# Doesn't IRS enforce quarterly taxes for 1099'ers



## x100 (Dec 7, 2015)

It looks they like above 85% taxes turned in quarterly or they can additionally tax/fine you.

A lot of drivers here only pop the tax questions this time of the year only, meaning waiting for 1099 but feels like they haven't paid it quarterly.

Does it matter not paying quarterly based on rough estimates and calc. ?

https://finance.yahoo.com/news/u-irs-waive-2018-penalties-214147274.html


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## Uber's Guber (Oct 22, 2017)

Write-offs are huge in the rideshare industry. Also, other legit incomes earned during the year has taxes deducted from salaries. You’re only dinged if you end up owing at the end of year.
Disclosure: I’m not a tax professional.


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## Launchpad McQuack (Jan 8, 2019)

Uber's Guber said:


> You're only dinged if you end up owing at the end of year.


Not entirely true. You're dinged if the taxes that are withheld from your wages don't cover your tax liability for the year and you didn't make quarterly payments to cover the excess. When dealing with the IRS, the term "wages" has a very specific meaning. Wages refers to money that you earn from an employer as an employee. If your tax withholdings from wages covers your tax liability, then you're golden (I think). If they don't, then if you didn't make quarterly payments on time then you can be penalized even if you are owed a refund at the end of the year.


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## FLKeys (Dec 27, 2018)

Launchpad McQuack said:


> Not entirely true. You're dinged if the taxes that are withheld from your wages don't cover your tax liability for the year and you didn't make quarterly payments to cover the excess. When dealing with the IRS, the term "wages" has a very specific meaning. Wages refers to money that you earn from an employer as an employee. If your tax withholdings from wages covers your tax liability, then you're golden (I think). If they don't, then if you didn't make quarterly payments on time then you can be penalized even if you are owed a refund at the end of the year.


I don't think this is correct. At my day job some years we know we are not going to make a profit and we do not file quarterly returns. Other years we do make quarterly payments. I think it all comes down to tax liability. Pretty sure I read that if you are expected to owe over $1000 in taxes you will be penalized if you did not make quarterly payments. The first year it happens they wave the penalties.


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## Disgusted Driver (Jan 9, 2015)

It's underpayment of taxes, here's a link:
https://www.irs.gov/taxtopics/tc306

You are subject to a penalty if you did not pay at least 90% of the tax owed OR 100% of last years tax.
This year they reduced it to 85% because of people having issues with the change in tax law.


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## Launchpad McQuack (Jan 8, 2019)

FLKeys said:


> I don't think this is correct. At my day job some years we know we are not going to make a profit and we do not file quarterly returns. Other years we do make quarterly payments. I think it all comes down to tax liability. Pretty sure I read that if you are expected to owe over $1000 in taxes you will be penalized if you did not make quarterly payments. The first year it happens they wave the penalties.


What I wrote is overly simplified. The reality is more complicated, and I don't fully understand it. The part that you highlighted in red is true, though. It straight up says that in Publication 505.

https://www.irs.gov/pub/irs-pdf/p505.pdf

In Chapter 4 it says....



IRS Publication 505 said:


> *Penalty figured separately for each period.*
> Because the penalty is figured separately for each payment period, you may owe a penalty for an earlier payment period even if you later paid enough to make up the underpayment. This is true even if you are due a refund when you file your income tax return.
> 
> *Minimum required each period.*
> ...


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## Fozzie (Aug 11, 2018)

LOL. Uber drivers are very low priority to the IRS. The IRS has finite resources, and spending time, effort and man hours to audit the earnings of workers that, on average, make less than minimum wage is stupid. If you were an auditor looking for tax money, would you audit the Uber driver, or the scumbag startup techie that makes $250k + per year?


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## Stevie The magic Unicorn (Apr 3, 2018)

x100 said:


> It looks they like above 85% taxes turned in quarterly or they can additionally tax/fine you.
> 
> A lot of drivers here only pop the tax questions this time of the year only, meaning waiting for 1099 but feels like they haven't paid it quarterly.
> 
> ...


