# Should I claim cash tips?



## mk5197

Do anyone of you claim cash tips? I was not planning on it since Uber doesn't allow credit card tips. Would that set off a flag? Also, how would the IRS know if I were repositioning myself to a more popular place for getting rides and keeping the app off until I get to said location? As it is I claim those miles driven with app off.

Thanks in advance!
Mike.


----------



## tohunt4me

mk5197 said:


> Do anyone of you claim cash tips? I was not planning on it since Uber doesn't allow credit card tips. Would that set off a flag? Also, how would the IRS know if I were repositioning myself to a more popular place for getting rides and keeping the app off until I get to said location? As it is I claim those miles driven with app off.
> 
> Thanks in advance!
> Mike.


I would claim all 3 of them.


----------



## renbutler

Probably 90% around here won't claim cash tips, and some of them will even have the gall to encourage that you don't claim them and mock you if you even suggest it.

Even though you probably won't be caught, just do the right thing. If you appreciate when others to do the right thing, and especially if you have negative thoughts toward others with their own ethical lapses, absolutely claim your cash tips.

It won't cost you much, but it is an easy way to ensure you a.) won't get in trouble and b.) can maintain your dignity and ethics.


----------



## tohunt4me

renbutler said:


> Probably 90% around here won't claim cash tips, and some of them will even have the gall to encourage that you don't claim them and mock you if you even suggest it.
> 
> Even though you probably won't be caught, just do the right thing. If you appreciate when others to do the right thing, and especially if you have negative thoughts toward others with their own ethical lapses, absolutely claim your cash tips.
> 
> It won't cost you much, but it is an easy way to ensure you a.) won't get in trouble and b.) can maintain your dignity and ethics.


I'm already paying higher taxes on my property to support the 10% increase in students,anchor babies.


----------



## Jollyrodger

Uh, god no. Cash is untraceable even by the IRS, who have bigger fish to fry than you. They only go after the big boys. The chances of anyone making 30K or less on Flubber even being audited is less than .0001%. Uber drivers are nuthin' but guppies. The IRS wants the sharks hiding the big dough. Do some research and you'll realize that.


----------



## Older Chauffeur

By IRS rules, tips are income and subject to tax. As for the miles, seems reasonable to count them. The IRS isn't going to know what you were doing, whether returning to your sweet spot after a drop, etc. or just leave the app on and ignore any ping you don't want.
Let your conscience be your guide. I have a client who calls only once or twice a year, so there is no 1099 involved. I still list the income, which is paid by personal check. My CPA lists it under "other" so there isn't even a name associated with it. I could probably just ignore it altogether, but the difference in my taxes would be negligible. From what I read here, I suspect the same will hold true for the generally low tip income.


----------



## renbutler

tohunt4me said:


> I'm already paying higher taxes on my property to support the 10% increase in students,anchor babies.


Then help change the laws. Don't cheat them.

You have to follow all the laws, not just the ones you like.


----------



## MrBear

mk5197 said:


> Do anyone of you claim cash tips? I was not planning on it since Uber doesn't allow credit card tips. Would that set off a flag? Also, how would the IRS know if I were repositioning myself to a more popular place for getting rides and keeping the app off until I get to said location? As it is I claim those miles driven with app off.
> 
> Thanks in advance!
> Mike.


When a customer hands you cash, it's considered a gift and not taxable. If the money was not given to you by hand, say he set it down somewhere and didn't directly hand it to you, it's considered a tip.


----------



## Older Chauffeur

MrBear said:


> When a customer hands you cash, it's considered a gift and not taxable. If the money was not given to you by hand, say he set it down somewhere and didn't directly hand it to you, it's considered a tip.


Well, that's a novel interpretation. Can you cite a reference for us? I would sure like to hear that one explained to an IRS agent!


----------



## stuber

renbutler said:


> Probably 90% around here won't claim cash tips, and some of them will even have the gall to encourage that you don't claim them and mock you if you even suggest it.
> 
> Even though you probably won't be caught, just do the right thing. If you appreciate when others to do the right thing, and especially if you have negative thoughts toward others with their own ethical lapses, absolutely claim your cash tips.
> 
> It won't cost you much, but it is an easy way to ensure you a.) won't get in trouble and b.) can maintain your dignity and ethics.


Those of us who have received a 3/4" thick letter from the IRS have adopted a policy of reporting all income.


----------



## MrBear

Older Chauffeur said:


> Well, that's a novel interpretation. Can you cite a reference for us? I would sure like to hear that one explained to an IRS agent!


I've been in the food business for 32 years and that's always been the case. You can give up to either 12 or $13,000 and claim it as tax free as per irs code. Ask any accountant


----------



## renbutler

There is zero chance that is true.

