# Question about reimbursements



## Outsider626 (Dec 29, 2018)

Might be a dumb questions but just want to make sure: On my Uber Tax Summary I see Gross Earnings, Expenses and Net Payout. Net payout consists of Net earnings + reimbursements (Tolls, Airport Fees and surcharges). So I assume that i can't list reimbursements under my expenses? Thank you in advance!


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## TheDevilisaParttimer (Jan 2, 2019)

Outsider626 said:


> Might be a dumb questions but just want to make sure: On my Uber Tax Summary I see Gross Earnings, Expenses and Net Payout. Net payout consists of Net earnings + reimbursements (Tolls, Airport Fees and surcharges). So I assume that i can't list reimbursements under my expenses? Thank you in advance!


No you can't, if you were reimbursed it's not an expense. Welcome to the forum


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## Outsider626 (Dec 29, 2018)

TheDevilisaParttimer said:


> No you can't, if you were reimbursed it's not an expense. Welcome to the forum


Thank you!


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## Launchpad McQuack (Jan 8, 2019)

TheDevilisaParttimer said:


> No you can't, if you were reimbursed it's not an expense. Welcome to the forum


That is not true. Being reimbursed for an expense does not stop it from being an expense. The key is whether the reimbursement is included in income. If the amount of the reimbursement is included in the income that you report, then you can deduct the expense. If the amount of the reimbursement is _excluded_ from the income that you report (as is often the case with employee expenses), then you _cannot_ deduct the expense.

In his example, he states that Net Payout = Net Earnings + Reimbursements. If the amount that he reports as income is his Net Payout (which includes the reimbursements), then he can deduct the expenses that he was reimbursed for........provided that he has sufficient evidence to prove that he actually paid the expenses.


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## TheDevilisaParttimer (Jan 2, 2019)

Launchpad McQuack said:


> That is not true. Being reimbursed for an expense does not stop it from being an expense. The key is whether the reimbursement is included in income. If the amount of the reimbursement is included in the income that you report, then you can deduct the expense. If the amount of the reimbursement is _excluded_ from the income that you report (as is often the case with employee expenses), then you _cannot_ deduct the expense.
> 
> In his example, he states that Net Payout = Net Earnings + Reimbursements. If the amount that he reports as income is his Net Payout (which includes the reimbursements), then he can deduct the expenses that he was reimbursed for........provided that he has sufficient evidence to prove that he actually paid the expenses.


If the "reimbursement" is part of income then it isn't a reimbursement and just a business expense.


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## Launchpad McQuack (Jan 8, 2019)

TheDevilisaParttimer said:


> If the "reimbursement" is part of income then it isn't a reimbursement and just a business expense.


You can play the semantics game if you want to, but it sounds like Uber is calling it a reimbursement. If I pay $1 for a toll while on a trip, and Uber adds $1 to my earnings for that trip to pay me back for the toll, and that extra $1 that Uber added is reported in my income, then I can deduct the $1 that I paid for the toll as an expense. I'm not going to get into the semantics of whether or not you call that a reimbursement.

On the other hand, if the extra $1 that Uber pays me for the toll is not included in my income, then I cannot deduct the $1 that I paid for the toll. As far as I know, though, that should never be the case for an independent contractor. It can happen with employees but as an IC, you are supposed to report all of the money that you receive.


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## TheDevilisaParttimer (Jan 2, 2019)

Launchpad McQuack said:


> You can play the semantics game if you want to, but it sounds like Uber is calling it a reimbursement. If I pay $1 for a toll while on a trip, and Uber adds $1 to my earnings for that trip to pay me back for the toll, and that extra $1 that Uber added is reported in my income, then I can deduct the $1 that I paid for the toll as an expense. I'm not going to get into the semantics of whether or not you call that a reimbursement.
> 
> On the other hand, if the extra $1 that Uber pays me for the toll is not included in my income, then I cannot deduct the $1 that I paid for the toll. As far as I know, though, that should never be the case for an independent contractor. It can happen with employees but as an IC, you are supposed to report all of the money that you receive.