There's several exemptions that make it not apply to 99% of uber drivers.

#1 you don't have to pay quarterly if it's your first year
#2 if you can't turn a profit than you don't owe anything
#3 if you owed less than $1000 last year you don't have to pay quarterly this year
#4 you paid 90% of your tax bill by years end the year prior
#5 Income from other sources and personal subsequent deductions can cancel out needing to pay extra in quarterly
#6 You have enough paid to the IRS from witholdings from another job to cover your tax bill

SO basically...

Only drivers who...
Have been working over a year (4%? with a 96% turnover?)
AND are turning a profit on paper
AND don't have any other job
AND primarily uber/lyft for a living
AND Arn't married to a w2 paid spouse
AND had over $6350 in taxable profit

The odds are that very very few if any uber drivers will fit into the above requirements, honestly... I just don't see it happening unles rates massively increase.


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## Disgusted Driver (Jan 9, 2015)

One other thing or trick to mention. If you work a regular job you can have them deduct an extra amount out of your December paycheck. Withholding from paychecks is counted as having been deducted throughout the year so if you take enough extra out on December you won't have a penalty for not doing quarterly. 

P.s. the penalty is pretty small unless you owe a ton.


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## FLKeys (Dec 27, 2018)

Disgusted Driver said:


> One other thing or trick to mention. If you work a regular job you can have them deduct an extra amount out of your December paycheck. Withholding from paychecks is counted as having been deducted throughout the year so if you take enough extra out on December you won't have a penalty for not doing quarterly.
> 
> P.s. the penalty is pretty small unless you owe a ton.


When I started driving earlier this year I bumped up my employer withholding to cover the extra income. In November I figured (hard to do with new tax laws) that I may owe a around $300 in taxes/medicare & SS still. Had an extra $100 taken out of my last two checks to cover it. Ideally at the end of the year I owe less than $100 in taxes.


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## SubaruLegacy (Jan 17, 2018)

I'm not 100% on this, but I believe you have to owe over $1000 in income taxes, and payroll taxes (ss and medicare) don't count towards it. Also they never really seem to care, it's not that exact. I don't think you have to worry unless you are that unicorn who's make $10,000 a year in profit.  but who really knows.


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## mmn (Oct 23, 2015)

There's a difference between paying quarterly estimates and filing quarterly returns. I've had to pay quarterly estimates the last 2 years because of not withholding enough. But I've not had to file quarterly returns.


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## Stevie The magic Unicorn (Apr 3, 2018)

With uberX rates in orlando...

every mile you drive and every $ you make puts you further into negative

$10.80 per hour in deductions with $7-10 in revenue, working 50+ hour weeks...

Your never going to hit positive no matter how much you drive....


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## HyundaiBigDog (Dec 15, 2018)

Here's what I was told by a CPA from Turbotax (not tax advice):
If you make less than $12,000 a year, then you don't owe any income tax that year (medicare / SS isn't income tax). If you didn't owe income tax last year, than you don't need to file quarterly taxes the next year.


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## SubaruLegacy (Jan 17, 2018)

if you make $12,000 before or after deductions?


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## Noles20 (Jan 12, 2019)

So if they don't issue a 1099, then how does the IRS know how much income you made through Uber?


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## HyundaiBigDog (Dec 15, 2018)

SubaruLegacy said:


> if you make $12,000 before or after deductions?


(Not tax advice), Probably after deductions. What matters is that you paid $0 in income tax the previous year.


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## SamuelB (Aug 29, 2018)

Fozzie said:


> LOL. Uber drivers are very low priority to the IRS. The IRS has finite resources, and spending time, effort and man hours to audit the earnings of workers that, on average, make less than minimum wage is stupid. If you were an auditor looking for tax money, would you audit the Uber driver, or the scumbag startup techie that makes $250k + per year?


