# taxes for 25% bracket



## janicesparty (Sep 10, 2015)

So I've been driving for about a week, and it's been pretty up and down. I've had good nights and bad nights, learned everything about the city I live in, had a puker, and received a generous cleanup fee, and I've had a good amount of fun along the way. 

What's not fun though, is taxes. Uber as a part time gig for me, so thinking about taxes makes my brain melt a little bit, especially when I have more pressing matters on my hands. I've read the code, and read this forum quite a bit to get some insight into paying my quarterly taxes. I do have a question now, and I could not find an answer on the forum:

Some of you have mentioned leaving a tip jar in your car. If I were to leave a tip jar with a sign saying that 100% of tips would go to a lisenced charitable organization, can I write that money off after giving it to charity? Obviously, when you drop a few quarters in the jar at a restaurant for some kids education program, you don't write that money off, but the restaurant does, I'm sure, when they turn in the money. Does anyone have any experience with this? I feel like 20 or $30 a week in charity money could really offset a lot of the bloated self-employment taxes that as contractors have to pay. 

Let me know what you guys think. Glad to be part of this forum.


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## elelegido (Sep 24, 2014)

janicesparty said:


> So I've been driving for about a week, and it's been pretty up and down. I've had good nights and bad nights, learned everything about the city I live in, had a puker, and received a generous cleanup fee, and I've had a good amount of fun along the way.
> 
> What's not fun though, is taxes. Uber as a part time gig for me, so thinking about taxes makes my brain melt a little bit, especially when I have more pressing matters on my hands. I've read the code, and read this forum quite a bit to get some insight into paying my quarterly taxes. I do have a question now, and I could not find an answer on the forum:
> 
> ...


You would record the receipts as income, and then deduct them from your taxable income as donations. Net benefit to you = zero.

Why would Uncle Sam give you free money for essentially nothing?


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## janicesparty (Sep 10, 2015)

I get that. So, someone who isn't me wanted to know what would happen if I didn't report that money at all as income, but still donated it. Wouldn't it be difficult for the IRS to prove where that cash came from? I mean, SWIM makes money in more ways than Uber, if there it's no receipts from riders giving tips, how would the IRS audit a couple hundred dollars worth of charitable donations?


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## StarzykCPA (Aug 6, 2015)

elelegido said:


> You would record the receipts as income, and then deduct them from your taxable income as donations. Net benefit to you = zero.


Agreed. And for some people, you may not even be able to write off the donations if you don't already itemize on Schedule A

Edit to address your comment:
No, the IRS would not know. Tax compliance is still largely based on the honor system.


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## elelegido (Sep 24, 2014)

janicesparty said:


> I get that. So, someone who isn't me wanted to know what would happen if I didn't report that money at all as income, but still donated it.


Anyone can make a donation and then make a deduction for it, whether or not they have a tip jar. Make any donation you want, and claim the deduction for it.

Your undeclared tips would be just like the undeclared tips of everyone else on here - hard to trace.


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## RainbowPlate (Jul 12, 2015)

The "donation by artist" example often helps tax illiterates figure this issue out:

An artist creates a work that she could have sold for $1,000 but instead donates to a charity for a silent auction, where it fetches $1,000 for the charity.

The artist's charitable deduction is ZERO*, not $1,000.

The artist never received the $1,000, therefore was never subject to tax on the $1,000, therefore cannot claim the value ($1,000) as a deduction.

(*The artist can deduct the cost of materials -- NOT LABOR -- that went into creating the piece.)


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## RainbowPlate (Jul 12, 2015)

elelegido said:


> Anyone can make a donation and then make a deduction for it,


No, wrong, wrong, no. You cannot claim a deduction against income never subject to income tax in the first place.


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## elelegido (Sep 24, 2014)

RainbowPlate said:


> No, wrong, wrong, no. You cannot claim a deduction against income never subject to income tax in the first place.


 Making a deduction implies that there is something for the deduction to be made from. I was referring to anyone in the situation where they have a taxable income, which is what the OP and I were discussing.

Keep up, young RainbowPlate!