If it is given in conjunction with a service provided, it is 100% reportable as income


----------



## Older Chauffeur

MrBear said:


> I've been in the food business for 32 years and that's always been the case. You can give up to either 12 or $13,000 and claim it as tax free as per irs code. Ask any accountant


Disclosure: I'm not a tax professional; but I've been around awhile, have a CPA do my taxes, and I can read.

You're talking about the gift tax, paid by the giver if it exceeds the statutory amount of $14,000 per person annually for 2016. It's been the same since 2014. This is so that large estates don't get passed down from one generation to the next while avoiding estate taxes that would otherwise be due. The money can be given to anyone, not just family members. Absolutely nothing to do with cash gratuities, however they may wind up in the hand of the recipient, which is what the OP is asking about.

The IRS goes by the Tax Code Section 61, which defines taxable income and overrules your accountant. If you haven't been playing by the rather complex (in my opinion) rules regarding tip reporting by employers and employees in the food business, then you are cheating, plain and simple. But that is your prerogative. If you face an auditor across the desk, your accountant will probably say something like, "Hey, I figured his taxes based on the information he provided."

Self employed filers report tips on Schedule C, which can be offset by operating expenses like mileage and cell phone bills.
There may be a slight break for drivers in that at one point it refers to reporting "tips exceeding $20 in any one month."
But like everything else, the IRS wants to see records, so it would make sense to keep a daily tip log along with mileage.

Now let's see if the tax pros here weigh in.... If you are correct, I will humbly apologize.


----------



## ragnarkar

I plan to claim a little but of cash tips as lip service to the IRS, but less than what I've actually received.


----------



## mk5197

Well I wasn't trying to stir the pot but I guess I did. Where do you put tips on the ride sharing? I have made something like $5000 over 6 months and less than $250 in Tips...had a few want to on card but can't etc.


----------



## renbutler

mk5197 said:


> Where do you put tips on the ride sharing? \


Form 1040, line 7


----------



## Older Chauffeur

renbutler said:


> Form 1040, line 7


No, IRS says put tips on Schedule C, so that deductible business expenses can lower the total self employment income.


----------



## naplestom75

I almost fell off my chair when I saw someone ask if they should claim cash tips.


----------



## renbutler

Older Chauffeur said:


> No, IRS says put tips on Schedule C, so that deductible business expenses can lower the total self employment income.


Well, looking back, I did count tips in "gross receipts or sales" on my Schedule C. If you actually turn a net taxable profit of $433+ (which is possible with ride sharing), you'll be on the hook for SS and Medicare on the tips too.


----------



## Mars Troll Number 4

If you never deposit the cash tips into a bank account or pay bills with it, (IE paying cash at walmart to pay your phone/cable bill)

The odds of getting caught shorting your income is virtually zero


----------



## renbutler

Mears Troll Number 4 said:


> If you never deposit the cash tips into a bank account or pay bills with it, (IE paying cash at walmart to pay your phone/cable bill)
> 
> The odds of getting caught shorting your income is virtually zero


So you are advising him to do the wrong thing because he can get away with it?

The new American way. This kind of thinking can get you to the presidency...


----------



## Jollyrodger

What EXACTLY last year did I actually make in tips. I averaged 23.00 a week. Serious chump change. I repeat, CHUMP CHANGE. U guys are arguing over pennies. It's the reason WHY people who make below 30K rarely if ever get audited by the IRS. People who say include the tips on your tax return are fools. U are at the bottom financially and yet get technical over CHUMP CHANGE. Sheesh!


----------



## renbutler

Jollyrodger said:


> What EXACTLY last year did I actually make in tips. I averaged 23.00 a week. Serious chump change. I repeat, CHUMP CHANGE. U guys are arguing over pennies. It's the reason WHY people who make below 30K rarely if ever get audited by the IRS. People who say include the tips on your tax return are fools. U are at the bottom financially and yet get technical over CHUMP CHANGE. Sheesh!


It _is_ chump change, and it_ is_ pennies, which is why it's that much more baffling why people try to get away with not paying it. And it's so simple to track it and report it.

Think of it this way: You're breaking the law to avoid paying pennies. Good grief!


----------



## Jollyrodger

You're pretty laughable buddy. A by the book man. Guys like u die early because they take things like this so seriously. Truly comical.


----------



## renbutler

Maybe you should re-read your posts for an example of taking things too seriously. 

I mean, you actually claimed I am going to die early for paying taxes on tips! I've read a lot of stupid things on the internet, but that's one of the funniest I've heard in quite a while.


----------



## bigdog305

Seriously! Cash tips for gas and food and maintenance period. Also cash tip for strip clubs...............


----------



## Jollyrodger

If I had a company, you're one guy I would not hire.