Uber itemized your reimbursement they didn't include it in your income. There is a complete breakdown of your rate of pay then your expenses reimbursed.

Put whatever you want on your taxes but an auditor will have little patience for shy tactics.


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## Outsider626 (Dec 29, 2018)

I'm confused now guys. Can I list in under expenses or not? I don't want to get audited. 

Also 1 more question. I bought a used car specifically for uber in 2018. Can I still depreciate it? The car is 5 years old.


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## Launchpad McQuack (Jan 8, 2019)

Outsider626 said:


> Can I list in under expenses or not?


If the "reimbursement" is included in your gross sales on Schedule C, then yes. If it is not, then no.

Example: Say I had $1,000 in trip fares for 2018. On one trip, I crossed a toll bridge and paid a $10 toll. Uber gave me an extra $10 for that trip in addition to the trip fare to pay me back the money that I spent on the toll.

If I report $1,010 in gross sales ($1,000 trip fares + the toll reimbursement), then I can deduct the $10 cost of the toll.

If I report $1,000 in gross sales (toll reimbursement is not included), then I cannot deduct the $10 cost of the toll because it has already been deducted.



Outsider626 said:


> I don't want to get audited.


My opinion is that you shouldn't worry about whether or not you get audited. Instead, be prepared for an audit in the event that it happens.



Outsider626 said:


> Also 1 more question. I bought a used car specifically for uber in 2018. Can I still depreciate it? The car is 5 years old.


I am not knowledgeable about depreciation. I use the standard mileage deduction, so no depreciation for me.


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## UberTaxPro (Oct 3, 2014)

Launchpad McQuack said:


> If the "reimbursement" is included in your gross sales on Schedule C, then yes. If it is not, then no.
> 
> Example: Say I had $1,000 in trip fares for 2018. On one trip, I crossed a toll bridge and paid a $10 toll. Uber gave me an extra $10 for that trip in addition to the trip fare to pay me back the money that I spent on the toll.
> 
> ...


Standard mileage deduction is better for most but it does include a depreciation component built in.


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## Launchpad McQuack (Jan 8, 2019)

UberTaxPro said:


> Standard mileage deduction is better for most but it does include a depreciation component built in.


Yes, what I meant is that I don't figure the depreciation separately, so I don't know how that works. Since I just use standard mileage, I've never looked at the details of figuring depreciation.


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## UberTaxPro (Oct 3, 2014)

Launchpad McQuack said:


> Yes, what I meant is that I don't figure the depreciation separately, so I don't know how that works. Since I just use standard mileage, I've never looked at the details of figuring depreciation.


Why not? You're researching everything else! hahaha Here ya go: 
"The portion of the business standard mileage rate that is treated as depreciation will be 26 cents per mile for 2019, 1 cent more than 2018. "
https://www.journalofaccountancy.com/news/2018/dec/2019-irs-mileage-rates-201820297.html

Remember, when you sell a vehicle used in business you may need to re-capture the depreciation taken on the vehicle during its working life. This is true even if you use the standard mileage method to deduct your vehicle expenses.


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## Launchpad McQuack (Jan 8, 2019)

UberTaxPro said:


> Remember, when you sell a vehicle used in business you may need to re-capture the depreciation taken on the vehicle during its working life. This is true even if you use the standard mileage method to deduct your vehicle expenses.


I can't remember things that I never knew. How does that work?


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## The Gift of Fish (Mar 17, 2017)

Launchpad McQuack said:


> I can't remember things that I never knew. How does that work?


I think he's telling you to remember it from here on out. Like a "for future reference" kind of thing.


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## UberTaxPro (Oct 3, 2014)

Launchpad McQuack said:


> I can't remember things that I never knew. How does that work?


