# Not understanding Mileage deductions



## Super dUber (Jul 31, 2015)

Im new to Uber. I drove about 800 miles to make $750. Let's say the tax bracket puts me at 25% for my annual driving. I still dont have to pay a dime if I can deduct over 50% of it $.56/mile. Am I correct here? Unless someone is making MORE than $2/mile that they drive (assumimg 25% tax rate), which is not likely if you add in the dead miles, then they wouldnt have to pay taxes.


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## Super dUber (Jul 31, 2015)

For 800 miles I could have made...
800*.56 = 448
448 / .25 = $1792!!! (Assuming 25% bracket)

Without paying a dime. This doesnt even include gas or other expenses. Someone tell me if this is true.


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## Altima ATL (Jul 13, 2015)

I think the deduction works more like:.....

Income - &750
Less allowable deduction @ .56 per mile = 800*.56 = 448.00

So 750-448=302

$302 is what are subject as taxable income.

Are you getting the $750 from the 1099 from Uber? - If that is the case then that will include the SRF and Ubers cut which you can also claim as deduction.


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## Super dUber (Jul 31, 2015)

Ok I see. My understanding was off. It was not a 1099, but my net profit for th le week, so no SRF. I guess gas, repairs, and things like water may bring it down to close to 0. Thanks.


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## TimFromMA (Mar 4, 2015)

Super dUber said:


> For 800 miles I could have made...
> 800*.56 = 448
> 448 / .25 = $1792!!! (Assuming 25% bracket)
> 
> Without paying a dime. This doesnt even include gas or other expenses. Someone tell me if this is true.


Our local base rate is 1.20 per mile plus $0.20 per minute.

800 miles x $1.20 per mile = $960
Assuming your average speed was 30mph, your total time was 1600 minutes
1600 minutes x $.20 = $320
$960 + $320 = $1280 in GROSS fares
$1280 - 20% uber cut = $1024
800 miles x $0.6 per mile in expenses = $480 in expenses
Assuming 400 dead miles x $0.60 = $240
$480 + @240 = $720 in expenses
$1024 - $720 = $304 profit before taxes

The above assumes 400 dead miles plus no surge


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## Oc_DriverX (Apr 29, 2014)

The IRS deduction is now $0.575/mile. If you use the deduction, then you may not also deduct gas or repairs or other vehicle expenses. The deduction covers this.

As an I/C you will also need to pay self employment tax. That is about 15% of your profits.


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## Super dUber (Jul 31, 2015)

So only IC's may use mileage deductions?
And only IC's need to pay 15% self employment tax? What's the point if you have to pay 15% regardless of deductions? That alone isnt worth it.



Thanks MA guy. I'm in MA too. My numbers were including dead miles.


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## Oc_DriverX (Apr 29, 2014)

Super dUber said:


> So only IC's may use mileage deductions?
> And only IC's need to pay 15% self employment tax? What's the point if you have to pay 15% regardless of deductions? That alone isnt worth it.
> 
> Thanks MA guy. I'm in MA too. My numbers were including dead miles.


You would owe the self employment tax on your profits. Profits would be net of the mileage deduction.

The mileage deduction is not only for I/Cs. Mileage driven for a charity or for non commuting business travel qualify as well.


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## Super dUber (Jul 31, 2015)

So let me get this straight. 15% is just the bracket that we're in? Or is this an additional tax on top of the regular income tax? I read a little about self-employment tax and it seems to include medicare and social security. Everyone pays those though.

Edit - Can you write up a quick example for me with numbers? That would be very helpful. Thank you sir.


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## Oc_DriverX (Apr 29, 2014)

Let's say you earned $1,000. If you earned it from a regular job, they would have deducted about 7.5% for SS and medicare.

Let's assume in stead that you had net profits from Uber of $1,000. That would be your profits after Uber takes their cut and you deduct your business expenses such as $0.575 for each mile you drove. You would then have to pay a self employment tax of 15% on the profits.

Now the difference between that and earning the money through an hourly job is the 7.5% that you as a business owner have to pay in that is usually paid by the employer.


