# Paying taxes as a part time driver



## New-berX

Hello! 

I just got approved to drive a week ago, so I have yet to figure out the tax implications of my shiny, new part-time employment as an Uber driver. I'm finding it very difficult to find any reliable tax advice that's pertinent to my situation, so I'm baffled. My next step will be to talk to a tax professional, but I thought I'd post here and maybe someone whose situation is similar to mine can weigh in on how they handle their tax payments. 

I know that full-time Uber Drivers are typically classified as independent contractors and are required to pay quarterly estimated taxes once they pass a certain profit threshold - however, is that still the case for someone who has a full-time, 40+ hour job and is just doing Uber on the side for extra cash? 

At the end of my first week of driving, I have driven probably 7-9 hours. I'm not bringing in a ton of cash at this point (about $75 after Uber takes their cut). Not sure if it's relevant, but there you go.

I'm currently planning to set aside 30% from every Uber paycheck in a separate account so I can settle up at tax time, but as for whether I should be paying quarterly estimated taxes or whether I should just be reporting this as additional income and paying what I owe come April 15th - I'm at a loss. I also have no idea how it will affect my filing for my regular full-time job. (Why must the tax code be so stupidly complicated?)

If any other part-timers cares to share their tax knowledge, I'd be most appreciative!


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## Lidman

Quarterly is not required, it is optional. I'm not sure if you know this already, but you'll receive a 1099 form in either January/February. There are plenty of things you can deduct like gas, maintenance, etc.


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## New-berX

Oh good, that's helpful! Thanks. This year I probably won't receive a 1099 at all since I will have at most a few hundred dollars for 2014.


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## Blaine Browning

Lidman said:


> Quarterly is not required, it is optional. I'm not sure if you know this already, but you'll receive a 1099 form in either January/February. There are plenty of things you can deduct like gas, maintenance, etc.


@New-berX , please do not listen to @Lidman. Quarterly estimated tax payments MAY be required. Not paying these may result in you paying penalties. Please contact an accountant.


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## UberTaxPro

If you make a profit quarterly estimated taxes must be made otherwise you will face penalties and interest. Most important thing.....keep a mileage record for all business driving....you can deduct .56 cents a mile for 2014. Its really not that hard to stay tax compliant once you understand the rules. You can choose to deduct actual expenses or take the standard .56 cents per mile deduction. Most drivers take take the standard .56 cents per mile deduction. If you select the .56 cents per mile deduction 90% of your tax work is done just by keeping the mileage log. Yes, the Uber income will be added to your full time job income for gross income on your next tax return.
Example1: if you drive 100 miles and earn $100 net from uber, 100(miles) x .56 = $56.00 $100(uber income) - $56 = $44.00 You will pay tax on $44 income. The % you pay depends on how much income you have from all income sources. If you decide 30% is the right amount you would send the irs .30 x $44 = $13.20 in estimated taxes.
Example 2. you drive 180 miles and earn $100 net from uber.... .56 x 180 = $100.80 $100(uber income)-100.8 = -.80 cents. You have an .80 loss and will not have to send in any estimated tax
KEEP A MILEAGE LOG!!!!


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## CLAkid

UberTaxPro said:


> If you make a profit quarterly estimated taxes must be made otherwise you will face penalties and interest. Most important thing.....keep a mileage record for all business driving....you can deduct .56 cents a mile for 2014. Its really not that hard to stay tax compliant once you understand the rules. You can choose to deduct actual expenses or take the standard .56 cents per mile deduction. Most drivers take take the standard .56 cents per mile deduction. If you select the .56 cents per mile deduction 90% of your tax work is done just by keeping the mileage log. Yes, the Uber income will be added to your full time job income for gross income on your next tax return.
> Example1: if you drive 100 miles and earn $100 net from uber, 100(miles) x .56 = $56.00 $100(uber income) - $56 = $44.00 You will pay tax on $44 income. The % you pay depends on how much income you have from all income sources. If you decide 30% is the right amount you would send the irs .30 x $44 = $13.20 in estimated taxes.
> Example 2. you drive 180 miles and earn $100 net from uber.... .56 x 180 = $100.80 $100(uber income)-100.8 = -.80 cents. You have an .80 loss and will not have to send in any estimated tax
> KEEP A MILEAGE LOG!!!!


