# Deducting 20% Uber/Lyft Fee?



## good4life

As an independent contractor, I would think the 20% fee imposed by Uber and Lyft would be deductible on my Federal taxes. My rationale is that this fee is basically paid for the receipt of leads that need rides and as such, is an expense incurred for the purpose of generating income and therefore should be deductible. Why would this fee not be deductible or is it actually deductible?


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## LAuberX

Good point. It is described by uber as a software "fee"

It is taken out of the "fare" as well as the $1.00 safety b.s. tax/fee

Mileage + software fee + safety fees deductible??

Tax people please chime in!


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## gubernj

I completely agree! If you file a Schedule C, there's a line for "commissions and fees" . There's also an "Insurance" line. 

Thank you for pointing this out.


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## UberHammer

It is a "lead generation" service, so yes it is a deductible business expense.


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## drivingstories

Interesting. I wonder if Uber has tried doing the same thing in reverse. That is, they could claim that passengers are their customers and pay Uber $X for a ride. But in order to give the customers a ride, they need to pay "independent contractors" an 80% fee to furnish the service. I wouldn't buy the argument, but it wouldn't surprise me if Uber tried it.


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## drivingstories

UberHammer said:


> It is a "lead generation" service, so yes it is a deductible business expense.


I wish I had done my own taxes the last several years so that I can have a better handle on this issue. If the 20% is deductible, are we in fact better off claiming the total fare as income and deducting the 20%, versus claiming the 80% of the fare as total income and not worrying about the 20% as a deduction?


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## UberHammer

drivingstories said:


> I wish I had done my own taxes the last several years so that I can have a better handle on this issue. If the 20% is deductible, are we in fact better off claiming the total fare as income and deducting the 20%, versus claiming the 80% of the fare as total income and not worrying about the 20% as a deduction?


That's six of one, and half a dozen of the other. It's a wash. The tax burden would be the same.


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## LookyLou

drivingstories said:


> I wish I had done my own taxes the last several years so that I can have a better handle on this issue. If the 20% is deductible, are we in fact better off claiming the total fare as income and deducting the 20%, versus claiming the 80% of the fare as total income and not worrying about the 20% as a deduction?


You have hit the nail on the head.

If you are going to deduct the 20% commission, you will need to add the 20% to your income.

You don't claim the commission because you never had it as income and therefore have no tax liability on the 20% commission. Same for the safe ride fee.


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## ElectroFuzz

The 1099 you will receive from Uber does not include the 20% or any other fee charged by Uber.
It only includes your "net pay"
So it's already pre deducted, you can not deduct it a second time.


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## IndianaMachino

good4life said:


> As an independent contractor, I would think the 20% fee imposed by Uber and Lyft would be deductible on my Federal taxes. My rationale is that this fee is basically paid for the receipt of leads that need rides and as such, is an expense incurred for the purpose of generating income and therefore should be deductible. Why would this fee not be deductible or is it actually deductible?


Wouldn't you claim what is paid to you? So if you make $10,000 in fares, Uber takes $2,000 and only pays your $8,000. You only claim the $8,000. Is there some sort of benefit of claiming $10,000 and stating the $2,000 deduction? Also, deduct gas costs? Can we deduct the $.0575 per mile IRS deduction? So if we drive 100 miles a night... we can deduct $57.50?


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## LAuberX

The 1099 determines all....


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## ElectroFuzz

LAuberX said:


> The 1099 determines all....


Right, a copy of the 1099 Uber sends you is also sent to the IRS.
So make sure the numbers match.


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## LAuberX

In the early 80s "a friend" was a partner in a local company. one of his biggest customers sent a 1099 for a staggering figure and according to his accountant he owed nearly $12,000.00 in taxes.... so being young and dumb He never included that income on his tax return and for some reason the IRS never took notice....

probably not possible with today's new and improved IRS.


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## IndianaMachino

LAuberX said:


> In the early 80s "a friend" was a partner in a local company. one of his biggest customers sent a 1099 for a staggering figure and according to his accountant he owed nearly $12,000.00 in taxes.... so being young and dumb He never included that income on his tax return and for some reason the IRS never took notice....
> 
> probably not possible with today's new and improved IRS.


Definitely not possible anymore. The 1099 is entered into a database when sent to the IRS, indexed by your social security number (I felt weird giving Uber my SS#, but it is common for anyone who will issue you a 1099). So the cross check literally takes a nanosecond of computing time when they try to process your return.


