# How do you handle tax deductions? And has anyone had any issues with the IRS?



## Cheese (Dec 25, 2014)

I"ve been logging my miles everyday. Once I go online for the day I clear my odometer and record the number at the end of the day. Is this the best way to do it? I will have to talk to my tax guy in the next few weeks, but im worried he is going to say i can't deduct anything because i haven' been doing it right.


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## Ross (Dec 18, 2014)

One thing I started doing years ago is on January 1st, I take a photo of the mileage in the odometer. The photo is time stamped and dated. An original gos to the tax man. On December 31st, another photo is taken, and again sent to the tax man. Now I have photographic proof of total miles driven for the year. He’ll figure out all my expenses, fuel, tires, maintenance, blah blah blah, and see which is greater, to write off, mileage or expenses. Nine outa ten times, its always the mileage.

Now mind you, my vehicle I use is a state licensed livery vehicle. I have my own LLC, USDOT Number, and EIN. This vehicle is solely for business use, I don’t use it for my personal running around in. So that may be something you have to figure out with your mileage if you’re a weekend worrier and operating an illegal taxi service and using your personal car.


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## cocoa (Oct 30, 2014)

A written log is acceptable. Income and expenses are reported on Schedule C which feeds into your 1040.


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## Ross (Dec 18, 2014)

cocoa said:


> A written log is acceptable. Income and expenses are reported on Schedule C which feeds into your 1040.


Should be filing a 1099 as he isn't an employee...


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## cocoa (Oct 30, 2014)

He doesn't file a 1099, Uber will send him a 1099. That income is then reported on Schedule C or Schedule C EZ the result of which is reported on line 12 of his 1040.


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## CowboyMC (Aug 26, 2014)

2015 business mileage rate is $0.575


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## Showa50 (Nov 30, 2014)

My tax guy told me to keep a driving log. Beginning milage and ending milage for the day. And also keep track of your pickup and drop-off locations.

I also keep track of hours of shift, not required.

I use a day planner as my log


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## Fauxknight (Aug 12, 2014)

CowboyMC said:


> 2015 business mileage rate is $0.575


That's good news for us for next years taxes, bigger write off even though gas prices are down means a lot more money that we get to keep.


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## Fauxknight (Aug 12, 2014)

Recording wise I was keeping track of personal vs work miles, which got tedious when I was delivering with the vehicle as miles to and from work are personal, add in Uber miles before and after work and I'd have quite a few mileage entries per day. Not to mention that the delivery miles were partially compensated for, so I had to keep track of them separately from Uber as well as write my daily compensation amount down, as that goes against the write off for those miles.

Now I don't have that job and I have a truck which I use for all personal trips. Now all miles on the Prius are work miles, making my paperwork a lot easier.


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## BlkGeep (Dec 7, 2014)

If your audited you will need recorded start and stop odometer readings.


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## DesertTiger (Jan 1, 2015)

IRS does NOT allow mileage deductions for "for hire" cars. Whether we're a "for hire" or just a "ride sharer" will probably depend on the IRS agent. With that said, I personally know over 30 black car drivers that have been using mileage deductions for years/decades and have never gotten audited for it. However, I do know of one black car driver that did get audited a couple of years back for a different specific reason, but wasn't asked about his mileage deduction.


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## Showa50 (Nov 30, 2014)

DesertTiger said:


> IRS does NOT allow mileage deductions for "for hire" cars.


What!? It's a business expense. Nowhere does it the say for hire is excluded. The standard milage deduction is for operating an automobile in your business.

http://www.irs.gov/2014-Standard-Mileage-Rates-for-Business,-Medical-and-Moving-Announced


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## DesertTiger (Jan 1, 2015)

Don't remember which IRS publication it's on but just google "mileage deduction for hire". It's a very fine print but it's there.


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## Showa50 (Nov 30, 2014)

DesertTiger said:


> Don't remember which IRS publication it's on but just google "mileage deduction for hire". It's a very fine print but it's there.


You do realize what your saying makes no sense? A for hire vehicles is part of a business, its equipment. You're saying an independent truck driver is not allowed to deduct milage that's a part of his/her business....? I don't think so.

This deduction has been around for decades, legally. If you're making an argument against this you should provide a source like I did, instead of telling people to look it up. The lack of information you're providing isn't helping the group.


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## DesertTiger (Jan 1, 2015)

I tried posting the link to the publication from IRS, but I guess as a new member I cannot post links yet. So cut and paste the following on google and you can find the actual publication... * IRS FS-2006-26, OCTOBER 2006*

Here's an excerpt:
*Standard Mileage Rate Method*

The standard mileage rate may be used to figure the deductible costs of a vehicle that is owned or leased. If a taxpayer wishes to use the standard mileage rate for a leased vehicle, it must be used for the entire lease period. In other words, a taxpayer must use the standard mileage rate for the first year a vehicle is available for business use in order to use the standard mileage rate in subsequent years.

The standard mileage rate is adjusted annually by the IRS to reflect changes in the cost of operating a vehicle. In some situations it is adjusted during the year. The 2006 standard mileage rate of 44.5 cents per mile, as well as rates for previous periods, can be found at [removed link]


The standard mileage rate is used in place of actual expenses. Taxpayers who choose the standard mileage rate may not deduct actual expenses, such as depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance or vehicle registration fees. Business-related parking fees and tolls may be deducted in addition to the standard mileage rate. Fees for parking at a taxpayer's main place of business or tolls related to commuting to and from that main place of business are personal expenses which are not deductible.

The standard mileage rate cannot be used if the taxpayer:



*Uses the car for hire (such as a taxi).*

Uses five or more cars at the same time (as in fleet operations).
 