----------



## renbutler

naplestom75 said:


> It's not ridesharing


Sounds like a catch phrase, but you don't know how every person uses Uber/Lyft.

I actually do rideshare for the bulk of my Ubering. When I have somewhere to be but timing isn't crucial, I try to get riders going in the same general direction. Like when I go to football games, or shopping, etc.

I've done some taxi-style rides too, but now it's mostly ridesharing.


----------



## Mars Troll Number 4

renbutler said:


> So you are advising him to do the wrong thing because he can get away with it?
> 
> The new American way. This kind of thinking can get you to the presidency...


No... i'm playing by uber's example

Break rules

Cover it up

And lie through your teeth


----------



## renbutler

Mears Troll Number 4 said:


> No... i'm playing by uber's example
> 
> Break rules
> 
> Cover it up
> 
> And lie through your teeth


So you are advising him to do the wrong thing just because somebody else does the wrong thing?

The new American way...


----------



## Nomad

renbutler said:


> You have to follow all the laws, not just the ones you like.


"One has not only a legal, but a moral responsibility to obey just laws. Conversely, one has a moral responsibility to disobey unjust laws."

-Dr. Martin Luther King, Jr.


----------



## renbutler

Nomad said:


> "One has not only a legal, but a moral responsibility to obey just laws. Conversely, one has a moral responsibility to disobey unjust laws."
> 
> -Dr. Martin Luther King, Jr.




Yeah, I've seen that trotted out many times as a feeble justification for tax fraud and many other crimes.

The thing is, if you seriously try to compare the laws he was talking about to the law we're talking about, you'll understand that it's a pretty embarrassing quote to use in this situation.


----------



## Nomad

mk5197 said:


> Do anyone of you claim cash tips? I was not planning on it since Uber doesn't allow credit card tips. Would that set off a flag? Also, how would the IRS know if I were repositioning myself to a more popular place for getting rides and keeping the app off until I get to said location? As it is I claim those miles driven with app off.
> 
> Thanks in advance!
> Mike.


You are part of the service industry. Unfortunately, you are in a very small group of that industry that is not expected to receive tips. Any tax professional will parrot the IRS code that says any tip income over $20 in a year must be reported (paraphrased); however, there is not a big part of the rest of the service industry that claim cash tips and the main reason for that is twofold.

1) It would be much more costly for the IRS to audit 99% of those people receiving cash tips than the revenue it would generate by proven tax is owed.

2) There is an unspoken sympathy for those receiving cash tips. Most servers, delivery drivers, maids, etc. have been put in scenarios where there are being taken advantage of on many different levels and in many different ways. If the IRS were to start targeting these low income jobs, eventually a lawyer will see dollar signs in a class-action lawsuit for each group against their employers for one of the many laws they have broken. That increases the employer's costs, they raise their prices, and we have a directly related inflation. It's a domino effect that the IRS doesn't want to start just to collect a few bucks in tax revenue.

Ultimately, it's your call. It probably won't mean that much extra income tax on your end but unless you're bringing in $10,000+ in cash tips, the IRS doesn't care about you.


----------



## Nomad

renbutler said:


> Yeah, I've seen that trotted out many times as a feeble justification for tax fraud and many other crimes.
> 
> The thing is, if you seriously try to compare the laws he was talking about to the law we're talking about, you'll understand that it's a pretty embarrassing quote to use in this situation.


There's nothing embarrassing about standing up for what's right and just, no matter how trivial you may believe it to be.


----------



## Nomad

I also love how easily the phrase "tax fraud" is brought up on a message board designed for those in the RideShare industry where we are very clearly subject to Wage Theft and a whole litany of other broken labor laws.

I'll be sure to think hard about my "tax fraud" as I battle Uber for their Wage Theft and struggle to keep my lights on and food on the table.


----------



## Older Chauffeur

Actually, it's $20 in any calendar month that the IRS rules are addressing, and that's the threshold for requiring an employee to report tips to the employer, for tax withholding purposes.


----------



## renbutler

Nomad said:


> I also love how easily the phrase "tax fraud" is brought up on a message board designed for those in the RideShare industry where we are very clearly subject to Wage Theft and a whole litany of other broken labor laws.
> 
> I'll be sure to think hard about my "tax fraud" as I battle Uber for their Wage Theft and struggle to keep my lights on and food on the table.


No, it's ridiculous that you think that working for an industry that (allegedly) breaks laws entitles you to break additional laws on an individual level.

Come on, man. No serious observer buys what you're selling.


----------



## renbutler

Nomad said:


> There's nothing embarrassing about standing up for what's right and just, no matter how trivial you may believe it to be.


Trust me, I stand up against ridiculous tax laws.

