# First year driving, tax advice



## Gwoae (Aug 12, 2017)

I know I should probably get an account but before I do I am trying to see if I can do it myself. I have always used hr block tax cut for my taxes. This is my first year driving rideshare so I have some questions.

1. Is there a software that is better than others for rideshare?

2. I have a car payment. I was thinking taking actual expenses might be better but I am reading that the first year I have to take standard rate. Is that true?

3. If I take the standard rate what else can I write off? As I understand it, smr includes gas, repairs, and car operating expenses. What about car washes, insurance, and car payments? Is there a list of common items that people write off when using smr?

Thanks in advance fr helping.


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## UberTaxPro (Oct 3, 2014)

There's lot on here already about the topics you're asking about. Do some searching and you'll find a lot of info.
First you need to understand that you're operating a business when you're ride sharing. The same tax rules apply to you you as any other business. 
1. You need software that can do a Schedule C. Older Chauffeur has some good posts about turbo tax products and deals. 
2. No, you don't have to take a standard rate the first year. Most are better off using the SMR however. The rule is if you use actual expenses you can't switch to using the SMR in future years with that particular vehicle. If you start with the SMR you can switch to actual expenses in later years. If you go with actual expenses you'll have calculate your business % use for all your expenses. For example if your insurance is $1000 per year and you use your car 30% of the time for ride-share than your deduction is 30% of $1000 = $300.
3. If you use the SMR in addition you can deduct a few things like parking, interest on your car loan, property tax on your car, goodies for your pax like candy and water and cell phone. All subject to the business % rule. Normal car washes are generally considered part of the SMR, extra car washes for your pax comfort may be deductible. Car payments are never deductible except for the interest. If you use actual expenses you'd depreciate your car to recapture the cost. With the SMR, depreciation is included.


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## Darrell Green Fan (Feb 9, 2016)

So it's pretty clear the SMR is the way to go. What about FICA contributions? I know this is state specific but are the state taxes factored in after you apply the SMR to your earnings?


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## UberTaxPro (Oct 3, 2014)

Darrell Green Fan said:


> So it's pretty clear the SMR is the way to go. What about FICA contributions? I know this is state specific but are the state taxes factored in after you apply the SMR to your earnings?


FICA (Federal Insurance Contribution Act) taxes are for payroll taxes (W-2) employees. Self employed business operators like ride-share drivers pay self employment taxes under SECA (Self-Employed Contributions Act)


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## Darrell Green Fan (Feb 9, 2016)

UberTaxPro said:


> FICA (Federal Insurance Contribution Act) taxes are for payroll taxes (W-2) employees. Self employed business operators like ride-share drivers pay self employment taxes under SECA (Self-Employed Contributions Act)


Thanks. So walk me through this. Let's say you earn $30,000 after UBER cut and before any deductions. Your income after the SMR is very low, say $8,000-$10,000 (help me understand if those figures are about right). With the new standard deduction of $12,000 per person it appears as if there will be little or no Fed Taxes and would the SECA be based on the $8,000-$10,000 net? Then we go to state taxes, which obviously vary. Would your state taxes be based on your Fed AGI which again after the Standard Deduction would be close to nothing?


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## Older Chauffeur (Oct 16, 2014)

The $12000 standard deduction takes effect for 2018, so it won't help until you file in early 2019. $6350.00 for a single person this year. SECA (15.3%) is based on net self employment profit once you make at least $400, as determined on your Schedule C. But you get to deduct half of it on your 1040. UberTaxPro can explain it much better than I can.

Disclosure- I'm not a tax professional.


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## Darrell Green Fan (Feb 9, 2016)

And I'm not an UBER driver. LOL I was thinking down the road I may do this part time. So to clarify the net profit you pay the SECA on is after the standard mileage deduction right? So in theory that figure may be pretty low.


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

Darrell Green Fan said:


> And I'm not an UBER driver. LOL I was thinking down the road I may do this part time. So to clarify the net profit you pay the SECA on is after the standard mileage deduction right? So in theory that figure may be pretty low.


What market your in has a bigger impact than how much you work and how much you owe in federal/state taxes.

$1000 in Uber income in Orlando will result in about $1100 in deductible miles.. or self employment taxes of zero.zero zero. And a total tax bill of Nada.

$1000 in Seattle will have about $300-400 or so in deductions resulting in self employment taxes of about $105.

So $1000 in revenue will result in anywhere beteeen zero and $100 in seca taxes and everything from $0-100 or so in local taxes.

Maryland is kinda vague....

I have no idea if you will be able to even turn a profit, or how much you will owe on any taxable profit you may or may not get.


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## UberTaxPro (Oct 3, 2014)

Darrell Green Fan said:


> And I'm not an UBER driver. LOL I was thinking down the road I may do this part time. So to clarify the net profit you pay the SECA on is after the standard mileage deduction right? So in theory that figure may be pretty low.


Yes, for most it's generally low to nothing. But everyone's situation is different.


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## Uber Duber Chick (Jun 29, 2017)

UberTaxPro said:


> There's lot on here already about the topics you're asking about. Do some searching and you'll find a lot of info.
> First you need to understand that you're operating a business when you're ride sharing. The same tax rules apply to you you as any other business.
> 1. You need software that can do a Schedule C. Older Chauffeur has some good posts about turbo tax products and deals.
> 2. No, you don't have to take a standard rate the first year. Most are better off using the SMR however. The rule is if you use actual expenses you can't switch to using the SMR in future years with that particular vehicle. If you start with the SMR you can switch to actual expenses in later years. If you go with actual expenses you'll have calculate your business % use for all your expenses. For example if your insurance is $1000 per year and you use your car 30% of the time for ride-share than your deduction is 30% of $1000 = $300.
> 3. If you use the SMR in addition you can deduct a few things like parking, interest on your car loan, property tax on your car, goodies for your pax like candy and water and cell phone. All subject to the business % rule. Normal car washes are generally considered part of the SMR, extra car washes for your pax comfort may be deductible. Car payments are never deductible except for the interest. If you use actual expenses you'd depreciate your car to recapture the cost. With the SMR, depreciation is included.


Can a percentage of auto insurance be deducted?

What about a percentage of Health Insurance payments for my family, if I was self paying?


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## Older Chauffeur (Oct 16, 2014)

Uber Duber Chick said:


> Can a percentage of auto insurance be deducted?
> 
> What about a percentage of Health Insurance payments for my family, if I was self paying?


Are you using the standard mileage rate or actual expenses for business use of your car? Insurance is included in the SRM,
but if you are deducting actual expenses based on the percentage of business/personal miles from your mileage log, insurance would be one of those costs of operation.

Health insurance premiums may involve a credit as well as being deductible. A credit goes directly against your tax liability, so it saves you more than a deduction, which lowers your taxable income. I hope UberTaxPro will answer on this issue, it's over my head.


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## UberTaxPro (Oct 3, 2014)

Uber Duber Chick said:


> Can a percentage of auto insurance be deducted?
> 
> What about a percentage of Health Insurance payments for my family, if I was self paying?





Uber Duber Chick said:


> Can a percentage of auto insurance be deducted?
> 
> What about a percentage of Health Insurance payments for my family, if I was self paying?


1.No insurance deduction if your using SMR
2. It's a deduction that goes on your 1040 not your schedule C. You have to have business income to qualify and not be eligible for any other insurance. http://loopholelewy.com/loopholelewy/02-business-deductions/health-insurance-deduction.htm


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