When you sell an asset it's subject to capital gains tax on the sale amount minus the basis. Depreciation taken on the asset over its life must be subtracted from the basis when determining the adjusted basis at the time of sale. Generally not a problem for most Uber drivers as most Uber used vehicles have very little value if any after a life of Ubering. There was someone on here a while back that only drove his vehicle for a few months and was dealing with this issue.


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## Launchpad McQuack (Jan 8, 2019)

UberTaxPro said:


> When you sell an asset it's subject to capital gains tax on the sale amount minus the basis. Depreciation taken on the asset over its life must be subtracted from the basis when determining the adjusted basis at the time of sale. Generally not a problem for most Uber drivers as most Uber used vehicles have very little value if any after a life of Ubering. There was someone on here a while back that only drove his vehicle for a few months and was dealing with this issue.


Is there a differentiation between personal assets and business assets? For example, let's say that I bought a cell phone specifically for Ubering and deducted the cost of the cell phone on Schedule C. And then let's say Uber cuts their rates substantially so that it is no longer profitable to drive (which they will, eventually). If I "shut down the business" and sell the cell phone that I bought, do I report that as a capital gain (with zero basis) or do I report it as income for the business on Schedule C?


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## UberTaxPro (Oct 3, 2014)

Launchpad McQuack said:


> Is there a differentiation between personal assets and business assets? For example, let's say that I bought a cell phone specifically for Ubering and deducted the cost of the cell phone on Schedule C. And then let's say Uber cuts their rates substantially so that it is no longer profitable to drive (which they will, eventually). If I "shut down the business" and sell the cell phone that I bought, do I report that as a capital gain (with zero basis) or do I report it as income for the business on Schedule C?


Yes, big difference between personal and business assets. You'd report the cell phone gain as a capital gain with an adjustment for personal vs business use. If you have already expensed the phone, it's basis would be $0 like you said.


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

Outsider626 said:


> Might be a dumb questions but just want to make sure: On my Uber Tax Summary I see Gross Earnings, Expenses and Net Payout. Net payout consists of Net earnings + reimbursements (Tolls, Airport Fees and surcharges). So I assume that i can't list reimbursements under my expenses? Thank you in advance!


Umm... yes and no.

If the reimbursements are included in your "revenue" then yes you can.

if you were not reimbursed then YES you can, IE a toll you were never paid on.

I write up all money paid to me as a "revenue" and all my expenses going out as "expenses"

So ALL the money i get paid is revenue 100% of the time, then i write off ALL my tolls (while working) as expenses

The difference is, the accounting is far far easier.

When your getting reimbursed for tolls after the fact, tolls change from being deductible to not being deductible. But if your just accounting for ALL Tolls as expenses, and all reimbursements as Payments... The tolls are never changing categories and your not editing records from previous days because you got reimbursed by something 2 calendar days later.

An even easier reason...

If you treat all tolls reimbursed as revenue and all tolls worked as expenses you don't have to separate them out on your accounting.

By my math ... it combines several columns of my books together, from 5! to 2! columns.

Option A.
Total deposit
Revenue
Tolls total
Tolls (unreimbursed)
Tolls Reimbursed

Option B
Revenue
Tolls

Scenerio 2. Uber + lyft both

Option C (uber and lyft both) 9! 9 collumns
Total deposited
Total Taxable revenue
Total untaxable revenue
Uber total
Lyft Total
Tolls total
Tolls reimbursed uber
Tolls Reimbursed lyft
Tolls unreimbursed

VS
Total deposited 4 columns..
Uber total
Lyft Total
Tolls Total

AND TOMORROW
PLUS -$2.50 in unreimbursed tolls (that's right...adding a negative number)
+$2.50 in non taxed Reimbursements
+2.50 uber payments reimbursed
+2.50 uber total

VS
+$2.50 uber

Seperting your unrembursed income from your reimbursed income, and keeping separate toll books for uber and lyft... it's a MESS... I'm pretty sure i screwed up my above numbers.


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