So from what you are saying, if we choose the .56 per mile route, then we will not be filling out a schedule C and taking deductions, like gas and maintenance, etc.


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## UberTaxPro

you'll still have to do a schedule C , you will have a few other deductions things like cellphone, chargers, water bottles etc... but no deductions for gas, or car maintenance other than the .56 cents per mile


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## Blaine Browning

CLAkid said:


> So from what you are saying, if we choose the .56 per mile route, then we will not be filling out a schedule C and taking deductions, like gas and maintenance, etc.


Diddo what UberTaxPro said. Keep in mind that the standard rate is in lieu of your "actual expenses". Which means that items that fall out of the definition of "actual expenses" can still be considered expenses for your business (possibly subject to allocations between personal and business depending on the item).

Actual expenses are

Depreciation 
Licenses 
Lease payments (Special rules here)
Registration fees
Gas 
Insurance 
Repairs
Oil 
Garage rent 
Tires

You may see other expenses that you have which are not included in the standard rate. (Tolls and parking fees attributable to business activities, and even interest expense can be deducted regardless of actual expenses or standard rate).


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## UberTaxPro

yes, tolls and parking can be deducted in addition to the standard mileage rate but not car washes! Isn't that crazy? Car washes shouldn't be considered maintenance. We don't wash the car to keep it running...we wash em to keep the pax happy and get good ratings. Its like buying water bottles and phone chargers which are deductible...Oh well the irs disagrees with me and they can be harder to deal with than Uber!


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## frndthDuvel

Lidman said:


> Quarterly is not required, it is optional. I'm not sure if you know this already, but you'll receive a 1099 form in either January/February. There are plenty of things you can deduct like gas, maintenance, etc.


Plus they say you can then file for an extension, making it October when taxes are due if you do not have it in April. Penalties and interest are not as onerous as may be believed. So I have been told. If you have a second job where you may get a refund, that would be applied towards any outstanding UBER taxes, I would imagine. In fact for some operating at a loss UBER might create a larger refund from a full time job. However one has to show profit within a number of years. Even if only nominal.

So as not to generate another post. I am responding to the note from Ubertaxpro here, are you sure on the car washes? I thought my tax person of almost 30 years has allowed them for the past 20 plus while working as a Realtor? Do you believe Uber drivers can take entertainment deductions? Of course in a reasonable amount, such as when drinking a beer and asking the bartender if he wants a referral card? Or when buying a beer for your buddy as you ask him if he wants to become a Driver so you can increase your taxable income with a referral. Sounds like a legitimate deduction to me. We'll see. LOL


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## frndthDuvel

UberTaxPro said:


> If you make a profit quarterly estimated taxes must be made otherwise you will face penalties and interest. Most important thing.....keep a mileage record for all business driving....you can deduct .56 cents a mile for 2014. Its really not that hard to stay tax compliant once you understand the rules. You can choose to deduct actual expenses or take the standard .56 cents per mile deduction. Most drivers take take the standard .56 cents per mile deduction. If you select the .56 cents per mile deduction 90% of your tax work is done just by keeping the mileage log. Yes, the Uber income will be added to your full time job income for gross income on your next tax return.
> Example1: if you drive 100 miles and earn $100 net from uber, 100(miles) x .56 = $56.00 $100(uber income) - $56 = $44.00 You will pay tax on $44 income. The % you pay depends on how much income you have from all income sources. If you decide 30% is the right amount you would send the irs .30 x $44 = $13.20 in estimated taxes.
> Example 2. you drive 180 miles and earn $100 net from uber.... .56 x 180 = $100.80 $100(uber income)-100.8 = -.80 cents. You have an .80 loss and will not have to send in any e
> stimated tax
> KEEP A MILEAGE LOG!!!!


Thanks for the concise read.


