# Newbie Tax Question



## Brianf27 (Feb 15, 2017)

I started about a month ago part-time. I have a full time. I do not itemize on my 1040... as i do not own a house. Will I be able to deduct mileage and various expenses separately?


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## NoStopping (Jan 25, 2017)

Brianf27 said:


> I started about a month ago part-time. I have a full time. I do not itemize on my 1040... as i do not own a house. Will I be able to deduct mileage and various expenses separately?


you would have to be more specific as to what various covers.


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## Brianf27 (Feb 15, 2017)

Ok. Mileage and maybe cleaning and some maintenance fees. Just wondering since I use the standard deduction for my income taxes, is this lumped in, different... With the gas, mileage on my vehicle and time this is barely worth it now. Personally using my own vehicle and gas to make a little more than minimum wage doesn't seem like they should be taxing me at all. I pay my share with my regular job. Of course that's a silly pipedream.


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## NoStopping (Jan 25, 2017)

Brianf27 said:


> Ok. Mileage and maybe cleaning and some maintenance fees. Just wondering since I use the standard deduction for my income taxes, is this lumped in, different... With the gas, mileage on my vehicle and time this is barely worth it now. Personally using my own vehicle and gas to make a little more than minimum wage doesn't seem like they should be taxing me at all. I pay my share with my regular job. Of course that's a silly pipedream.


if you take the mileage deduction you cant take maintenance, gas, insurance, and other similar car related things. I think you can still deduct parking meters.


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## Brianf27 (Feb 15, 2017)

Thanks, is that separate from deductions on your 1040. I am guessing it is a separate entity being a schedule. Guessing at this point...


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## cheerose (Aug 29, 2014)

You'll need to fill out Schedule C -- that will have a place to put your expenses. And yes, this is a separate issue that your itemized deductions (Schedule A)

Assuming that you own your vehicle (versus leasing), if this is the first year that you are using your vehicle for rideshare purposes, I would suggest using the standard mileage rate for that year. If you use actual expenses, you will not be able to use the standard mileage rate going forward.

If this is a leased vehicle, then you either must use the standard mileage rate during the entire lease period or actual expenses; no switching back and forth.

As NoStopping mentioned, you can add parking fees & tolls to the standard mileage rate calculation.


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## Brianf27 (Feb 15, 2017)

Thank you all. I was worried I would be excluded from using deductions because I use the standard deduction from my 'Normal' job. I don't think ridesharing should be taxed at all on the driver's end. I'll run this by Trump next time he needs a ride in my Hyundai.


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## Mars Troll Number 4 (Oct 30, 2015)

Brianf27 said:


> Thank you all. I was worried I would be excluded from using deductions because I use the standard deduction from my 'Normal' job. I don't think ridesharing should be taxed at all on the driver's end. I'll run this by Trump next time he needs a ride in my Hyundai.


depending on what market your in...

Driving for uber can actually generate more in deductions than it generates in taxable income...

Thus uber can actually lower your tax burden (For your day job) in some markets.


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## NoStopping (Jan 25, 2017)

Mears Troll Number 4 said:


> depending on what market your in...
> 
> Driving for uber can actually generate more in deductions than it generates in taxable income...
> 
> Thus uber can actually lower your tax burden (For your day job) in some markets.


I am not sure you understand deductions. If your driving is creating a deduction that helps with your day job, your taking a loss driving and you should quit.

edit: or you are over deducting.


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## Jimm57 (Oct 17, 2016)

I am VERY confused with doing my taxes. Im using turbo tax. Needed a place to put my 1099-k income, they said I needed to download the bussiness edition on top of my delux version. Did that, entered in all my income and deductions. Read on a turbo tax Q&A that I needed to deduct social security and medicare taxes of 15% of my income. Have posted questions on local Uber driver forum and have not gotten any replies in a week. Is nobody doing this? Did anyone here also add the bussiness edition? If not, what are you doing with your income and deductions? Turbo tax shows I lost about $1000 as a driver after making $2500 for the 8 weeks I drove, and put 4000 miles on my car! Never driving Uber again. Even Walmart pays more. Please help!


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## UberTaxPro (Oct 3, 2014)

You don't have any Uber net income so TT isn't looking to pay self employment taxes. You have to have over $400 *net *income to owe SE taxes. You've got -$1000 *net* income.


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## NoStopping (Jan 25, 2017)

Jimm57 said:


> I am VERY confused with doing my taxes. Im using turbo tax. Needed a place to put my 1099-k income, they said I needed to download the bussiness edition on top of my delux version. Did that, entered in all my income and deductions. Read on a turbo tax Q&A that I needed to deduct social security and medicare taxes of 15% of my income. Have posted questions on local Uber driver forum and have not gotten any replies in a week. Is nobody doing this? Did anyone here also add the bussiness edition? If not, what are you doing with your income and deductions? Turbo tax shows I lost about $1000 as a driver after making $2500 for the 8 weeks I drove, and put 4000 miles on my car! Never driving Uber again. Even Walmart pays more. Please help!