Really?
Might want to read this: https://www.ustaxcourt.gov/ustcinop/opinionviewer.aspx?ID=11787


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## Fozzie (Aug 11, 2018)

SamuelB said:


> Really?
> Might want to read this: https://www.ustaxcourt.gov/ustcinop/opinionviewer.aspx?ID=11787


That's what happens when you (stupidly) itemize rather than claim the standard mileage deduction.


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## Stevie The magic Unicorn (Apr 3, 2018)

SamuelB said:


> Really?
> Might want to read this: https://www.ustaxcourt.gov/ustcinop/opinionviewer.aspx?ID=11787


I read through that..

He got in trouble over things he couldn't justify, he was also working on 2014 numbers which are somewhere in the neighborhood of 200% base rates compared to what they are now.

Quite literally a florida driver will have less than half the income per Dollar of expenses as they had back then, probobly less than that as uber/lyft paid out a lot more in bonuses and surges back then.

He had 9,438 miles and $44,000 in expenses with zero justification beyond the mileage. That's over $4.00 a mile in costs based on what the IRS had info for.

He walked into it with zero documentation.

If he had a mileage log showing instead of 9,438 miles e actually drove 70,000 miles... he would have had over $35,000 in expenses, which is a heck of a lot closer to $44,000 than he had. But event that would have been a stretch.

I mean... best as i can tell.. he was just making up crap on taxi day cause he got such a high tax bill he wasn't prepared for...

He had zero hope of surviving with that strategy.



SubaruLegacy said:


> if you make $12,000 before or after deductions?


It varies by market,
Seattle rates you'll owe taxes well before $12,000. In Orlando you probably won't owe anything on $50,000. Just talking federal taxes, not even including or considering state/local/sales tax.


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## SubaruLegacy (Jan 17, 2018)

SamuelB said:


> Really?
> Might want to read this: https://www.ustaxcourt.gov/ustcinop/opinionviewer.aspx?ID=11787


lol when you read that, the guy literally submitted zero receipts, and claimed massive expenses and mileage. not to mention he tried to claim lots of stuff that 100% doesn't apply to uber drivers, like clothing and shoes(only applies if it's a uniform you are required to wear). Anybody who tries to claim that kind of stuff is going to get flagged for an audit for sure. That guy for sure just made up random numbers.


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## SamuelB (Aug 29, 2018)

Fozzie said:


> That's what happens when you (stupidly) itemize rather than claim the standard mileage deduction





Stevie The magic Unicorn said:


> I mean... best as i can tell.. he was just making up crap on taxi day cause he got such a high tax bill he wasn't prepared for...


And yet he is a "scumbag Uber driver" who got audited. People wrongly think because they are small potatoes they are low risk for audit. A certain % of audits are random. There was another post on here about his mileage log being rejected because it was not IRS compliant. I read another case of a contractor who had commute miles disallowed. It wasn't high dollar. I'm just pointing out that it is a false sense of security to think they don't go after Uber drivers. In fact I think being IC makes you higher risk.


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## FLKeys (Dec 27, 2018)

Here is something to ponder......after the recent .gov shut down and rumor has it many .gov employees took to driving to make some money I'm sure some of them stumbled upon this site, saw the crazy number of posts referencing improper mileage logs and boom not we have a new market to audit. Job Security baby.


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## Fozzie (Aug 11, 2018)

SamuelB said:


> And yet he is a "scumbag Uber driver" who got audited. People wrongly think because they are small potatoes they are low risk for audit. A certain % of audits are random. There was another post on here about his mileage log being rejected because it was not IRS compliant. I read another case of a contractor who had commute miles disallowed. It wasn't high dollar. I'm just pointing out that it is a false sense of security to think they don't go after Uber drivers. In fact I think being IC makes you higher risk.


If you walk the straight and narrow to stay "IRS compliant," I commend you for it. Some of us, however, are not always so forthcoming. Audits happen, but you're not going to be targeted because of your profession or from random posts in a public forum. Sometimes you win, sometimes you lose, and if your shit is really messed up, just hire an accountant.