But I don't do it by not paying taxes I'm legally obligated to pay for now. IMO, that's just an excuse to be greedy, even if it saves you small amounts of money. Sorry, you can't sell it as some sort of civil disobedience when it's really just that you want to keep the money.


----------



## Nomad

renbutler said:


> it's really just that you want to keep the money.


It's more that I've always thought of it as a perk for being underpaid and putting up with all the BS that comes with the service industry.



renbutler said:


> that's just an excuse to be greedy


Yup. Trying to keep my lights on at my place instead of funding an inefficient and corrupt government... color me greedy


----------



## renbutler

If the pennies saved by not reporting cash tips is the difference between lights and no lights (doubtful, but I'll play along), clearly you need to do something a bit more lucrative with your life.

And if you're making so little money, you're most likely paying zero federal income tax, or you more likely have a net negative federal tax liability through credits.


----------



## Nomad

renbutler said:


> If the pennies saved by not reporting cash tips is the difference between lights and no lights (doubtful, but I'll play along), clearly you need to do something a bit more lucrative with your life.


Golly gee, you're right. I never thought of that before. Thank you so much for showing me the light. I'll just go get a more lucrative paying job now and then I can just do RideShare in my spare time to make even more money. #greedy


----------



## Nomad

mk5197 said:


> Do anyone of you claim cash tips? I was not planning on it since Uber doesn't allow credit card tips. Would that set off a flag? Also, how would the IRS know if I were repositioning myself to a more popular place for getting rides and keeping the app off until I get to said location? As it is I claim those miles driven with app off.
> 
> Thanks in advance!
> Mike.


I'd like to reiterate my point since this thread has now become about me and my life choices somehow.

It's YOUR choice whether to claim cash tips. If your moral core says that you must claim every penny you make, then track and claim your tips. If you don't claim your tips, the only people who are going to claim that what you're doing is "tax fraud" are the trolls here. No IRS agent will ever claim that not claiming cash tips is "tax fraud" - unless you're clearing a LARGE amount of cash tips like a stripper or concierge.

Worst case scenario, you are audited for some other reason and a special agent is assigned to your case, asks you about cash tips, you admit you didn't claim them, and then you owe a very small tax on them as well as an even smaller amount of penalty and interest.

EDIT: And that's only if you have actually tracked the cash tips. If there's no way to prove an amount of cash tips, there is no way for the IRS to tax you on it or charge interest and penalties.

This advice comes from someone who has been in hospitality for 15+ years and has 4+ years of audit experience.


----------



## renbutler

Nomad said:


> Golly gee, you're right. I never thought of that before. Thank you so much for showing me the light. I'll just go get a more lucrative paying job now and then I can just do RideShare in my spare time to make even more money. #greedy


Despite your sarcasm, and the fact that you don't actually plan on doing this, it's actually a great idea.

There aren't a lot of jobs available, but there are good jobs out there going unfilled because there are not enough qualified and trained people to do them. Get a grant and go learn a skill or a trade. Stop fighting all the unskilled workers for scraps.


----------



## renbutler

Nomad said:


> I'd like to reiterate my point since this thread has now become about me and my life choices somehow.


Probably because you brought up your life choices, not paying cash tips because you supposedly can't pay for your utilities. You opened that door.



Nomad said:


> No IRS agent will ever claim that not claiming cash tips is "tax fraud" - unless you're clearing a LARGE amount of cash tips like a stripper or concierge.


So, what's the threshold between fraud and not fraud? An exact dollar amount.

BTW, I agree that nobody is going to be prosecuted for not reporting a couple hundred in cash tips. But that really shouldn't be the only issue one considers...


----------



## Mars Troll Number 4

renbutler said:


> So, what's the threshold between fraud and not fraud? An exact dollar amount.
> ..


That depends.

Like I said it can be very easy to make money disappear if you do it right,

The trick is if you ever deposit the cash in the bank or use cash to pay a bill (i.e. I can and have paid my health insurance bill from Walmart with cash)

Any cash that gets deposited or used in a manner such as the above falls under fraud if you don't report it.

However if you use cash tips for things like dinner out, groceries, taco stand food, ect... it can disappear into the ethos no risk,

So it's not about how much, it's about how you spend it.

Once cash tips becomes so high that it becomes more than beer and pizza money, and a vital portion of your income it needs to be reported.