If you drove 4000 miles your loss from that would be around $2120. Not sure where turbo tax is getting the $1000 from.

If you take the standard deduction for miles that is.


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## Recoup (Jan 30, 2017)

NoStopping said:


> Mears Troll Number 4 said:
> 
> 
> > depending on what market your in... Driving for uber can actually generate more in deductions than it generates in taxable income... Thus uber can actually lower your tax burden (For your day job) in some markets.
> ...


Good grief. Mears is right, and NoStopping is _so_ wrong. There is _what your miles actually cost you_, and there is _the IRS standard mileage deduction_. *These two number are not the same*! If your actual costs are higher than than your income, then yeah, you are losing money and should quit (or get better at your job). But if your income minus actual costs is positive, you only have to decide whether the cost per hour, vehicle depreciation, etc. is worth it to you.

The standard deduction of 53.5c/mile handily covers my own actual costs with room to spare: fuel 3c/mile (EVs for the win!), depreciation 12c/mile, gap insurance roughly 3c/mile, new tires every so often, 3c/mile... that's 21c/mile actual cost to run my car.

I use the standard deduction to reduce my tax liability. If the IRS wants to let me say every mile costs 53.5c, then I will. That doesn't make it true, however 

Bottom line to the OP: Calculate your actual costs to drive. The IRS standard deduction is almost certainly not an accurate number for you. For example:

Actual profit:
If I put 4000 miles on _my _car, it would have ACTUALLY cost me around $840 (21c/mile x 4000 miles).
2,500 earnings minus 840 cost = 1,660 gross profit.
Then you add (or subtract) taxes to find your net profit.

Taxes:
IRS says I can deduct 53.5c x 4,000 = $2140 from my $2500 earnings, meaning I pay taxes only on $360.
What tax bracket are you in? I dunno... let's just call it 33% (fed tax plus self-employment taxes), or $120 in taxes.

Back to actual profit:
My net profit in this scenario is 1,660 gross profit - 120 taxes = $1,540 net profit

This scenario assumes I had no other deductions, which is crazy talk. By the time you throw in other deductions, you can probably get your IRS liability down to zero or even negative (which would be a tax credit, or reducing your day-job taxes). That doesn't mean you didn't make a profit driving. It just means you didn't have to pay taxes on what you actually earned.

Again, remember that my scenario above is unrealistic for most non-hybrid cars or non-EVs... if I were driving my gas burner, my actual costs per mile would be more like 34c/mile and my profit correspondingly less.

If your actual costs are much lower than the IRS std mileage deduction, and yet your tax return shows your rideshare business running at a loss, celebrate! You reduced your tax burden and still made money!
.
.
.

Now for the bad news. A good rule of thumb is: you should be making at LEAST a buck a mile. You're making 62.5c a mile _gross _(before costs and taxes). Not good. If you continue my example numbers, we drove 4,000 miles, which is probably about 200 hours in the saddle (I drive mostly in-town and average 21 miles an hour--if you do a lot of airport driving, you may have spent fewer hours in your car). 1,540 net profit / 200 hours = 7.70/hour. Uh-oh... just barely above federal minimum wage.


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## Older Chauffeur (Oct 16, 2014)

Recoup said:


> Good grief. Mears is right, and NoStopping is _so_ wrong. There is _what your miles actually cost you_, and there is _the IRS standard mileage deduction_. *These two number are not the same*! If your actual costs are higher than than your income, then yeah, you are losing money and should quit (or get better at your job). But if your income minus actual costs is positive, you only have to decide whether the cost per hour, vehicle depreciation, etc. is worth it to you.
> 
> The standard deduction of 53.5c/mile handily covers my own actual costs with room to spare: fuel 3c/mile (EVs for the win!), depreciation 12c/mile, gap insurance roughly 3c/mile, new tires every so often, 3c/mile... that's 21c/mile actual cost to run my car.
> 
> ...


The standard mileage rate for 2016 is $0.54 per mile, $0.535 applies to business miles accrued in 2017.
Your net profit is figured before taxes. If after deducting expenses you have a net profit of $400 or more, you will owe self employment taxes (FICA) of 15.3% in addition to any income taxes you owe.



Jimm57 said:


> I am VERY confused with doing my taxes. Im using turbo tax. Needed a place to put my 1099-k income, they said I needed to download the bussiness edition on top of my delux version. Did that, entered in all my income and deductions. Read on a turbo tax Q&A that I needed to deduct social security and medicare taxes of 15% of my income. Have posted questions on local Uber driver forum and have not gotten any replies in a week. Is nobody doing this? Did anyone here also add the bussiness edition? If not, what are you doing with your income and deductions? Turbo tax shows I lost about $1000 as a driver after making $2500 for the 8 weeks I drove, and put 4000 miles on my car! Never driving Uber again. Even Walmart pays more. Please help!


