# Deduction high enough dead heading good deal?



## entrep1776 (Nov 3, 2016)

I haven't done my taxes yet for 2016. 1st time filing while driving Uber. 

My market is 75 cents with 15 cents.

I have 2005 Prius I paid $3575 for. I think my mileage is costing me between 10 cents and 20 cents. Each additional mile doesn't cost much. 

tax write off is 54 cents. so using 10 cents/54 cents = 18.5%. 

being independent contractor what rate would I be taxed at? (FICO, SS, personal etc.) 

Would it be cheaper to drive the miles empty to get the write off? 

Thanks.


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## entrep1776 (Nov 3, 2016)

entrep1776 said:


> I haven't done my taxes yet for 2016. 1st time filing while driving Uber.
> 
> My market is 75 cents with 15 cents.
> 
> ...


hmm answering my own question.

If you are self-employed, your Social Security tax rate is 12.4 percent and your Medicare tax is 2.9 percent on those same amounts of earnings but you are able to deduct the employer portion. - See more at: https://www.calcxml.com/calculators/self-employment-tax-calculator#sthash.E9b8QmVA.dpuf

10% is lowest tax bracket. 
15.3% ss & medicare. 
25.3% vs 18.5%.

better to drive car til tax liability is as close to zero especially if trying to get in better spot to get surge/fares.

ANYONE?


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## Older Chauffeur (Oct 16, 2014)

The FICA taxes are assessed on net profits, the threshold amount being $400. If you have a contemporaneous mileage log you can probably get that net profit down pretty low. Many drivers report two or more empty miles to each paid mile.
Your effective tax rate is going to depend on other income, filing status, dependents and deductions. 
I suppose if you are trying to operate at a loss in order to reduce your taxes on other income a case could be made for putting on extra miles, rather than parking and waiting for the next ping.

Disclosure: I'm not a tax professional.


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## entrep1776 (Nov 3, 2016)

Older Chauffeur said:


> The FICA taxes are assessed on net profits, the threshold amount being $400. If you have a contemporaneous mileage log you can probably get that net profit down pretty low. Many drivers report two or more empty miles to each paid mile.
> Your effective tax rate is going to depend on other income, filing status, dependents and deductions.
> I suppose if you are trying to operate at a loss in order to reduce your taxes on other income a case could be made for putting on extra miles, rather than parking and waiting for the next ping.
> 
> Disclosure: I'm not a tax professional.


Feel like more I drive more I make. Even if I'm empty. I'm pretty active not very often sitting and waiting for a ping.

Plus sometimes I stop to buy light bulbs because I'm a landlord. I write these miles off too.


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## johnnytt (Feb 21, 2017)

It is kind of confusing. Should we let the professional,(cpa) to do our tax( they probably charges us $500 and we can claim that at our expenses for next year??


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## entrep1776 (Nov 3, 2016)

johnnytt said:


> It is kind of confusing. Should we let the professional,(cpa) to do our tax( they probably charges us $500 and we can claim that at our expenses for next year??


I have tax preparer do my taxes for $100. I can write off the $100. $500 would take me week and a half doing Uber. I'm not working week and half to pay CPA.


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## johnnytt (Feb 21, 2017)

entrep1776 said:


> I have tax preparer do my taxes for $100. I can write off the $100. $500 would take me week and a half doing Uber. I'm not working week and half to pay CPA.[/QUOTE
> It true that is what they charges today. Everything gone up.


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## Older Chauffeur (Oct 16, 2014)

johnnytt said:


> It is kind of confusing. Should we let the professional,(cpa) to do our tax( they probably charges us $500 and we can claim that at our expenses for next year??


Since rideshare income/expenses go on Schedule C, your CPA would probably split his fee between the business and personal work on your return. Say half of the fee would be a business expense, fully deductible. The other half would be listed on Schedule A, line 22, tax preparation fees. But you would have to subtract 2% of your AGI from that half before claiming the deduction, so it's not likely to reduce your taxable income much on the personal side.
At least that's the way my CPA does it.


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## steveK2016 (Jul 31, 2016)

My regular 9-5 has a CPA on retainer that does my taxes for free. 

I made too much money Ubering last year, owe the tax man about $400.


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## Subjugator (Jun 22, 2016)

I will say deadmiling is pointless. you are maybe saving yourself 5 cents per mile cost from income earned but costing yourself what like 20 cents or more in wear and tear. if you think about it you are destroying your car and have to pay more to replace the auto parts versus paying the tax and having those unused miles go towards being put to use.

I'll give you an example:

if you drove and made .67 cents a mile, deduct the standard of lets say 54. you end up paying 15% of .13 cents.

now lets say you had to get paid .67 cents a mile but you decided to double the amount of miles to deduct what you paid.

lets say for every mile earned at .67 you did 2 miles. so you would then be at 1.08 as your deduction.

wear and tear at 20 cents lets say, is it really worth doing this just not to pay that 1 cent in tax?


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## Diamondraider (Mar 13, 2017)

?????

