# How does the mileage deduction work?



## GalinMcMahon (Jun 30, 2016)

I'm using quickbooks with my Uber "business." I did my first quarterly and with expenses I was ahead by a couple hundred. Entering my mileage for the second quarter has been different. I notice that if I enter 100 miles which should be $54 (57?) then the deduction in taxes owed only changes by maybe $10 and not the full $54. Is 54 cents per mile the deduction or is 10 cents? There is no way to come out ahead if 10 cents a mile is all we actually get for car payment, gas, depreciation, etc.

Please tell me I'm missing something here.


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## Older Chauffeur (Oct 16, 2014)

GalinMcMahon said:


> I'm using quickbooks with my Uber "business." I did my first quarterly and with expenses I was ahead by a couple hundred. Entering my mileage for the second quarter has been different. I notice that if I enter 100 miles which should be $54 (57?) then the deduction in taxes owed only changes by maybe $10 and not the full $54. Is 54 cents per mile the deduction or is 10 cents? There is no way to come out ahead if 10 cents a mile is all we actually get for car payment, gas, depreciation, etc.
> 
> Please tell me I'm missing something here.


Just a guess, but could you have hit the $400 income threshold for self employment taxes (15.3%) to come into the figures? I don't know how that would affect the numbers Quickbooks is showing, but it seems like something has changed in the income area.


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## GalinMcMahon (Jun 30, 2016)

Older Chauffeur said:


> Just a guess, but could you have hit the $400 income threshold for self employment taxes (15.3%) to come into the figures? I don't know how that would affect the numbers Quickbooks is showing, but it seems like something has changed in the income area.


Yes, it's possible I made it into a somewhat higher bracket. It still seems like I should be getting 57 cents back per mile. Ar only 10 cents it would be impossible to do business.


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## Older Chauffeur (Oct 16, 2014)

GalinMcMahon said:


> Yes, it's possible I made it into a somewhat higher bracket. It still seems like I should be getting 57 cents back per mile. Ar only 10 cents it would be impossible to do business.


Yes, but what you are seeing is the end result, right? It would be like having your tax all figured and then seeing that you left off $5k in earnings, but with nothing further in deductions to offset it.


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## Ubergirlz99 (Sep 25, 2016)

Something is definitely wrong. I used to work in real estate, and the mileage deduction is the 2nd highest tax deduction behind a home mortgage. You should be getting the full .54 cents per mile.

Just a heads up - if you claim mileage, especially a lot, it's a red flag for an audit. Make sure your log is audit proof. Most apps don't even come near the right amount of info. For instance, you have to have start and stop addresses, not just city. And you need a business purpose, which for us is easy. "Uber ride". I use a Mileage Ace (a designated GPS device), which is significantly more accurate than an app and logs a bigger deduction.


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## uberfraud (Sep 22, 2016)

I assume the mileage driven for uber passenger trips were included in annual 1099 supplied by uber? This isn't the case?


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## Older Chauffeur (Oct 16, 2014)

uberfraud said:


> I assume the mileage driven for uber passenger trips were included in annual 1099 supplied by uber? This isn't the case?


True, but that doesn't include "dead" miles, no pax but necessary to get to pick up point or back to area where you can get pinged after completing a paid trip.


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## jester121 (Sep 6, 2016)

GalinMcMahon said:


> I'm using quickbooks with my Uber "business." I did my first quarterly and with expenses I was ahead by a couple hundred. Entering my mileage for the second quarter has been different. I notice that if I enter 100 miles which should be $54 (57?) then the deduction in taxes owed only changes by maybe $10 and not the full $54.
> 
> Please tell me I'm missing something here.


You are.

Revenue (Income)
- Expenses (mileage deduction)
= Profit (what you pay tax on)
x Tax Rate
= Tax Due (cash you mail to the IRS)

Using some numbers as a better example:
$300 Uber fares
- $270 expenses (500 miles @ $0.54 per)
= $30 Profit (or Net Income)
x 25% tax rate (example only)
= $7.50 in taxes due to IRS

So the $0.54/mi isn't the amount by which your tax decreases, it's the amount used to offset your income/revenue, and *that* is what's used to calculate your taxes. Big differences with percentages in order of operations.