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## Lidman

Blaine Browning said:


> @New-berX , please do not listen to @Lidman. Quarterly estimated tax payments MAY be required. Not paying these may result in you paying penalties. Please contact an accountant.


whatever, I never had any problems filing annually. you do it your way I do it mine


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## Blaine Browning

Lidman said:


> whatever, I never had any problems filing annually. you do it your way I do it mine


Some people get away with murder... doesn't make it legal. You are availing yourself to fines and penalties. However, you may not always have to pay, there are some rules involved.


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## No-tippers-suck

Tax is the best option but they will also charge you.

I had one for 2011 and 2012 (not for Uber tho) and I was paying monthly $150 and still had to prepare my invoices and QuickBooks File. And for the yearly filing I had to pay another $1300 extra.

For 2013 I did it just by myself and please check the IRS website, in fact you find all basic information there %100 correct.

*As some others already posted : keep track of your mileage, 
use the 0.56 deduction and save 90% of your valuable time.*
Use the $0.56 UNLESS you drive a superexpensive car and your per mile cost is much higher than that.

parttimer : once per year is actually correct, unless you do it fulltime with a high income
(everybody knows that is not possible with gross $1.10/mile)

OH, I SEE I MIGHT BE WRONG that's why I marked it red and didn't delete it.

here is the link to the relevant IRS Page :

http://www.irs.com/articles/what-estimated-tax-and-who-does-it-apply

Everyone must pay taxes on the income they receive during the year, whether it is from a job, self-employment, or other sources. The IRS expects to receive tax payments as your income is earned, not just at the end of the year when you file a tax return. This is referred to as a "pay as you go" system.
While those who are employed will usually have taxes withheld from their paychecks and sent directly to the IRS, some people will need to make these tax payments on their own in the form of _Estimated Tax_.
*What Is Estimated Tax?*
Estimated tax is a method of paying tax on income that is not subject to withholding tax. This can include income from self-employment, business earnings, interest, rent, dividends and other sources.
The IRS requires estimated tax to be paid quarterly, typically in 4 equal installments. If you underpay your estimated tax, you will have to write a bigger check to the IRS when you file your tax return. If you overpay your estimated tax, you will receive the excess amount as a tax refund (similar to how withholding tax works).


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## CowboyMC

If you are part-time, I assume you have a W-2 job. Instead of doing estimated tax payments, you can adjust the W-2 tax withholding to cover both jobs.


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## CowboyMC

Lidman said:


> whatever, I never had any problems filing annually. you do it your way I do it mine


We have a pay as you go tax system. The IRS wants it's cut when you make the money. Each quarter, you must withhold at least 90% of what you owe. If you wait till then end of the year to pay, you could be subject to the underpayment penalty. Generally, you do not have to pay an underpayment penalty if either:
Your total tax is less than $1,000, or
You had no tax liability last year.

You may have lucked out or if you have an accountant do your return, he may have calculated the penalty and reduced your refund by it without you even knowing about it. I've been doing taxes for H&R Block since before we had computers, so I know what I am talking about.


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## just drive

As part timer. Half the deposit from Uber and lyft goes to a separate account. I will use that account to pay taxes. Then what's left is all mine, I don't know if it will be enough for a nice vacation Or a premium car wash..


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## No-tippers-suck

notting than a car wash sir.............. "not premium"


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## Liquid

Anyone know the answer on this? The car I used is leased under my wife's name. Can I write off the lease payment per month if I am using this car to Uber?


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## marketmark

My way of doing it...

I set 25% of each Uber "paycheck" aside for taxes at end of year.
I log ALL my miles driven and take the standard per mile deduction of .56/mile if I remember right...
Last year my tax bill for Uber income was about 10% of the total of my paychecks.
I talked to an accountant last year and this is what they recommended.
As far as quarterly vs. year end, my understanding is if your taxes due at the end of the year are over 10% of your total tax bill there will be a penalty.
My wife and I have other full time work and my ubering didn't trigger this, even got a refund...
I assume if driving for Uber makes up all or a significant part of your income you would need to pay quarterly much as a regular job takes money from each paycheck.