Claims depreciation or a section 179 deduction (Publication 463, Chapter 4).
 
Is a rural mail carrier who receives a qualified reimbursement (Publication 463, Chapter 4).


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## DesertTiger (Jan 1, 2015)

Here's an excerpt from Turbotax website.... sorry, I still cannot post links yet.

*Business Use of Vehicles*
Updated for Tax Year 2014

OVERVIEW

If you use vehicles in your small business, how and when you deduct for the business use of those vehicles can have significant tax implications. It pays to learn the nuances of mileage deductions, buying versus leasing and depreciation of vehicles. Special rules for business vehicles purchased in 2014 can deliver healthy tax dividends.

*Some important questions*
The deduction for using vehicles in your business can sometimes be significant, so it's important to make the following decisions:


Is it better to use the standard mileage rate as your deduction or the actual expenses incurred for a vehicle used for this business?
Who should own the vehicle? The business, the business owner or the employee?
Should the business lease or buy the vehicle?
*Here's a general overview*
Business vehicles are cars, SUVs and pickup trucks that are used for business activities.

What does not qualify:


Vehicles used as equipment, such as dump trucks
*Vehicles used for hire, such as taxi cabs or airport transport vans*


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## OC-Lyft&Uber Driver (Jan 1, 2015)

Cheese said:


> I"ve been logging my miles everyday. Once I go online for the day I clear my odometer and record the number at the end of the day. Is this the best way to do it? I will have to talk to my tax guy in the next few weeks, but im worried he is going to say i can't deduct anything because i haven' been doing it right.


If you are going to use your car 100% for business, you can deduct 100% of the expenses. Depending on the amount of miles you drive, you should compare your mileage deduction compared to your other deductions - gas, ins, car washes, maintenance, registration, oil changes, etc, and depreciation. Once you choose mileage, you must continue to use the mileage deduction going forward. If you use your car for both personal and business, you must log your mileage. Then all the deductions are based on a ratio of Bus miles/Total Miles. Be careful here. If you get audited, the IRS wants to see proof - such as a ledger. You don't have to keep track of everyday for the whole year. You have some options where you only have to keep track for a month or a few months - ask your personal tax advisor. If you come from a two-car family and only are deducting one car, you may want to see about using the other car as well. If you can prove that you have used both, you can write a percentage of both cars off as well and potentially increasing the amount of your deduction. I'm not an accountant but I am in the industry. The information above is to the best of my knowledge and I would recommend you consult with your professional tax advisor to insure the information is not only correct but applies to your own personal tax situation. Happy new year!


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## OC-Lyft&Uber Driver (Jan 1, 2015)

Showa50 said:


> You do realize what your saying makes no sense? A for hire vehicles is part of a business, its equipment. You're saying an independent truck driver is not allowed to deduct milage that's a part of his/her business....? I don't think so.
> 
> This deduction has been around for decades, legally. If you're making an argument against this you should provide a source like I did, instead of telling people to look it up. The lack of information you're providing isn't helping the group.


Don't know if this will help but.... If you have two jobs or have travel with only one job, I believe you cannot take a deduction driving to your primary place of employment such as your office "commute to work." However, you can take a mileage deduction for any business mileage from your "office" to anywhere else you are conducting business and take a deduction for traveling to your second job and deduct any additional mileage. You cannot deduct the commute home. It's always a good idea to confirm any tax advice with your personal tax profession before taking any action.


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## Showa50 (Nov 30, 2014)

DesertTiger said:


> I tried posting the link to the publication from IRS, but I guess as a new member I cannot post links yet. So cut and paste the following on google and you can find the actual publication... * IRS FS-2006-26, OCTOBER 2006*


 You are correct in a way.

The milage deduction only effects those filing a 1040. Which most of us will file.

The reason taxi and for hire are excluded is those generally operate as legitimate business, ie corporations. Corporations file under separate forms. Not personal income tax forms.

Most of us are not licensed livery, so we file personal forms and take the expense.


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## lu181 (Nov 3, 2014)

I believe this was changed in 2011 : see underlined IRS rules change constantly you have to keep up with the times

Standard mileage rate not allowed. You
cannot use the standard mileage rate if you:
Use five or more cars at the same time
(such as in fleet operations),
Claimed a depreciation deduction for the
car using any method other than straight
line, for example, MACRS (as discussed
later under Depreciation Deduction),
Claimed a section 179 deduction (discussed
later) on the car,
Claimed the special depreciation allowance
on the car,
Claimed actual car expenses after 1997 for
a car you leased, or
Are a rural mail carrier who received a
qualified reimbursement. (See Rural mail
Note. You can elect to use the standard
mileage rate if you used a car for hire (such as a
taxi) unless the standard mileage rate is otherwise
not allowed, as discussed above.


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## DesertTiger (Jan 1, 2015)

@lu181 Wow... excellent find! Why the IRS makes this a fine print I don't know... thank you for the correction.


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## Tom Doran (Dec 29, 2014)

cocoa said:


> A written log is acceptable. Income and expenses are reported on Schedule C which feeds into your 1040.


Keep good records and log everything. I was audited once and they asked for logs of all the trips.


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## CowboyMC (Aug 26, 2014)

DesertTiger said:


> IRS does NOT allow mileage deductions for "for hire" cars. Whether we're a "for hire" or just a "ride sharer" will probably depend on the IRS agent. With that said, I personally know over 30 black car drivers that have been using mileage deductions for years/decades and have never gotten audited for it. However, I do know of one black car driver that did get audited a couple of years back for a different specific reason, but wasn't asked about his mileage deduction.


This is old info and is incorrect. This was answered elsewhere.


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