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## SoiCowboy (Sep 17, 2016)

Am I missing something here? The $.54 per mile is money off your Adjusted Gross Income. The way I see it described here is that the government is paying you $.54 to drive.

Help me, please.


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## Older Chauffeur (Oct 16, 2014)

SoiCowboy said:


> Am I missing something here? The $.54 per mile is money off your Adjusted Gross Income. The way I see it described here is that the government is paying you $.54 to drive.
> 
> Help me, please.


No, "the government" is allowing you to avoid paying tax on $.54 per business mile driven. The amount of tax you are saving depends on the bracket you are in.

But I'm not a tax pro, let's see what they say.


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## SoiCowboy (Sep 17, 2016)

Older Chauffeur said:


> No, "the government" is allowing you to avoid paying tax on $.54 per business mile driven. The amount of tax you are saving depends on the bracket you are in.
> 
> But I'm not a tax pro, let's see what they say.


So then, we are in agreement.

I pity the drivers that haven't done their due diligence in investigating the tax implications. I haven't been with one Uber/Lyft yet that knew how to keep track of miles/expenses.


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## jester121 (Sep 6, 2016)

There's little point in keeping meticulous records in between or during rides all night, unless you're completely anal and want to verify Uber's numbers.

Odometer returning home at night's end 
(minus) 
odometer leaving home earlier 
= 
business mileage for the night. 

Add on dead-head tolls, and whatever other misc. expenses may apply, but not gas or anything that's included in the $0.54.

Honestly, it's not complicated.


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## Fuzzyelvis (Dec 7, 2014)

GalinMcMahon said:


> I'm using quickbooks with my Uber "business." I did my first quarterly and with expenses I was ahead by a couple hundred. Entering my mileage for the second quarter has been different. I notice that if I enter 100 miles which should be $54 (57?) then the deduction in taxes owed only changes by maybe $10 and not the full $54. Is 54 cents per mile the deduction or is 10 cents? There is no way to come out ahead if 10 cents a mile is all we actually get for car payment, gas, depreciation, etc.
> 
> Please tell me I'm missing something here.


Your change in taxes you pay is not going to be the $54 for driving 100 miles, it will be the difference you would pay after deducting it from your income.

So if for example you made $100 driving that 100 miles and for the sake of argument paid 20% taxes, you'd pay $20 in tax. After the deduction you'd pay taxes on $46, or $9.20 (20% of $46). So you save $11.80 in taxes paid.

It's a deduction, not a credit. You are not GIVEN .54 a mile.

Once your income gets too low to pay taxes it won't do anything.


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## Older Chauffeur (Oct 16, 2014)

SoiCowboy said:


> So then, we are in agreement.
> 
> I pity the drivers that haven't done their due diligence in investigating the tax implications. I haven't been with one Uber/Lyft yet that knew how to keep track of miles/expenses.


I don't think we are in agreement. You said the government is "paying you $.54 to drive." That would only be true if you were in a 100% tax bracket.



jester121 said:


> There's little point in keeping meticulous records in between or during rides all night, unless you're completely anal and want to verify Uber's numbers.
> 
> Odometer returning home at night's end
> (minus)
> ...


Now this I agree with. I would just clarify by saying you need to record those actual odometer readings, along with the total business miles, the date and the purpose.


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## Older Chauffeur (Oct 16, 2014)

Fuzzyelvis said:


> Your change in taxes you pay is not going to be the $54 for driving 100 miles, it will be the difference you would pay after deducting it from your income.
> 
> So if for example you made $100 driving that 100 miles and for the sake of argument paid 20% taxes, you'd pay $20 in tax. After the deduction you'd pay taxes on $46, or $9.20 (20% of $46). So you save $11.80 in taxes paid.
> 
> ...


Well said; better example than I gave.