Rule of thumb is to report at least 10% more then you deposit or spend on trackable things (such as i mentioned bills and the like)


----------



## renbutler

Mears Troll Number 4 said:


> That depends.
> 
> Like I said it can be very easy to make money disappear if you do it right,
> 
> The trick is if you ever deposit the cash in the bank or use cash to pay a bill (i.e. I can and have paid my health insurance bill from Walmart with cash)
> 
> Any cash that gets deposited or used in a manner such as the above falls under fraud if you don't report it.
> 
> However if you use cash tips for things like dinner out, groceries, taco stand food, ect... it can disappear into the ethos no risk,
> 
> So it's not about how much, it's about how you spend it.
> 
> Once cash tips becomes so high that it becomes more than beer and pizza money, and a vital portion of your income it needs to be reported.
> 
> Rule of thumb is to report at least 10% more then you deposit or spend on trackable things (such as i mentioned bills and the like)


Wow, you completely whiffed on the point of my question.

I certainly didn't ask how to get away with tax fraud. I'm not remotely interested in that nonsense.


----------



## Mars Troll Number 4

renbutler said:


> Wow, you completely whiffed on the point of my question.
> 
> I certainly didn't ask how to get away with tax fraud. I'm not remotely interested in that nonsense.


No...

you asked the threshold between Fraud and Not Fraud.

I answered by explaining WHEN you HAVE to report your cash income. I report a great deal of Cash revenue every year (over $15,000 last year)

You asked for the threshold,

I answered by explaining THE threshold at when you MUST start reporting the cash income.

This threshold can and will vary by lifestyle and personal choices you make with your money.

The threshold you asked about, is THE MOMENT when you start depositing cash and start using it to pay for major expenses. This is the moment you need to start reporting it.

I KNOW i gave you enough information to get away with unreporting small amounts of cash tips. I KNOW I did.

You asked for the threshold of WHEN you NEED to report the cash tips. The actual number is you need to report it all.

The truth is I gave you the situations WHEN the IRS can Nail you for fraud.

The truth is your supposed to just report it all 100% of it. Personally i would skim some of your income off the books for an occasional coffee. If you don't want to do that fine by me.. Just report all of your cash income.

Personally... i like to report my cash income in other categories for laughs...

Some of my tip money ends up being reported as "treasure hunting" income.

Also selling lost and found articles at the thrift store counts as well.

You ALSO need to report the estimated value of any lost and found articles you find (even if you end up stuffing them into a donation box) so you really ought to get an estimate of their value at a thriftstore.

Finally if you find anything SUPER valuable and can't identify the owner,

You have to file taxes on it as treasure hunting income.


----------



## renbutler

Mears Troll Number 4 said:


> The truth is your supposed to just report it all 100% of it.


There you go. It took a while, but we've stumbled onto the correct answer.


----------



## Sueron

Just for information.... 
*Planning on getting a job at the local steakhouse to earn a little extra spending money? Here's a tax tip hot off the grill: Report all the gratuities you receive or the tax collector could come looking for you.*

If you earn more than $20 a month in tips, tax laws require you to tell your employer the amount by the 10th of the following month. Bankrate's Tax Guide Calendar can help you keep track of your tip reporting responsibilities.

For restaurant employees, tips include cash left at the table, amounts added to credit card charges, tips you got from your boss as part of a tip-pooling arrangement and money you received from a co-worker if you shared the serving work.

Tip reporting isn't limited to restaurant employees. Anyone who gets a salary or wages and collects tips -- cab drivers, hairdressers, club attendants, performers -- must report tips as income. Your employer uses the tip income you report to figure out how much payroll withholding, Social Security and Medicare taxes to take out of your regular paycheck.

And don't think you're off the tax hook if your customers turn out to be penny pinchers one month. All tips, even those amounts that fall under the $20 reporting limit, still are taxable. The Internal Revenue Service expects you to own up to them when you fill out your annual tax return.

Read more: http://www.bankrate.com/finance/mon...-tips-are-taxable-income-1.aspx#ixzz4OTy7nbOs 
Follow us: @Bankrate on Twitter | Bankrate on Facebook

Perfect example why the TAX law needs to be scraped, and go to something like a "fair tax" a tax bill that you can fill out on a paper the size of a post card.


----------



## renbutler

Sueron said:


> Perfect example why the TAX law needs to be scraped, and go to something like a "fair tax" a tax bill that you can fill out on a paper the size of a post card.


Yep. Or a national sales tax. That way, nobody would avoid income taxes by never reporting income. Basics of life (healthy food, utilities, an allowance for clothing and housing, etc.) should be exempt from the sales tax, and then anything deemed a luxury or an unnecessary expense should be taxed.

That way, everybody pays in (if they have more than enough money to cover the basics), no more arcane tax laws -- no more IRS!


----------



## the rebel

MrBear said:


> I've been in the food business for 32 years and that's always been the case. You can give up to either 12 or $13,000 and claim it as tax free as per irs code. Ask any accountant


I am an accountant, and that will never hold up in an audit.



renbutler said:


> Form 1040, line 7


It goes on your schedule C either in your gross income or other income.