Once upon a time I was a compliant ant as well, but over the years I've learned to play the odds and it just works out for me. Back in the 90's I went several years without filing any returns, then after about a decade I back filed the last 3 or 4 years and paid the amounts due. The IRS was fine with that, and never even asked about the 6 or 7 years when I paid nothing.


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## Pittos (Feb 7, 2019)

x100 said:


> It looks they like above 85% taxes turned in quarterly or they can additionally tax/fine you.
> Tax advisor near me a lot of drivers here only pop the tax questions this time of the year only, meaning waiting for 1099 but feels like they haven't paid it quarterly.
> Does it matter not paying quarterly based on rough estimates and calc. ?
> 
> https://finance.yahoo.com/news/u-irs-waive-2018-penalties-214147274.html


I think not.


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## Launchpad McQuack (Jan 8, 2019)

mmn said:


> There's a difference between paying quarterly estimates and filing quarterly returns. I've had to pay quarterly estimates the last 2 years because of not withholding enough. But I've not had to file quarterly returns.


I didn't know there was any such thing as a quarterly return. I'm hearing that for the first time.


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## Stevie The magic Unicorn (Apr 3, 2018)

Launchpad McQuack said:


> I didn't know there was any such thing as a quarterly return. I'm hearing that for the first time.


It's not a quarterly return, it's quarterly PAYMENTS. As apposed to employer deductions.

Your *supposed* to make payments quarterly based on your taxable profit you've earned. However most uber drivers won't have a taxable profit...

Taxi drivers have the same thing, except they do have a taxable profit.


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## UberTaxPro (Oct 3, 2014)

This is the form 1040-ES
https://www.irs.gov/pub/irs-pdf/f1040es.pdf


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## Launchpad McQuack (Jan 8, 2019)

UberTaxPro said:


> This is the form 1040-ES
> https://www.irs.gov/pub/irs-pdf/f1040es.pdf


Yeah, I'm familiar (casually, not intimately) with the 1040-ES, but that is for making quarterly estimated payments. In the post that I responded to, the guy said that there is a difference between making quarterly estimated payments and filing a quarterly return. I've never heard of a quarterly return before.


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## UberTaxPro (Oct 3, 2014)

Launchpad McQuack said:


> Yeah, I'm familiar (casually, not intimately) with the 1040-ES, but that is for making quarterly estimated payments. In the post that I responded to, the guy said that there is a difference between making quarterly estimated payments and filing a quarterly return. I've never heard of a quarterly return before.


Businesses with payroll file quarterly 941 returns, I think people sometimes confuse the two


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## Launchpad McQuack (Jan 8, 2019)

UberTaxPro said:


> Businesses with payroll file quarterly 941 returns, I think people sometimes confuse the two


So as long as you don't have a payroll, you don't have to concern yourself with filing a quarterly return? That would explain why I've never heard of it.


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## Boca Ratman (Jun 6, 2018)

I just wait a few years, I don't file anything. they have a program where they take what you owe out of your deposits.


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## MarkR (Jul 26, 2015)

Stevie The magic Unicorn said:


> There's several exemptions that make it not apply to 99% of uber drivers.
> 
> #1 you don't have to pay quarterly if it's your first year
> #2 if you can't turn a profit than you don't owe anything
> ...


I made $400 for the year before expenses.


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## Taxi2Uber (Jul 21, 2017)

I owe about $1500 in taxes for 2018. 
I would have been penalized $11, according to TurboTax, but it was waived since I owed <$1000 last year. 
The completed TurboTax return included 4 printable quarterly payment vouchers for this year. 
Each payment is what I owed, divided by 4. First one due 4/15/19.


