# Estimated/quarterly tax and the mileage deduction



## tcaud (Jul 28, 2017)

Can someone affirm/disaffirm the following for USA tax year 2018:
a) The mileage deduction can be counted against estimated self-employment tax
b) The mileage deduction cannot be counted against estimated income tax (but 50% of the self-employment tax can)


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## Older Chauffeur (Oct 16, 2014)

tcaud said:


> Can someone affirm/disaffirm the following for USA tax year 2018:
> a) The mileage deduction can be counted against estimated self-employment tax
> b) The mileage deduction cannot be counted against estimated income tax (but 50% of the self-employment tax can)


My understanding is that nothing changes with regard to business mileage. In effect it lowers the self employment tax, just as any other deductible expenses reduce your net profits on Schedule C, on which the SE tax is figured. The use of the SRM ends there.
Are you asking about quarterly estimated tax payments? You can use the SRM to figure your estimated profit the same way you eventually do on your Schedule C at tax time. Generally, you are supposed to make estimated payments if you will owe more than $1000 when you file. If you have regular W2 income, you can ask your employer to withold more out of your checks.
I hope this helps.

Disclosure: I'm not a tax professional.


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## tcaud (Jul 28, 2017)

Older Chauffeur said:


> My understanding is that nothing changes with regard to business mileage. In effect it lowers the self employment tax, just as any other deductible expenses reduce your net profits on Schedule C, on which the SE tax is figured. The use of the SRM ends there.
> Are you asking about quarterly estimated tax payments? You can use the SRM to figure your estimated profit the same way you eventually do on your Schedule C at tax time. Generally, you are supposed to make estimated payments if you will owe more than $1000 when you file. If you have regular W2 income, you can ask your employer to withold more out of your checks.
> I hope this helps.
> 
> Disclosure: I'm not a tax professional.


What do you do? SRM? What does that stand for?

I expect $16k in income for the year (all self-employed, doing Uber/Grubhub/other delivery). I figure I can count my miles and other expenses for the quarter on the estimated self-employment tax sheet. I saw nothing about business deductions (aside from home office adjustment and some more special circumstances adjustments) on the estimated income tax form, so I'm figuring that I can only count the miles against estimated income tax at the end of the year (by filing Schedule C).


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## Older Chauffeur (Oct 16, 2014)

tcaud said:


> What do you do? SRM? What does that stand for?
> 
> I expect $16k in income for the year (all self-employed, doing Uber/Grubhub/other delivery). I figure I can count my miles and other expenses for the quarter on the estimated self-employment tax sheet. I saw nothing about business deductions (aside from home office adjustment and some more special circumstances adjustments) on the estimated income tax form, so I'm figuring that I can only count the miles against estimated income tax at the end of the year (by filing Schedule C).


Oops! Sorry, it should read SMR, for Standard Mileage Rate, which will be $0.545 per mile for 2018. It covers most operating costs of your vehicle. The IRS requires a contemporaneous mileage log in order to claim either the SMR or the alternative, actual expenses. You can also deduct the so called "dead" miles, which accrue when you are empty and waiting on a ping or traveling to a pick up. I don't know about food delivery, but from what I read here a lot of drivers are able to write off enough mileage to match or exceed their paid miles, resulting in very low profit or an operating loss. Depending on your filing status, exemptions and the like, I don't think you will owe much at tax time. But you can't go wrong paying estimated quarterly taxes, resulting in a refund.
Other deductions include the portion of your cellphone bill used for business, unreimbursed tolls, parking charges, and anything you provide for riders, such as water, mints, etc.

Scanning the instructions for quarterly estimated payments I don't see anything prohibiting use of the business mileage in computing your tax.
I think you're worried about something that is not likely to be necessary. On your expected gross of $16k, if you're filing single you would have over $10k subtracted by your personal exemption and standard deduction. That's if you don't deduct any mileage or expenses. So your net profit (income) is going to be a lot less. Do keep in mind that if your net profit from self employment is $400 or more, you will owe 15.3% on that profit for Medicare and Social Security contributions, even if you don't owe income tax. You do get half that tax credited on your 1040, as you mentioned.


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## UberTaxPro (Oct 3, 2014)

tcaud said:


> Can someone affirm/disaffirm the following for USA tax year 2018:
> a) The mileage deduction can be counted against estimated self-employment tax
> b) The mileage deduction cannot be counted against estimated income tax (but 50% of the self-employment tax can)


a. The mileage deduction using the SMR reduces your net income. Self employment tax is on your net income, so the mileage deduction would be before any self employment tax.
The mileage deduction using the SMR is an expense and behaves like any other expense reducing your net taxable income. It comes off the top before any taxes are figured.



tcaud said:


> What do you do? SRM? What does that stand for?
> 
> I expect $16k in income for the year (all self-employed, doing Uber/Grubhub/other delivery). I figure I can count my miles and other expenses for the quarter on the estimated self-employment tax sheet. I saw nothing about business deductions (aside from home office adjustment and some more special circumstances adjustments) on the estimated income tax form, so I'm figuring that I can only count the miles against estimated income tax at the end of the year (by filing Schedule C).


The IRS estimated tax sheet is a nightmare. It makes things much more difficult than need be. I think it's one of the reasons so few people actually pay estimated taxes!


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## tcaud (Jul 28, 2017)

The GOP did away with the personal exemption last year (see IRS pub. 505 - "What's New"), and the standard deduction has been increased to $12k ($24k married).

I don't want to pay estimated taxes, but I figure I'll face a penalty if I don't.

The estimated tax form mentioned "adjusted gross income". It mentions nothing about "net" income or "profit".


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## UberTaxPro (Oct 3, 2014)

tcaud said:


> The GOP did away with the personal exemption last year (see IRS pub. 505 - "What's New"), and the standard deduction has been increased to $12k ($24k married).
> 
> I don't want to pay estimated taxes, but I figure I'll face a penalty if I don't.
> 
> The estimated tax form mentioned "adjusted gross income". It mentions nothing about "net" income or "profit".


If you look at a 1040 form you'll see how adjusted gross income is figured. There's an entry line for business income. (line 12)That line gets filled by your net income from schedule c


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## Older Chauffeur (Oct 16, 2014)

tcaud said:


> The GOP did away with the personal exemption last year (see IRS pub. 505 - "What's New"), and the standard deduction has been increased to $12k ($24k married).
> 
> I don't want to pay estimated taxes, but I figure I'll face a penalty if I don't.
> 
> The estimated tax form mentioned "adjusted gross income". It mentions nothing about "net" income or "profit".


You're right- I forgot about the change for this year. I doubt you'll owe much if any income tax based on your $16k gross. And any SE tax won't be much. I wouldn't worry about quarterly payments if I were you. Just keep a good mileage log to back up the deduction.


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