----------



## renbutler

the rebel said:


> I am an accountant, and that will never hold up in an audit.


It's a good thing he asked any accountant. Because he didn't want to believe the rest of us.


----------



## the rebel

Nomad said:


> I'd like to reiterate my point since this thread has now become about me and my life choices somehow.
> 
> It's YOUR choice whether to claim cash tips. If your moral core says that you must claim every penny you make, then track and claim your tips. If you don't claim your tips, the only people who are going to claim that what you're doing is "tax fraud" are the trolls here. No IRS agent will ever claim that not claiming cash tips is "tax fraud" - unless you're clearing a LARGE amount of cash tips like a stripper or concierge.
> 
> Worst case scenario, you are audited for some other reason and a special agent is assigned to your case, asks you about cash tips, you admit you didn't claim them, and then you owe a very small tax on them as well as an even smaller amount of penalty and interest.
> 
> EDIT: And that's only if you have actually tracked the cash tips. If there's no way to prove an amount of cash tips, there is no way for the IRS to tax you on it or charge interest and penalties.
> 
> This advice comes from someone who has been in hospitality for 15+ years and has 4+ years of audit experience.


Actually if your tip income amounts to more than 25% of your income and you get caught it is tax fraud, and while customers do not tip much for the drivers if they ever decide to, than it will not take a whole lot in tips to end up being more than 25% of your income with the low mileage rates and costs of operations being deducted.


----------



## the rebel

Overall anybody that tells you not to report your tips is telling you to break the law, you should always report all income and if you get caught not reporting it than you will be paying penalties and interest on all taxes that you would owe. What will likely add up to $200-300 in more tax this year for reporting tips will easily become 3 times that if you are caught later in an audit. 

As for the IRS not auditing certain professions because they are tipped, you are wrong. Rideshare drivers are actually in 2 higher audit risk categories, tipped and self employed. While you are only about 2% likely to get audited, the fact of the matter is that the IRS will at times pick an industry and audit just about everybody in the industry in an area. I have seen it happen with casino employees, bartenders and wait staff, and cab drivers. Once a handful of people get caught, we are all more likely to get audited.


----------



## renbutler

the rebel said:


> Actually if your tip income amounts to more than 25% of your income and you get caught it is tax fraud, and while customers do not tip much for the drivers if they ever decide to, than it will not take a whole lot in tips to end up being more than 25% of your income with the low mileage rates and costs of operations being deducted.


Do you have an official source to support that 25% claim?

I'm not challenging or attacking; I'm just asking. Obviously there is a lot of misinformation floating around, so I like to see an authoritative source for these things.


----------



## Older Chauffeur

the rebel said:


> Actually if your tip income amounts to more than 25% of your income and you get caught it is tax fraud, and while customers do not tip much for the drivers if they ever decide to, than it will not take a whole lot in tips to end up being more than 25% of your income with the low mileage rates and costs of operations being deducted.


I couldn't find this rule. Under reporting income deliberately would be fraud, regardless of the ratio to reported income, at least the way I read it. Is it possible that you are thinking of the 75% penalty added on to the tax owed where fraud exists, as opposed to the 20% penalty for what the auditor believes to be an honest mistake?


----------



## the rebel

http://www.forbes.com/sites/robertw...doubled-from-three-years-to-six/#1ef4364c1dd3

I guess I should have been more clear, they do consider under reporting of any income of fraud, however the rule is under reporting income by more than 25% is considered a Gross misstatement of income and results in extra penalties and interest for a fraud charge. It also allows them to audit up to 6 years of tax returns if you are caught with a gross misstatement.


----------



## Older Chauffeur

^^^^^ thanks.


----------



## UStaxman

Jollyrodger said:


> Uh, god no. Cash is untraceable even by the IRS, who have bigger fish to fry than you. They only go after the big boys. The chances of anyone making 30K or less on Flubber even being audited is less than .0001%. Uber drivers are nuthin' but guppies. The IRS wants the sharks hiding the big dough. Do some research and you'll realize that.


Except for most Uber drivers will have a loss on Schedule C --- that will increase your chance of an audit, and first question they will have is where are your tips recorded--- Tips are minimal, but if you tell them Zero you have lost credibility.

I keep a log book in my car; every day I go out I record beginning/ending/elapsed miles; tolls; fuel ($ and gallons); car wash; tolls; amount paid to me from Uber; tips; # of trips; time on line....

Because the standard mileage will most likely give me a tax loss, I want to have the information available to show there is a cash flow profit, otherwise the IRS can disallow the loss as per IRC 183.


----------



## TheThings

renbutler said:


> Then help change the laws. Don't cheat them.
> 
> You have to follow all the laws, not just the ones you like.