So for you 30% should more than cover it. If this is your only source of income or more than about 20% of what you make in a year I would assume you will need to send in money quarterly.
You could either read up on federal and state tax rules that apply to you, or you can pay an accountant to do that reading for you.

My advice is that you are better off setting too much aside each week or overpaying quarterly than not enough. Better to have extra at tax time vs. having to scramble for cash...


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## Older Chauffeur

To the OP,
From what I have read here about the low pay I don't think you're going to make enough to make a difference on your tax return. You can increase your withholding on your full time pay, as was suggested. But if you already get a refund every year, that may not be necessary. You might just have that refund reduced slightly. I don't think you have to worry about quarterly payments in your situation, assuming you (and your husband, if any) are subject to payroll witholding. The IRS regs let you off the hook if they already have at least the amount of last year's tax, or 90% of the tax for this year. (DISCLAIMER: this is from memory, and I am not a tax pro, nor do I play one on tv) Writing off the legitimate expenses, including the mileage from your log at $.56 per mile will probably give you very little if any taxable income on Schedule C. You may owe FICA on self employment income. I agree that you should consult a tax professional. I use a CPA and follow his rules and requirements for back up material, such as a log with starting and ending odometer readings, and receipts for other expenses.
As some have said in other threads, you are picking up some extra cash now at the expense of decreasing your car's value. Adding heavily to your annual mileage will cause your car to depreciate faster, and increase your maintenance and repair costs. There is also the ongoing question about insurance, and how your insurer will react to you working for Uber. If you read some of the other threads you will gain some valuable insight. Good luck to you.


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## gman

Older Chauffeur said:


> To the OP,
> From what I have read here about the low pay I don't think you're going to make enough to make a difference on your tax return. You can increase your withholding on your full time pay, as was suggested. But if you already get a refund every year, that may not be necessary. You might just have that refund reduced slightly. I don't think you have to worry about quarterly payments in your situation, assuming you (and your husband, if any) are subject to payroll witholding. The IRS regs let you off the hook if they already have at least the amount of last year's tax, or 90% of the tax for this year. (DISCLAIMER: this is from memory, and I am not a tax pro, nor do I play one on tv) Writing off the legitimate expenses, including the mileage from your log at $.56 per mile will probably give you very little if any taxable income on Schedule C. You may owe FICA on self employment income. I agree that you should consult a tax professional. I use a CPA and follow his rules and requirements for back up material, such as a log with starting and ending odometer readings, and receipts for other expenses.
> As some have said in other threads, you are picking up some extra cash now at the expense of decreasing your car's value. Adding heavily to your annual mileage will cause your car to depreciate faster, and increase your maintenance and repair costs. There is also the ongoing question about insurance, and how your insurer will react to you working for Uber. If you read some of the other threads you will gain some valuable insight. Good luck to you.


 If you have two cars and are only using the second car when ubering (wink, wink), then a log is not necessary for that car, correct? Just write off 100% of the miles?


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## Older Chauffeur

My understanding is that you need a mileage log in order to claim the deduction. You could wing it, but if you are ever audited, you might have a problem. Maybe if you were a plumber or other craftsman with a work truck it would be a different story. I haven't had that issue come up, but I would run it by a tax pro, which, as I have pointed out, I am not.


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## uberdriver

UberTaxPro said:


> yes, tolls and parking can be deducted in addition to the standard mileage rate but not car washes! Isn't that crazy? Car washes shouldn't be considered maintenance. We don't wash the car to keep it running...we wash em to keep the pax happy and get good ratings. Its like buying water bottles and phone chargers which are deductible...Oh well the irs disagrees with me and they can be harder to deal with than Uber!


Can you be more specific about why you state that the IRS disagrees with car washes being an additional expense to the standard mileage for Uber-type of driving ? Did you get a case where the IRS disallowed car washes as a deduction on top of the $0.56 for Uber type of driving ? As you say, Uber drivers spend on car washes not because they want to keep their car in "normal" condition. they over spend on car washes compared to a regular private driver because they need to keep their ratings up or risk being deactivated.


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