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## Super dUber (Jul 31, 2015)

Now how does income tax and your tax bracket fit into this?


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## Oc_DriverX (Apr 29, 2014)

Your tax bracket will come from your taxable income number. If all your income come from UberLyft and you actually made money in the previous year, then you should look into filing quarterly estimated taxes. If you have a job, typically you are having some income taxes withheld. If UberLyft is a small percentage of your total income, then you might not need to worry about estimated taxes, but that is something you need to figure out yourself.


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## Super dUber (Jul 31, 2015)

So if uber is my only income and I made 30k this year, and that put me in the 15% tax bracket... How much am I paying? 30% because of SE tax?


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## UberNorthStar (Jul 7, 2015)

No. As self-employees you pay the employee's share of FICA _and _the employer's share of FICA, as well as federal withholding tax. That equals out to 15.3% (or .153).

On your question on 30K is that before our after deductions? For sit & giggles let's say your 1099 read $725,

1. Deduct the # of Safe Ride Fees as Insurance payment to Uber for "Use of Uber Platform". Let's say the # is 29, Each fare was $25.
$725 - 29 = $696

2. Then deduct 20% of $696 as "Payment to Uber for liability insurance.
$696 x 80% = $556.80

3. Mileage deduction [ofcost of running car (gas, oil changes, repairs, etc.)] IRS standard $.575/mile
800 x .575 = $460. $556.80 - $460 = $96.80 = Net Profit

4. Self-employment Tax 15.3% or .153. Multiply net profit by .847 for profit after taxes.
$98.60 x $.847 = *$81.99* Profit after taxes.

You can use this same procedure each week.

Your tax bracket as self-employed is determined by your net income before taxes. In this case it is $96.80.

Your net is 13% of $725. Applying this percentage to 30K:
30,000 x .13 = $3,900 Net Income upon which your tax bracket is determined.

Hope this helps. 

Disclaimer: This is this poster's opinion & is not intended to take the place of checking with a CPA or reading the official IRS booklet of instructions.


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## Oc_DriverX (Apr 29, 2014)

UberNorthStar said:


> 4. Self-employment Tax 15.3% or .153. Multiply net profit by .847 for profit after taxes.
> $98.60 x $.847 = *$81.99* Profit after taxes.
> 
> You can use this same procedure each week.
> ...


Actually, 1/2 of what you pay in self employment taxes is subtracted off for your gross income. So with $98.60 in profits the SE tax would be $14.81. You would then be able to deduct $7.40 from your net profits, so the taxable income would be $89.40. Of course then there would be either the standard deduction or the itemized deductions that would be taken off of that figure to arrive at your taxable income.


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## Realityshark (Sep 22, 2014)

Contact a tax professional. Getting tax advise from a blog on the internet makes about as much sense as getting tax advise from the fry cook at McDonalds.


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## UberNorthStar (Jul 7, 2015)

Realityshark said:


> Contact a tax professional. Getting tax advise from a blog on the internet makes about as much sense as getting tax advise from the fry cook at McDonalds.


True. Get the forms off the internet & read. Until I have to file, what I posted is the way I do my calculations.


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## ReviTULize (Sep 29, 2014)

Super dUber said:


> Ok I see. My understanding was off. It was not a 1099, but my net profit for th le week, so no SRF. I guess gas, repairs, and things like water may bring it down to close to 0. Thanks.


You either take the deduction per mile or actual expenses. You can't do gas AND the mileage. Mileage deduction is almost always better.
Dashcam, phone, water, mints, car washes, sirius (subscriptions) etc are all business expenses


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## UberNorthStar (Jul 7, 2015)

I don't think the cell phone can be used as a deduction _unless _it is exclusively used for Uber.

Disclaimer: This is this poster's opinion & is not intended to take the place of checking with a CPA or reading the official IRS booklet of instructions.


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## ReviTULize (Sep 29, 2014)

A percentage of it can be deducted. Even the monthly charge is


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## UberNorthStar (Jul 7, 2015)

ReviTULize said:


> Even the monthly charge is


Nice!


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