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## UberTaxPro (Oct 3, 2014)

Taxi2Uber said:


> I owe about $1500 in taxes for 2018.
> I would have been penalized $11, according to TurboTax, but it was waived since I owed <$1000 last year.
> The completed TurboTax return included 4 printable quarterly payment vouchers for this year.
> Each payment is what I owed, divided by 4. First one due 4/15/19.


The rule is owe less than $1000 for *this year (2018), *not last year. You avoided the penalty most likely because you paid 100% of the tax shown on your return from the prior year. You and/or your spouse must also have a W2 job that paid the same or more taxes than your 2017 return.

"Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and refundable credits, or if they paid withholding and estimated tax of at least 90% of the tax for the current year or *100% of the tax shown on the return for the prior year, whichever is smaller. "*


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## Taxi2Uber (Jul 21, 2017)

UberTaxPro said:


> The rule is owe less than $1000 for *this year (2018), *not last year. You avoided the penalty most likely because you paid 100% of the tax shown on your return from the prior year. You and/or your spouse must also have a W2 job that paid the same or more taxes than your 2017 return.
> 
> "Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and refundable credits, or if they paid withholding and estimated tax of at least 90% of the tax for the current year or *100% of the tax shown on the return for the prior year, whichever is smaller. "*





> You avoided the penalty most likely because you paid 100% of the tax shown on your return from the prior year


Nope.


> You and/or your spouse must also have a W2 job that paid the same or more taxes than your 2017 return.


Nope.
All I know is, while going through the steps in TurboTax, my taxes owed for 2018 is ~$1500, and TurboTax applied an $11 penalty.
I then answered a series of addition questions regarding 2017 taxes (~$500) and the penalty was removed.
I had no W2's or withholding or paid estimated taxes.


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## UberTaxPro (Oct 3, 2014)

Taxi2Uber said:


> Nope.
> 
> Nope.
> All I know is, while going through the steps in TurboTax, my taxes owed for 2018 is ~$1500, and TurboTax applied an $11 penalty.
> ...


So you owed less than $1000 in 2017, that might explain it...interesting


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## I_Like_Spam (May 10, 2015)

x100 said:


> It looks they like above 85% taxes turned in quarterly or they can additionally tax/fine you.
> 
> A lot of drivers here only pop the tax questions this time of the year only, meaning waiting for 1099 but feels like they haven't paid it quarterly.
> 
> ...


The general rule is that you are expected to pay estimated taxes quarterly if the amount withheld isn't going to cover your taxes.

However, if the amount you owe is low, or you paid as much as you actually owed during the previous year, you won't be penalized if you don't. Further you can ask for an abatement and the IRS is often times ok with it, if you are making full payment with the return and you have a good excuse.


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## touberornottouber (Aug 12, 2016)

Stevie The magic Unicorn said:


> With uberX rates in orlando...
> 
> every mile you drive and every $ you make puts you further into negative
> 
> ...


Correct. I believe it is 52 cents a mile over there in Orlando. The standard mileage rate is 54.5 cents per mile for 2018. On top of this generally for every paid mile you will have one unpaid mile on average. But for the most part you will be able to deduct that unpaid mile too.

Therefore:

For every $0.52 you make from mileage alone you will have a deduction of $1.09 for each paod mile (this is from the standard mileage rate from the paid mile plus the unpaid mile). This pretty much means that anyone driving in an area with base pay below $1.00 a mile pretty much has a 0% chance of ever owing federal income taxes if this is their only source of income. It's slightly more complicated due to the pay per minute rate but generally this holds:

*If you are being paid below $1 per paid mile then according to the IRS you are taking a loss.*


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## Stevie The magic Unicorn (Apr 3, 2018)

touberornottouber said:


> Correct. I believe it is 52 cents a mile over there in Orlando. The standard mileage rate is 54.5 cents per mile for 2018. On top of this generally for every paid mile you will have one unpaid mile on average. But for the most part you will be able to deduct that unpaid mile too.
> 
> Therefore:
> 
> ...


50% is a really high ratio.

I probobly couldn't get much more than 40% if i was trying to optimize it.


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