# Federal and State Taxes for 1099



## jason_womack (Nov 17, 2014)

I know the Federal tax is going to be about 15%, anyone know which states make you report?

I read that not all states are going to make you report 1099 earnings, or does anyone have an idea on how much it would be at the state level?

Also, it's 57.5 cents a mile driven so I will make you well there, is there a limit to how many miles I can report?


----------



## LAuberX (Jun 3, 2014)

.56 per mile for 2014, no limit on business miles.

if you have income tax in your state, I am sure the 1099 counts.


----------



## jason_womack (Nov 17, 2014)

This said 57.5 but is that for reporting next year? irs.gov/pub/irs-drop/n-14-79.pdf, it's just a cent and half so whatever


----------



## Eric K (Dec 28, 2014)

Trust me...don't take a "cent and half" whatever attitude. It may not sound like much but if you report it wrong on your taxes that will increase your chance of getting audited. Just being self employed automatically puts you in a more closely looked at group for audits.
Just pure speculation but with this being such a new industry I imagine a lot of people will try to cheat the system so ridesharing may be closely looked at by the IRS.
The IRS also likes to go after self employed because they know you can't afford lawyers to fight back like big business.


----------



## LAuberX (Jun 3, 2014)

jason_womack said:


> This said 57.5 but is that for reporting next year? irs.gov/pub/irs-drop/n-14-79.pdf, it's just a cent and half so whatever


I have heard that number used regarding 2015 tax returns.


----------



## jason_womack (Nov 17, 2014)

Eric K said:


> Trust me...don't take a "cent and half" whatever attitude. It may not sound like much but if you report it wrong on your taxes that will increase your chance of getting audited. Just being self employed automatically puts you in a more closely looked at group for audits.
> Just pure speculation but with this being such a new industry I imagine a lot of people will try to cheat the system so ridesharing may be closely looked at by the IRS.
> The IRS also likes to go after self employed because they know you can't afford lawyers to fight back like big business.


I've kept a log of everything so I'm not worried, work at a private golf club too so I know plenty of lawyers and can afford them with the trading money I make.


----------



## UberFrolic (Sep 18, 2014)

Do all of you use mileage instead of actual expenses? I have done countless of reading and conclusion I found was that actual expenses are in the benefit. I'm not too sure now. 

This tax season will be my first time and I want to get it right because I heard you can't just change it back to the other tracking method.


----------



## Eric K (Dec 28, 2014)

UberFrolic said:


> Do all of you use mileage instead of actual expenses? I have done countless of reading and conclusion I found was that actual expenses are in the benefit. I'm not too sure now.
> 
> This tax season will be my first time and I want to get it right because I heard you can't just change it back to the other tracking method.


From my other self employed jobs where I do a lot of driving IMO the milage method is a lot easier. All you have to do is track your miles. You don't need receipts for that and it is easy to prove an odometer reading on your car.
The expense method means requiring to keep track of every receipt for gas, oil changes, etc and then you would have to break it down to what percentage is personal vs business.
I would imagine (but I'm not sure) you could deduct febreeze, car washes, etc. However me personally i want to attract as little attention as possible for an IRS audit. To me is say $20 worth of cleaning supplies worth the deduction..


----------



## UberFrolic (Sep 18, 2014)

N


Eric K said:


> From my other self employed jobs where I do a lot of driving IMO the milage method is a lot easier. All you have to do is track your miles. You don't need receipts for that and it is easy to prove an odometer reading on your car.
> The expense method means requiring to keep track of every receipt for gas, oil changes, etc and then you would have to break it down to what percentage is personal vs business.
> I would imagine (but I'm not sure) you could deduct febreeze, car washes, etc. However me personally i want to attract as little attention as possible for an IRS audit. To me is say $20 worth of cleaning supplies worth the deduction..


What does mileage cover exactly?

Gas obviously. Tires? Breaks ? Maintenance. Basic wear and tear correct .

Does it also cover car cleaning products, seat covers, car washes etc. 
Or does that need to be itemized


----------



## Eric K (Dec 28, 2014)

Milage is a flat rate. I beleive it is 56.5 cents per mile for 2014 but please verify that with the IRS or your accountant.
What a lot of people get confused about is exactly what a write off is. It isn't a tax refund. It's whatever you would have had to pay in taxes you'll pay 56.5 cents less per mile you drove for business.
I believe the current SE tax rate is 15.3%
Also, is your taxes are over a certain amount you'll have to start paying estimated taxes also.


----------



## good4life (Oct 4, 2014)

Eric K said:


> It's whatever you would have had to pay in taxes you'll pay 56.5 cents less per mile you drove for business.


This is a very loose definition of a deduction. Actually, deductions reduce your taxable income (before your tax rate is applied to determine your actual tax) whereas, credits reduce your tax liability (after your tax rate is applied or actual tax owed). A credit is worth more than a deduction. My rule of thumb is to take my deduction (say $1000) and multiply by my effective tax bracket (say 30%) or $300 and this reflects the value of the deduction to my tax liability. In this case, my taxes owed would be reduced by approx. $300, for a deduction of $1000. Again, this is my rule of thumb, or a crude way to estimate.


----------



## CowboyMC (Aug 26, 2014)

UberFrolic said:


> Do all of you use mileage instead of actual expenses? I have done countless of reading and conclusion I found was that actual expenses are in the benefit. I'm not too sure now.
> 
> This tax season will be my first time and I want to get it right because I heard you can't just change it back to the other tracking method.


Keep take for both and then see which one is better. If you are using an inexpensive car (You should for UberX) then the mileage may come out better. If your using an expensive car, maybe actual will be better. That is because of the 56 cents per mile expense. Cheaper cars don't cost that much.


----------

