNYuber (Oct 5, 2019)




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## Seamus (Jun 21, 2018)

This was batted about quit a bit last fall. The bottom line seems to be no one at this point can say if this is true with any certainty. Like everything, it all depends on the details which are far from resolved. People can speculate but until all that "who pays what" etc.etc. is worked out we would just have to wait and see.


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## Jon Stoppable (Dec 11, 2019)

CA employee designation is not controlling for federal taxes. That said, it would suck if CA treats them as employees for CA income taxes unless CA still allows unreimbursed employee business expenses (don't follow CA tax law because I don't care)


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## observer (Dec 11, 2014)

As employees, Uber has to pay for business expenses above the wages, not taxpapers.


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## RDWRER (May 24, 2018)

observer said:


> As employees, Uber has to pay for business expenses above the wages, not taxpapers.


This. This has been argued a million times before and yet people (or sometimes trolls) keep incorrectly bringing it back up.

At least in California an employer must reimburse absolutely all expenses that an employee makes on top of their wages. For example, a job earning $30/hr but requires expenses must be compensated $30/hr + expenses even if those expenses do not bring the hourly wage below the minimum wage. This is not true for Federal law however. Federally, the employee can be required to make personal expenses so long as those expenses do not bring the hourly wage below the minimum wage.

Fortunately, when there is a conflict between State and Federal wage laws the better law for the employee wins out. This means that if Uber is ever declared to be our employer they absolutely must pay for our expenses. We would not need to deduct anything because our expenses would already have been compensated for.

In fact, the proposed scenario where Federal law does not recognize Uber as an employer but State law does would be the best case scenario for California Uber drivers because we would be both compensated for the expenses and be able to deduct those same expenses on our Federal taxes. Double dipping legally, as it were in that hypothetical.


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## Jon Stoppable (Dec 11, 2019)

The federal mileage rate is an optional allowance--an employer can require documentation of actual expenses instead. U/L could and probably would refuse to reimburse for deadhead miles. They could require allocation of repair & maintenance expenses to pax/deadhead/personal miles. They have every incentive to make reimbursement a giant pain.

Then they would further respond by favoring drivers with lower expenses. It could become a hybrid-only driver pool.


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## observer (Dec 11, 2014)

Jon Stoppable said:


> The federal mileage rate is an optional allowance--an employer can require documentation of actual expenses instead. U/L could and probably would refuse to reimburse for deadhead miles. They could require allocation of repair & maintenance expenses to pax/deadhead/personal miles. They have every incentive to make reimbursement a giant pain.
> 
> Then they would further respond by favoring drivers with lower expenses. It could become a hybrid-only driver pool.


Nope, ALL miles are reimbursable and must be compensated for as well as any vehicle expenses.

While Uber could require actual expenses, it would be more of a headache for Uber to keep track of expenses and verify for hundreds of thousands of drivers.



RDWRER said:


> This. This has been argued a million times before and yet people (or sometimes trolls) keep incorrectly bringing it back up.
> 
> At least in California an employer must reimburse absolutely all expenses that an employee makes on top of their wages. For example, a job earning $30/hr but requires expenses must be compensated $30/hr + expenses even if those expenses do not bring the hourly wage below the minimum wage. This is not true for Federal law however. Federally, the employee can be required to make personal expenses so long as those expenses do not bring the hourly wage below the minimum wage.
> 
> ...


I don't think drivers could legally get away with double dipping since the expenses are covered by Uber and Uber would deduct drivers expenses on their taxes.


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## RDWRER (May 24, 2018)

observer said:


> I don't think drivers could legally get away with double dipping since the expenses are covered by Uber and Uber would deduct drivers expenses on their taxes.


I don't think that kind of scenario can actually occur, but it was a hypothetical.

Hypothetically speaking if somehow Uber can call us employees in regards to the State but independent contractors in regards to the Federal government then Uber would not be deducting anything in regards to Federal taxes as we would still be "independent contractors" according to Uber.

However, once again I don't believe we can be classified as both even though they are two different jurisdictions, State and Federal.


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## Jon Stoppable (Dec 11, 2019)

observer said:


> While Uber could require actual expenses, it would be more of a headache for Uber to keep track of expenses and verify for hundreds of thousands of drivers.


