# Tax Question!



## staticoverdub

Hey everyone! I'm new. I'm thinking about doing the uber thing as a part time gig in addition to my regular full time job. My question is this:

The deduction for mileage is $0.56/mile. Seeing as how I would be driving part time, I doubt that it will even come close to my $6,000 standard deduction (or whatever it is this year). Is there some way I could arrange my taxes to where I would be able to personally claim the $6,000 in addition to the 56 cents per mile on money earned by driving? This seems like something someone could have dealt with in the past.

Thanks so much for reading!!

-Chris


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## Tim In Cleveland

Yes, form a s-corp. Claim all your income and expenses over there. Only your net profit will be carried over to your personal tax return. You will still be free to take the standard deduction. This might work with an LLC as well but I'm not positive.


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## iumichael

Just file your Uber income as a sole proprietorship on a Schedule C. If you want to incorporate or go the S corp route that would work, too - but there will be some legal fees to setting those up. Schedule C is part of the normal 1040, you report your income from Uber, subtract expenses, and carry over any profit or loss to page 1 of your 1040. On page 2 you can then deduct your standard deduction. The standard deduction cannot be claimed if you itemize your personal expenses on Schedule A (mortgage interest, property taxes, etc.). However, Schedule C is business related and doesn't affect your ability to claim the standard deduction.


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## Tim In Cleveland

Yeah, schedule C sounds easier, BUT, s-corp's shield you from lawsuits. Schedule C businesses are sole proprietorship so customers can sue you and win your car, house and savings accounts. S-corps can only be sued for assets in the s-corp's name. You can set up your own corp for less than $100. Once formed, you can use it for the rest of your life. As more companies cheap out and hire independent contractors (like Uber does), the usefulness of your s-corp/llc will increase.


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## staticoverdub

Thank you! I will most likely go the Schedule C route for TY 2014, then go with an S Corp for 2015; that'll give me some time to figure a few other things out. Appreciate the help.

-Chris


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## ValleyKip

If you're driving the car then you're going to be personally liable in any litigation. If you own the car then you're going to be personally liable in any litigation. The LLC form or electing S-Corp taxation will not shield you.


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## ValleyKip

Another point before some other misinformed ignoramus weighs in: If you opt for the "LLC taxed as an S-Corp" structure, then you MUST MUST MUST pay yourself some W-2 wages and file quarterly Form 941 returns for FICA and withholding (your state equivalents as well, if applicable), AND federal unemployment tax (Form 944) and state equivalent. You absolutely cannot push all your net income onto Schedule K-1. Trying to report zero wages on Form 1120S is an automatic audit flag.


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## scrurbscrud

ValleyKip said:


> Another point before some other misinformed ignoramus weighs in: If you opt for the "LLC taxed as an S-Corp" structure, then you MUST MUST MUST pay yourself some W-2 wages and file quarterly Form 941 returns for FICA and withholding (your state equivalents as well, if applicable), AND federal unemployment tax (Form 944) and state equivalent. You absolutely cannot push all your net income onto Schedule K-1. Trying to report zero wages on Form 1120S is an automatic audit flag.


There is a 3 year exemption AND it's predicated on actually making a wage. For X rates driver probably won't have to worry.

To the opening poster you have to file long form to report itemized biz expenses.


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## Guest

ValleyKip said:


> If you're driving the car then you're going to be personally liable in any litigation. If you own the car then you're going to be personally liable in any litigation. The LLC form or electing S-Corp taxation will not shield you.





ValleyKip said:


> Another point before some other misinformed ignoramus weighs in: If you opt for the "LLC taxed as an S-Corp" structure, then you MUST MUST MUST pay yourself some W-2 wages and file quarterly Form 941 returns for FICA and withholding (your state equivalents as well, if applicable), AND federal unemployment tax (Form 944) and state equivalent. You absolutely cannot push all your net income onto Schedule K-1. Trying to report zero wages on Form 1120S is an automatic audit flag.


These are very valid reasons why it may, or more likely may not, be worthwhile to go through the complications and costs of creating a legal entity to be driving for Uber, as opposed to just operate as a sole proprietorship and simply file a 1040 with a Schedule C. If you do the latter, you can still deduct all the operating expenses of driving for Uber on your Schedule C, and then use the highest of the standard or itemized personal deduction on the 1040.


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## UberPissed

DO NOT FORM AN S CORP. With the money you plan on earning, the cost savings will be transferred to your preparer, unless you are able to prepare your own 1120S and K1s.

You could set up an LLC, however, many jurisdictions treat an LLC a sole prop in terms of liability.

Another consideration that I don't know 100%, but if you have an S-Corp, i think you need to have business insurance, which is an added expense. If you don't have adequate insurance, they could 'pierce the corporate veil' and hold you personally liable. 

Free passes for wrongdoing are only afforded to those on the top. We are on the bottom. Re-align that thinking and you will be fine.


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## Guest

UberPissed said:


> DO NOT FORM AN S CORP. With the money you plan on earning, the cost savings will be transferred to your preparer, unless you are able to prepare your own 1120S and K1s.
> 
> You could set up an LLC, however, many jurisdictions treat an LLC a sole prop in terms of liability.
> 
> Another consideration that I don't know 100%, but if you have an S-Corp, i think you need to have business insurance, which is an added expense. If you don't have adequate insurance, they could 'pierce the corporate veil' and hold you personally liable.
> 
> Free passes for wrongdoing are only afforded to those on the top. We are on the bottom. Re-align that thinking and you will be fine.


Keep in mind that, as stated above, all these complications may be superfluous and useless if your objective is to try to protect yourself from liability. The car may be owned by an LLC or an S-Corp, but if you are driving it and you become liable, you will be held personally responsible as the driver, and the legal entity as the owner of the car. Bottom line: Unless you will only have somebody else do the Uber driving in your car, you don't gain anything significant by creating an LLC, S-Corp or other type of legal entity.


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## Steve_Chatt

Hey.. when you are deciding what to hold and save for end of year taxes, so you use the percentage for just your uber pay, or your total yearly pay for all income?


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## Older Chauffeur

Your net Uber pay from Schedule C is added to other income, so you need to plan on paying tax based on total income. From what most posters are saying hear, they don't expect to show much profit after deducting mileage and other business expenses. 
Consult a tax preparer or accounting professional- I am neither, but have been filing Schedule C as a self employed driver for several years, using a CPA.


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## Steve_Chatt

Older Chauffeur said:


> Your net Uber pay from Schedule C is added to other income, so you need to plan on paying tax based on total income. From what most posters are saying hear, they don't expect to show much profit after deducting mileage and other business expenses.
> Consult a tax preparer or accounting professional- I am neither, but have been filing Schedule C as a self employed driver for several years, using a CPA.


Thank you for the information. I however, plan on profiting. You have to stay on the positive side of everything.


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