# Deductions > Earnings ?!?



## DRiver II (May 24, 2015)

My deductions, using the actual expense method, is way higher than my earnings. I drove for 7 months this year (started late April) earned less than $5,000 but have deductions approaching $10,000?!?

I had several caveats that made using the actual expense method preferable over standard mileage, such as having a very high repair bill due to my engine getting flooded while on the way to pick up a rider (freak accident/flash flooding incident), buying a new set of tires, car depreciation, etc; while not driving many miles (<8,000).

Has this ever happened to anyone else?

I'm afraid of raising an audit alert for the IRS. 

I'm pretty confident in my accounting knowledge/process, although I will definitely calculate multiple times to be sure.

Ridesharing is only a part time gig for me where I wanted to clear about $500.00 a month to supplement my fulltime job income...


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## UberPissed (Aug 13, 2014)

I'm not 100% sure without researching, but my concern here is that you placed your car in service in APril, and then incurred a large expense - the IRS may instead force you to claim a standard mileage rate as opposed to the actual expenses. But i don't know for sure. You may want to consider the tax outcome for both scenarios. Assuming you have a huge loss with no other income, the standard mileage rate may get you to the same result. 

Another idea may be to write of the casualty loss as a Schedule A deduction and claim business mileage - just a thought.


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## StarzykCPA (Aug 6, 2015)

Yes it can happen, for sure. Make sure you are only taking the business % portion of the actual expenses (business miles / total miles). 

So long as all your records are in order, take the deduction you are entitled to. If it comes to an audit, you will have the support needed to back up your expenses.


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## UberTaxPro (Oct 3, 2014)

DRiver II said:


> My deductions, using the actual expense method, is way higher than my earnings. I drove for 7 months this year (started late April) earned less than $5,000 but have deductions approaching $10,000?!?
> 
> I had several caveats that made using the actual expense method preferable over standard mileage, such as having a very high repair bill due to my engine getting flooded while on the way to pick up a rider (freak accident/flash flooding incident), buying a new set of tires, car depreciation, etc; while not driving many miles (<8,000).
> 
> ...


how many miles did you drive for the whole year? personal and business combined 1/1 to 12/31


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## UberTaxPro (Oct 3, 2014)

I'm sure you know that if you use actual expense for 1st year you can't later switch to standard correct?


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## DRiver II (May 24, 2015)

UberTaxPro said:


> I'm sure you know that if you use actual expense for 1st year you can't later switch to standard correct?


yea. but given my vehicle, the actual expense method will probably always be better for me if not less complicated and burdensome.

i came to rideshare kinda out of need and not planning. i have a twin turbo, higher end, leather, moonroof etc car that burns gas, living a bachelor lifestyle until i had to step up and help out family. not the smartest rideshare vehicle. my expenses are probably much higher than the avg uber/lyft driver.

i also only live 4 miles from my full time job and don't have to put alot of personal miles on my car.


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## UberTaxPro (Oct 3, 2014)

DRiver II said:


> yea. but given my vehicle, the actual expense method will probably always be better for me if not less complicated and burdensome.
> 
> i came to rideshare kinda out of need and not planning. i have a twin turbo, higher end, leather, moonroof etc car that burns gas, living a bachelor lifestyle until i had to step up and help out family. not the smartest rideshare vehicle. my expenses are probably much higher than the avg uber/lyft driver.
> 
> i also only live 4 miles from my full time job and don't have to put alot of personal miles on my car.


You're gonna need to come up with a business % use of your car. If you drove 10,000 miles total (personal and business) and 8,000 business you would have 80% business use based on mileage records. You could then reasonably deduct 80% of your actual expenses


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## DRiver II (May 24, 2015)

UberTaxPro said:


> You're gonna need to come up with a business % use of your car. If you drove 10,000 miles total (personal and business) and 8,000 business you would have 80% business use based on mileage records. You could then reasonably deduct 80% of your actual expenses


yea, i did the calculations. my rideshare miles represented approx 79% of total miles since i started driving, and approx 70% for the entire year...


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## DRiver II (May 24, 2015)

does the % hold for depreciation?

i assume depreciation is what it is, as long as the vehicle in question was used the majority of the time for rideshare.


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## UberTaxPro (Oct 3, 2014)

DRiver II said:


> does the % hold for depreciation?
> 
> i assume depreciation is what it is, as long as the vehicle in question was used the majority of the time for rideshare.


If you use a property for business and for personal purposes, you can only deduct depreciation based only on the business use of that property. *So the % does hold for depreciation.*


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## UberTaxPro (Oct 3, 2014)

DRiver II said:


> yea, i did the calculations. my rideshare miles represented approx 79% of total miles since i started driving, and approx 70% for the entire year...


sounds like you could reasonably use 70% for all your vehicle deductions for the year.


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## DRiver II (May 24, 2015)

thanks UTP!

greatly appreciated...


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