You were a victim of Intuit marketing. The Deluxe version on CD for about $40 has everything you need for reporting IC income and expenses. But using the online or download versions require you to upgrade to the more expensive Home and Business to get the necessary schedules.


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## Recoup (Jan 30, 2017)

Older Chauffeur said:


> The standard mileage rate for 2016 is $0.54 per mile, $0.535 applies to business miles accrued in 2017.
> Your net profit is figured before taxes. If after deducting expenses you have a net profit of $400 or more, you will owe self employment taxes (FICA) of 15.3% in addition to any income taxes you owe.


1) Yeah, my bad--54¢, instead of 53.5¢, changes the bottom line in my example by 7 green dollars.

2) I mentioned self-employment taxes, but as I said I have no idea what OP's tax bracket is. I just guesstimated 33% for fed + SE.

_Quibbles aside_, my point was (and is): *you can't know if you're winning or losing at this game unless you know your own (real) expenses!* When I see people saying they lost money because H&R Block told them so, I want to shake them. It's like thinking your kid costs $5k* a year to raise because that's the standard deduction.

*just a number pulled out of a hat--I have no idea what the standard deduction is for a kid.


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## UberTaxPro (Oct 3, 2014)

Older Chauffeur said:


> The standard mileage rate for 2016 is $0.54 per mile, $0.535 applies to business miles accrued in 2017.
> Your net profit is figured before taxes. If after deducting expenses you have a net profit of $400 or more, you will owe self employment taxes (FICA) of 15.3% in addition to any income taxes you owe.
> 
> You were a victim of Intuit marketing. The Deluxe version on CD for about $40 has everything you need for reporting IC income and expenses. But using the online or download versions require you to upgrade to the more expensive Home and Business to get the necessary schedules.


On their website they make it look like the cd and download are identical. https://turbotax.intuit.com/personal-taxes/compare/desktop/


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## Mars Troll Number 4 (Oct 30, 2015)

NoStopping said:


> I am not sure you understand deductions. If your driving is creating a deduction that helps with your day job, your taking a loss driving and you should quit.
> 
> edit: or you are over deducting.


In orlando the rate per mile is (paid to the driver) is 48c a mile plus 8c per minute (for X)

These rates are low enough that _*on paper*_ you are turning a loss, with a 50% paid mileage ratio. Notice that i say "ON PAPER!"

In many markets it's easy to be showing a loss, in which case you don't owe ANY taxes.


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## Older Chauffeur (Oct 16, 2014)

UberTaxPro said:


> On their website they make it look like the cd and download are identical. https://turbotax.intuit.com/personal-taxes/compare/desktop/


I probably conflated the "online" and "download" formats. Don't want to pay for it to figure it out for sure. Thanks for pointing it out. After their shenanigans in 2015 I don't trust them.


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## Recoup (Jan 30, 2017)

Mears Troll Number 4 said:


> In orlando the rate per mile is (paid to the driver) is 48c a mile plus 8c per minute (for X).



 
 
  holy crap, are you kidding??


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## Mars Troll Number 4 (Oct 30, 2015)

Recoup said:


> holy crap, are you kidding??


65c a mile 11c a minute...

X .75

Turns into 48c a mile 8c a minute

This is why all the uber drivers in the orlando forum now work for the big cab/towncar company here...
Because it's actually possible to turn profit


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## NoStopping (Jan 25, 2017)

Mears Troll Number 4 said:


> In orlando the rate per mile is (paid to the driver) is 48c a mile plus 8c per minute (for X)
> 
> These rates are low enough that _*on paper*_ you are turning a loss, with a 50% paid mileage ratio. Notice that i say "ON PAPER!"
> 
> In many markets it's easy to be showing a loss, in which case you don't owe ANY taxes.


If you are earning 48c a mile your earning less than the average cost wear and tear + cost of operating a car & depreciation. I thought it was funny the guy with the EV earlier said he was driving for free. I mean you have to at least replace the battery pack at some point.


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## Mars Troll Number 4 (Oct 30, 2015)

NoStopping said:


> If you are earning 48c a mile your earning less than the average cost wear and tear + cost of operating a car & depreciation. I thought it was funny the guy with the EV earlier said he was driving for free. I mean you have to at least replace the battery pack at some point.


Well i get $2.40 a mile, plus 45c a minute for stopped/slow time.

But I also drive a taxi...



NoStopping said:


> If you are earning 48c a mile your earning less than the average cost wear and tear + cost of operating a car & depreciation. I thought it was funny the guy with the EV earlier said he was driving for free. I mean you have to at least replace the battery pack at some point.


 I stopped trying to argue with people over the actual cost of operating a vehicle, but at those rates I only uber with the destination filter anymore.

Because less than my cost of operation is still better than nothing i was getting before.


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