I must be tipsy....this math does not make sense


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## johnnytt (Feb 21, 2017)

To be honest most driver out there just got out their house and drive/work they did not account all the numbers that you guys have on here. You guys are very clever


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## Trafficat (Dec 19, 2016)

Subjugator said:


> wear and tear at 20 cents lets say, is it really worth doing this just not to pay that 1 cent in tax?


Your post makes sense, unless you are right on the border of needing to pay an obamacare penalty or other cause of major tax increase for a slight increase in reported revenue.


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## Diamondraider (Mar 13, 2017)

Diamondraider said:


> ?????
> 
> I must be tipsy....this math does not make sense


If understand the original question; the driver is simply comparing/contrasting staying mobile vs idling between trips.

E.g. Vehicle costs $0.20 per mile "all in." At tax time, idling results in a certain taxable situation. The delta created by essentially "padding" the deductions is a beneficial $0.34 per mile applied against all remaining taxable earnings.

***Unless I am overlooking something, entrep1776 is benefitting from a self-realized tax shelter.

Thoughts from the pros out there????


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## SOLA-RAH (Dec 31, 2014)

Diamondraider said:


> If understand the original question; the driver is simply comparing/contrasting staying mobile vs idling between trips.
> 
> E.g. Vehicle costs $0.20 per mile "all in." At tax time, idling results in a certain taxable situation. The delta created by essentially "padding" the deductions is a beneficial $0.34 per mile applied against all remaining taxable earnings.
> 
> ...


Think of it this way...it costs you ~25¢ of real money out of your own pocket to drive your car for one mile. Meanwhile the IRS standard mileage deduction lets you deduct 54¢ from your earnings for that mile that you drove. It doesn't matter if you had a passenger with you on a paid ride, were driving around downtown looking for bars/hotels that were lively with people for prospective pick-ups, or were deadheading back to the city center when a long ride slung you way out to the 'burbs...just as long as you were on your uber shift, the miles you rack up count for the standard mileage deduction. Now this isn't ~30¢ in free money (a lot of people mistakenly think this)...but it is untaxed earnings (read: "free money") at ~30¢/mile x YOUR TAX RATE (10%=3¢, 15%=5¢, 25%=7¢). It's best to keep your mileage as low as possible because your car absolutely 100% will cost more than 3¢, 5¢, or 7¢ per mile to operate...I guarantee it.

Example time:
A single ten-mile trip nets you $12.00, but you had to drive 20 miles to find, pick-up, complete the ride, and then get back home. It costs you $5.00 in real money to get the trip done (20 miles x 25¢), but you are taxed on only $1.20 ($12.00 - (20 miles x 54¢)), which results in a true net of $6.60 for the ride ($12.00 (ride fare) - $5.00 (expenses) - 40¢ (~30% for all taxes)).

But let's say you're a very efficient driver and could complete the same ten-mile ride above in only 12 driven miles. It costs you $3.00 in real money to get the trip done (12 miles x 25¢), while you are taxed on $5.52 ($12.00 - (12 miles x 54¢)), which results in a true net of $7.35 for the ride ($12.00 (ride fare) - $3.00 (expenses) - $1.65 (~30% for all taxes)).

So knowing that...which would you rather do? Earn less money with more miles put on your car OR earn more money with fewer miles put on your car?



Trafficat said:


> Your post makes sense, unless you are right on the border of needing to pay an obamacare penalty or other cause of major tax increase for a slight increase in reported revenue.


Correct on the Obamacare threshold...another situation would be when you are on the cusp of having a traditional IRA become non-deductible due to having too much income. It's something to think about if your tax/earnings situation applies, but you have to know the rules, plan out your strategy, and get it done in the year that you are doing the earning...not after the fact when you are doing your taxes in the following April.


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## entrep1776 (Nov 3, 2016)

Subjugator said:


> I will say deadmiling is pointless. you are maybe saving yourself 5 cents per mile cost from income earned but costing yourself what like 20 cents or more in wear and tear. if you think about it you are destroying your car and have to pay more to replace the auto parts versus paying the tax and having those unused miles go towards being put to use.
> 
> I'll give you an example:
> 
> ...


I came up with 13 cents per mile.

I drive 200 miles with no pax I get to write off 54 cents x 200 = $108 tax deduction.

my cost is 13 cents x 200 miles =$26.

Taxes on $108 in income.
10% is lowest tax bracket.
15.3% ss & medicare.
25.3%

$108*25.3%=$27. 32 taxes owed

$26 cost <$27.32 taxes. So better to drive empty since my Prius is so cheap to operate. especially if trying to get in better spot to get surge/fares.


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## Subjugator (Jun 22, 2016)

Don't burn those miles unless you Need to. Each mile is worth mile rate that you earn. If you just dead mile for tax deduction you basically are saving yourself maybe 5 to 10 cents a mile for taxes where as you could make a lot more using those miles for when u get paid


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## entrep1776 (Nov 3, 2016)

Subjugator said:


> Don't burn those miles unless you Need to. Each mile is worth mile rate that you earn. If you just dead mile for tax deduction you basically are saving yourself maybe 5 to 10 cents a mile for taxes where as you could make a lot more using those miles for when u get paid


If I could I would get a paying pax in the car. If I can't get a paying pax, I'm driving while getting a tax deduction to where I'm more likely to get a pax hopefully with surge.


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