Nope. Big data is much better at that then 100,000 drivers will be, and Uber will have the incentive to deny reimbursement based on incomplete documentation. I've done taxes for almost 30 years; people suck at recordkeeping. Whereas Uber could save tens of millions of dollars by being a pain the butt about substantiation of employee reimbursements.

Drivers would have to submit regular photos of their odometer readings (I have to do that with State Farm already just for my discount). Uber already knows the booked mile amount. Next, you'll have to upload photos of every repair and maintenance item and be able to prove it was related to the registered vehicle. Floor mats at Autozone? Did Uber tell you to buy those? Not reimburseable then. Want new wipers? Did your old ones fail inspection? No? Not reimburseable. Everything that is deemed reimburseable then gets allocated based on booked vs. total miles.

And I'm not sure why you think deadhead miles would be reimburseable. Did Uber tell you to deadhead? That would create a perverse incentive to drive on the interstate while rejecting pings. At least if you think you're getting the standard mileage rate for deadhead miles. And if you think Uber will allow their employees to reject pings.


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## LADryver (Jun 6, 2017)

Jon Stoppable said:


> CA employee designation is not controlling for federal taxes. That said, it would suck if CA treats them as employees for CA income taxes unless CA still allows unreimbursed employee business expenses (don't follow CA tax law because I don't care)


California follows federal tax laws with rare exceptions. California has a stake in the game however because they collect the California SDI payments and Unemployment Insurance premiums. The first agency interested in employer-employee is the Employment Development Department. If CA decides someone is an employee, the IRS will also.


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## Stevie The magic Unicorn (Apr 3, 2018)

RDWRER said:


> This. This has been argued a million times before and yet people (or sometimes trolls) keep incorrectly bringing it back up.
> 
> At least in California an employer must reimburse absolutely all expenses that an employee makes on top of their wages. For example, a job earning $30/hr but requires expenses must be compensated $30/hr + expenses even if those expenses do not bring the hourly wage below the minimum wage. This is not true for Federal law however. Federally, the employee can be required to make personal expenses so long as those expenses do not bring the hourly wage below the minimum wage.
> 
> ...


Yes you are correct.

However uber cannot classify workers in California as employees then classify them as ICs to the Feds. That's imposs...

Never mind that _*IS*_ something Uber would try....


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## CaptainToo (Dec 5, 2017)

The whole discussion of California and AB5 is fantasy - Uber will never make drivers employees, the business model could not support it, Uber could never make a profit, ever. Making a driver an employee in California, would immediately add something like $30-40,000 cost in benefits per driver to Uber, and then compensating the employee for the car expenses would be about 50% of current driver fares. It isn't hard to see that Uber's costs, if its drivers were employees, would make Ubers more expensive than cabs...

So its fantasy. California dreaming on a big scale.. If Uber is held liable under AB5, it'll either control and limit online hours to make drivers part-time and not eligible for benefits, if California law permits, or it will cease operating in California. Lyft too.


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## Jon Stoppable (Dec 11, 2019)

Also the resulting increase in fares will lower demand, which will allow Uber to get pickier about their drivers. And Uber will set reimbursement rates at the most efficient vehicle cost at each service level. That will create winners and losers among the current driver pool. If you have a five-year old hybrid, accept every ride, and like to work no more than 30 hours per week, you'll win.


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## pengduck (Sep 26, 2014)

WNYuber said:


> View attachment 402091


You need to check current IRS allowed deductions. The difference is you will have to itemize which may keep you from using the deduction of $12,000 you currently receive as well. The no reimbursed employee expenses used to less 15% of your AGI.


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## CaptainToo (Dec 5, 2017)

Jon Stoppable said:


> Also the resulting increase in fares will lower demand, which will allow Uber to get pickier about their drivers. And Uber will set reimbursement rates at the most efficient vehicle cost at each service level. That will create winners and losers among the current driver pool. If you have a five-year old hybrid, accept every ride, and like to work no more than 30 hours per week, you'll win.


If a driver does even 3,000 rides a year, Uber would not make anywhere close to enough in fee income to pay a third of the costs of mandated employee benefits for that driver. Where would that money come from? a fantasy is all.


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