What you mean to say is, you SHOULD follow all the laws, not just the ones you like. don't get your panties in a bunch because people aren't doing what you think they should do. it's not worth the energy. for now, this is still America and they have the right to do it how they choose . I'm not saying there aren't consequences for some things, but they get to decide for themselves.


----------



## renbutler

TheThings said:


> What you mean to say is, you SHOULD follow all the laws, not just the ones you like. don't get your panties in a bunch because people aren't doing what you think they should do. it's not worth the energy. for now, this is still America and they have the right to do it how they choose . I'm not saying there aren't consequences for some things, but they get to decide for themselves.


No, I say what I mean. Maybe you shouldn't "get your panties in a bunch" (a juvenile phrase) because I see things differently from you.

For now, this is still "America" and I have the right to say things the way I want to.


----------



## jfinks

Mears Troll Number 4 said:


> If you never deposit the cash tips into a bank account or pay bills with it, (IE paying cash at walmart to pay your phone/cable bill)
> 
> The odds of getting caught shorting your income is virtually zero


Yup pretty much. It would be good to claim some tips through the year if this is your only job, but since you can prove they aren't required with Uber then you can generally say no one tipped. Buy your self lunch with the cash, or buy a lottery ticket. Keep it under your mattress or otherwise off the grid (bank). Maybe someday (probably never) when the government gets some ethics and doesn't piss away so much money maybe more would think ethically too.

What would throw up a red flag is if one year you claimed $2000 in tips, then the next year decided to not report many at all, say $50 or so. This "might" throw up a red flag and IRS could look into it, chances are slim for that amount of $$ though.


----------



## renbutler

jfinks said:


> Maybe someday (probably never) when the government gets some ethics and doesn't piss away so much money maybe more would think ethically too.


Good grief. _Some others don't act ethically, so I won't either.
_
Obviously that's a faulty justification for unethical behavior.


----------



## Dontmakemepullauonyou

mk5197 said:


> Do anyone of you claim cash tips? I was not planning on it since Uber doesn't allow credit card tips. Would that set off a flag? Also, how would the IRS know if I were repositioning myself to a more popular place for getting rides and keeping the app off until I get to said location? As it is I claim those miles driven with app off.
> 
> Thanks in advance!
> Mike.


Unless an IRS agent sat next to you for every single ride you got cash tips from, I wouldn't claim anything. They have no proof. Maybe with lyft cause tipping is in the app and in the pays statements. But with uber take the cash and pretend no one saw anything.


----------



## jfinks

renbutler said:


> Good grief. _Some others don't act ethically, so I won't either.
> _
> Obviously that's a faulty justification for unethical behavior.


Maybe if the Government actually did something about taxation instead of just blowing hot air during every election for the last 30 years I would care.

Lets do a consumption tax, and tax businesses and corporations a fair rate on top line sales numbers instead of profits.


----------



## tohunt4me

Do you get any ?


----------



## jfinks

Who me? Yes some but maybe 2 out of 10 trips tip. Most was 10 bucks usually it is 2-3. It adds up though. I just toss it into the storage bin and if I need a Mighty kids meal or some tacos I pay out of that. I call it petty cash.


----------



## renbutler

Dontmakemepullauonyou said:


> Unless an IRS agent sat next to you for every single ride you got cash tips from, I wouldn't claim anything. They have no proof.


Sure, do the wrong thing if you know you'll get away with it.

It's the American way...


----------



## renbutler

jfinks said:


> Maybe if the Government actually did something about taxation instead of just blowing hot air during every election for the last 30 years I would care.
> 
> Lets do a consumption tax...


I agree 100% with all of this.

It's just a horrible response to, and excuse for, not paying your legal share of taxes on all earned income.


----------



## jfinks

I do pay taxes on all earned income, that they know about.. Quite frankly it is a pain in my ass to track tips, so I'm not gonna do it. I'm surprised the Government doesn't make them put tipping as part of the app so it can be tracked. But even then cash tips can be still given. Really though a lot don't tip because they simply don't carry cash. I almost never have cash on me, in my pocket/wallet or anywhere near me.


----------



## renbutler

jfinks said:


> Quite frankly it is a pain in my ass to track tips, so I'm not gonna do it.


It's one of the easiest things I've ever had to do in my life.

1.) Put tip money in pocket.

2.) At the end of the driving day, count the tips and type them into the spreadsheet that every independent contractor must have already.


----------



## Older Chauffeur

renbutler said:


> It's one of the easiest things I've ever had to do in my life.
> 
> 1.) Put tip money in pocket.
> 
> 2.) At the end of the driving day, count the tips and type them into the spreadsheet that every independent contractor must have already.


I agree, but I think you're flogging a dead horse here.