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## CommanderXL (Jun 17, 2015)

janicesparty said:


> So I've been driving for about a week, and it's been pretty up and down. I've had good nights and bad nights, learned everything about the city I live in, had a puker, and received a generous cleanup fee, and I've had a good amount of fun along the way.
> 
> What's not fun though, is taxes. Uber as a part time gig for me, so thinking about taxes makes my brain melt a little bit, especially when I have more pressing matters on my hands. I've read the code, and read this forum quite a bit to get some insight into paying my quarterly taxes. I do have a question now, and I could not find an answer on the forum:
> 
> ...


If you're giving 100% of it to charity, it's not a tip jar, it's a donation jar. And if you just hand over the jar to the charity (which is what a store would do) you wouldn't ever record it as either income or a donation (which is also what a store would do).


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## janicesparty (Sep 10, 2015)

Thanks guys, you cleared that up. I just needed clarity on whether non taxable income was deductable. The answer to that is apparently no. Thanks for your time!


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## Kru (Feb 4, 2016)

janicesparty said:


> Thanks guys, you cleared that up. I just needed clarity on whether non taxable income was deductable. The answer to that is apparently no. Thanks for your time!


Did you ever claim the deduction? Did you put a sign for Tips will go to charity?
what happened? who says that you need to tell uncle sam about tips? I thought we can say we donated from the fares . No one gives tips anyway.


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## Kru (Feb 4, 2016)

Hi,
I will be filing 2016 taxes as married and fall in 25% ($75,300 to $151,900) tax bracket.

I would like to know whats the minimum total donation I need to reach at the end of year to claim as deduction that actually gives me some tax break. I am thinking my total household income will be around $115,000

I am thinking of putting a sing that all tips go to charity and donate all the tips I received. If it gives me any tax break.

I will not be reporting tips as my earning but will be donating them as if I am donating from the fares I received.

Thanks for any advise or numbers you can provide.


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## UberTaxPro (Oct 3, 2014)

Sounds like tax evasion to me.


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## Older Chauffeur (Oct 16, 2014)

Apparently he didn't like the answers in the thread "Tip Jar Write Off?" yesterday.


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## 14gIV (Dec 12, 2015)

Kru said:


> I will not be reporting tips as my earning but will be donating them as if I am donating from the fares I received.


if you aren't reporting those tips as income, how can you use those tips as as tax deduction against your income?


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## Older Chauffeur (Oct 16, 2014)

Coming soon, Uber Graybar Hotel.....


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## PooPhD (Jun 26, 2016)

you can find IRS tax rate ranges/levels online. You'd have to be just over a level for the little bit of tips to claim as tips and then write off as charity.


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## UberPissed (Aug 13, 2014)

janicesparty said:


> Some of you have mentioned leaving a tip jar in your car. If I were to leave a tip jar with a sign saying that 100% of tips would go to a lisenced charitable organization, can I write that money off after giving it to charity? Obviously, when you drop a few quarters in the jar at a restaurant for some kids education program, you don't write that money off, but the restaurant does, I'm sure, when they turn in the money. Does anyone have any experience with this? I feel like 20 or $30 a week in charity money could really offset a lot of the bloated self-employment taxes that as contractors have to pay.


I'm resisting the knee jerk reaction to be snarky. But.... here is my advice. If you receive ANY income as tips, and then donate them to charity, you could get the tax deduction for it; HOWEVER, you would need to also report the tips as income first. It's assignment of income. In fact, that would lead you to a higher tax liability because your self employment tax would be higher than the offsetting income tax deduction. Under your scheme (let's call a spade a spade) you would be better off giving $5 to every rider as an advertising expense (here is $5, give your friend my referral code) and minimizing your income.


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## UberPissed (Aug 13, 2014)

CommanderXL said:


> If you're giving 100% of it to charity, it's not a tip jar, it's a donation jar. And if you just hand over the jar to the charity (which is what a store would do) you wouldn't ever record it as either income or a donation (which is also what a store would do).


Gross income includes all sources...including tips.


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## UberPissed (Aug 13, 2014)

Kru said:


> Hi,
> I will be filing 2016 taxes as married and fall in 25% ($75,300 to $151,900) tax bracket.
> 
> I would like to know whats the minimum total donation I need to reach at the end of year to claim as deduction that actually gives me some tax break. I am thinking my total household income will be around $115,000
> ...


As I stated in a different thread - you would need to report the tip as income, and then you would also get a deduction for the donation, but the donation deduction would probably be less offsetting than the increase of self-employment income and income tax.


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