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## 5 Star Guy (Nov 7, 2015)

If you drove 15,000 for Travass in a year the mileage deduction would be $8,100. You do need to watch your deductions so you don't get audited like some people.


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## UTX1 (Dec 7, 2015)

Fuzzyelvis said:


> So if for example you made $100 driving that 100 miles and for the sake of argument paid 20% taxes,
> you'd pay $20 in tax. After the deduction you'd pay taxes on $46, or $9.20 (20% of $46).
> So you save $11.80 in taxes paid.


This sounds right and appears to illustrate the point well, UNLESS one has been drinking alcohol.
Then, we want to know where that $11.80 cents is right now, before the liquor store closes.
My math then says that a cheap bottle of booze at $10.99, plus tax equals about $11.80
To hell with everything else until tomorrow.... if the sun even rises again, who knows..


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## Fireguy50 (Nov 23, 2015)

uberfraud said:


> I assume the mileage driven for uber passenger trips were included in annual 1099 supplied by uber? This isn't the case?


No, you'll be WAY off. Uber only adds miles of you with a passenger. Not the entire work shift.


Older Chauffeur said:


> Now this I agree with. I would just clarify by saying you need to record those actual odometer readings, along with the total business miles, the date and the purpose.


I like my TripLog app that sends a CSV file of each days mileage to me I can add up in excel. Part time driving I'm at 4,660 miles = $2,516.40 deduction.
It has start & stop times, odometer readings and locations, average MPH, and other features I don't use.


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## Fireguy50 (Nov 23, 2015)

UTX1 said:


> This sounds right and appears to illustrate the point well, UNLESS one has been drinking alcohol.
> Then, we want to know where that $11.80 cents is right now, before the liquor store closes.
> My math then says that a cheap bottle of booze at $10.99, plus tax equals about $11.80
> To hell with everything else until tomorrow.... if the sun even rises again, who knows..


Not if we drink enough, cheers mate!


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## Vavvav (Jan 9, 2017)

Shouldn't Uber be giving us the yearly km or mile count? Not worth declaring or paying taxes in my opinion or having Insurance outside of Uber, it will just complicate things. Let Uber work out the kinks first and then I will jump onboard.


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## Older Chauffeur (Oct 16, 2014)

Vavvav said:


> Shouldn't Uber be giving us the yearly km or mile count? Not worth declaring or paying taxes in my opinion or having Insurance outside of Uber, it will just complicate things. Let Uber work out the kinks first and then I will jump onboard.


Uber isn't responsible for your individual tax return. It's up to you to track and record your deductible expenses, just part of being an adult and in business for yourself.


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## SoiCowboy (Sep 17, 2016)

Vavvav said:


> Shouldn't Uber be giving us the yearly km or mile count? Not worth declaring or paying taxes in my opinion or having Insurance outside of Uber, it will just complicate things. Let Uber work out the kinks first and then I will jump onboard.


Uber does, but only the miles driven with a passenger. Uber doesn't include miles driven TO the passenger.


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## El Gato (Mar 5, 2016)

SoiCowboy said:


> Uber doesn't include miles driven TO the passenger.


Correct. This is why most folks use a 3rd party mileage tracker. I used mileIQ but hated that everytime I stopped and parked inbetween rides it would end that "trip." Not a big deal as the mileage tracker starts up again when I move, but for convenience sake it would be nice to have it keep running until I stole it I'm done. Either way didn't what to pay so went to just writing down Odometer readings and transferring to excel.


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## skytessa (Dec 12, 2016)

Fireguy50 said:


> No, you'll be WAY off. Uber only adds miles of you with a passenger. Not the entire work shift.
> 
> I like my TripLog app that sends a CSV file of each days mileage to me I can add up in excel. Part time driving I'm at 4,660 miles = $2,516.40 deduction.
> It has start & stop times, odometer readings and locations, average MPH, and other features I don't use.


 You should check out my tracker comparison thread (click here). Triplog had one of the worst accuracy rates. It's shaving a ton of miles off your log and deduction.


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