----------



## renbutler

Yeah, but it's very easy to shoot holes through every lame excuse for not reporing tip income.

In the end, I'd guess that 90% of it is nothing more than greed. And most of that greed is probably from people who are quick to call other people or corporations "greedy" for pursuing _legal_ profit.


----------



## jfinks

Much easier to run into McDs and buy me a Mighty kids meal with cash.


----------



## jfinks

Yup, I'm greedy, and our government is greedy, stupid and wasteful. 

Spreadsheet??? lol


----------



## renbutler

jfinks said:


> Yup, I'm greedy, and our government is greedy, stupid and wasteful.


Both correct, and both shameful.



jfinks said:


> Spreadsheet??? lol


And why does that makes you laugh?


----------



## jfinks

Cause there is probably an app for that.


----------



## renbutler

So it's even _easier _I suggested?

How about that.


----------



## jfinks

If I did this for a living I probably would. I'm just doing this to make some extra cash. I have a regular 9 to 5 job that is slow on OT right now. So just looking to make 1000-1200 a month. If people tip, then it goes into my stomach or gas tank. lol


----------



## renbutler

Still wondering what the _valid _justification is.

Yes, it's pennies, which makes it that much easier to just pay the tax.

It's the principle that matters. What you do when nobody is looking matters as much (if not more) than what you do to avoid getting caught.


----------



## jfinks

I don't need a valid justification. I just don't care.


----------



## renbutler

Oh, okay. Good to know finally. 

Your several different attempted justifications sent an entirely different message.


----------



## jfinks

renbutler said:


> Oh, okay. Good to know finally.
> 
> Your several different attempted justifications sent an entirely different message.


My other attempts were just cynical... the reality is IJDGAF. lol


----------



## TheThings

renbutler said:


> No, I say what I mean. Maybe you shouldn't "get your panties in a bunch" (a juvenile phrase) because I see things differently from you.
> 
> For now, this is still "America" and I have the right to say things the way I want to.


True, but you'll be wrong. people don't have to do anything.


----------



## renbutler

TheThings said:


> True, but you'll be wrong. people don't have to do anything.


It's bizarre how you interpreted that phrase, as if I don't realize that there are alternatives to doing what one_ has to _do...


----------



## BeantownZombie

mk5197 said:


> Do anyone of you claim cash tips? I was not planning on it since Uber doesn't allow credit card tips. Would that set off a flag? Also, how would the IRS know if I were repositioning myself to a more popular place for getting rides and keeping the app off until I get to said location? As it is I claim those miles driven with app off.
> 
> Thanks in advance!
> Mike.


never under any circumstances claim cash tips!!!!

the irs has no way of tracking cash tips paid to you and claiming thhem might end up hurting you in the end.


----------



## renbutler

^^^Obviously terrible advice.


----------



## tohunt4me

.


----------



## BeantownZombie

renbutler said:


> ^^^Obviously terrible advice.


I assume your being sarcastic on this one


----------



## renbutler

BeantownZombie said:


> I assume your *[sic]* being sarcastic on this one


And you would be assuming wrong.


----------



## DCadran

I used to be much more concerned about claiming cash tips in past jobs. Then I became very involved in politics and economics and learned how much the little guy is being SCREWED over by the rich. Trust me; I don't think the little bit of cash tips you make (I've made about $10 in the last two months) is going to be missed by anyone. Keep that money. It's your way of screwing over the rich.


----------



## renbutler

DCadran said:


> I used to be much more concerned about claiming cash tips in past jobs. Then I became very involved in politics and economics and learned how much the little guy is being SCREWED over by the rich. Trust me; I don't think the little bit of cash tips you make (I've made about $10 in the last two months) is going to be missed by anyone. Keep that money. It's your way of screwing over the rich.


Good lord. A bunch of populist nonsense.

It has nothing to do with whether it's a lot of money. In fact, if it's so little money, then you should have no problem whatsoever forking it over.

It has everything to do with principle. I understand not wanting to give money to a wasteful government. But if you're going to be a cheater, at least give that money directly to legitimate poor relief.

Don't try justify your own greed/laziness/jealousy by blaming "the rich." Time to put that bogeyman to bed.


----------



## DCadran

Ha ha. Laziness... I'm stringing together a full time job, plus Uber and going to College part time. I don't need lectures on laziness.


----------



## renbutler

DCadran said:


> Ha ha. Laziness... I'm stringing together a full time job, plus Uber and going to College part time. I don't need lectures on laziness.


Then pick whatever character flaw applies to you. I didn't know which motivation was yours, so I just included the most likely options. It doesn't matter which one applies to you.

But, yeah, if you're using class warfare BS to justify your inability/unwillingness to fork over a few pennies to fulfill your legal and ethical duty, you need a lecture.


----------