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## Guest

IndianaMachino said:


> Wouldn't you claim what is paid to you? So if you make $10,000 in fares, Uber takes $2,000 and only pays your $8,000. You only claim the $8,000. Is there some sort of benefit of claiming $10,000 and stating the $2,000 deduction? Also, deduct gas costs? Can we deduct the $.0575 per mile IRS deduction? So if we drive 100 miles a night... we can deduct $57.50?


As an Independent Contractor, your gross income is what Uber paid you. That is net of the 20% commission and net of the $1 Safety fee. For your example, you don't really make $10,000 in fares, Uber does. Uber likes to quote "their" fares when communicating to drivers to make them feel that they are making more money than they really are. Your real revenue for tax purposes (and in an economic sense too) is only $8,000.

In order to compute your net income, you have to deduct your business expenses from your revenues. Your two big options are to use actual business expenses for all items, or to use the standard mileage deduction which would encompass most expenses, and only use actual expenses for items that are not considered use of the vehicle (e.g. marketing materials you may have ordered). Please notice that the $0.575 per mile rate applies to calendar year 2015, i.e. for use of the vehicle during 2015. For the income tax return to be filed by April 15, 2015, which will report revenues and expenses that occurred during 2014, the rate is $0.56 per mile.


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## MoneyUber4

Your 1099 will show what Uber paid you for the whole year. *This cost is what you net from Uber after all their fees. 

Income $28,600 - Uber payments for the whole year.
Expenses - $4,980 Home office Expenses 
Communication -$780 Cellular 
Auto - Depreciation -$4,200
Auto - Maintenance - $2,071
Auto - Gasoline - $4,680
Any other Expenses - $1,250 
Left is $10,639 @ 20% Income Tax = 
$2,127.80 average driver will owe this year for business operation. 


Income $28,600.00 (man we are poor!) (I estimate average driver make $550 per week ($550.00 x 52 weeks per year = $28,600
Minus - $4,980 Your home office expenses (partial or whole cost of Internet cost ($185 x 12 months = $2,220 + partial electric bill ($120 x 12 months = $1,440) + Computer depreciated cost about $85.00 year + paper supplies about $75.00 year + Rent if any? - estimated $1,200 year)
Minus other expenses - Your cell about $65.00 X 12 months = $780.00 
Minus Auto expenses 
1) Auto depreciation minus $4,200 this year - ex auto value $21,000 *auto will be use for 5 years only - each year use is valued at $4,200 per year year ($21,000 / 5 years) 
2) Auto Maintenance & Repairs minus $2071 ( Oil change $210 + Car wash $351 + New tires $850 + brakes $450 + others $210) 
3) Fuel: Gasoline $4,680 (about $90 per week = $90 X 52 weeks = $4,680) 
I hope you have receipts for every expense saved and recorded.


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## Disgusted Driver

MoneyUber4 said:


> Your 1099 will show what Uber paid you for the whole year. *This cost is what you net from Uber after all their fees.
> 
> Auto - Depreciation -$4,200
> Auto - Maintenance - $2,071
> Auto - Gasoline - $4,680
> Minus Auto expenses
> 1) Auto depreciation minus $4,200 this year - ex auto value $21,000 *auto will be use for 5 years only - each year use is valued at $4,200 per year year ($21,000 / 5 years)
> 2) Auto Maintenance & Repairs minus $2071 ( Oil change $210 + Car wash $351 + New tires $850 + brakes $450 + others $210)
> 3) Fuel: Gasoline $4,680 (about $90 per week = $90 X 52 weeks = $4,680)
> I hope you have receipts for every expense saved and recorded.


You are correct in your approach however there is a second way. Instead of deducting actual auto expenses you can simply take the standard $.56 per mile deduction that the IRS allows. It's easier and quite possibly gives you a slightly larger deduction. The thing to remember is you can't do both. If you take the mileage then you can't deduct tires or insurance as well, it's included in the 56 cents. I find the mileage to be easier and more lucrative because I leave myself online as I am driving about town doing errands so the mileage is deductible because I'm working.


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## Fuzzyelvis

Disgusted Driver said:


> You are correct in your approach however there is a second way. Instead of deducting actual auto expenses you can simply take the standard $.56 per mile deduction that the IRS allows. It's easier and quite possibly gives you a slightly larger deduction. The thing to remember is you can't do both. If you take the mileage then you can't deduct tires or insurance as well, it's included in the 56 cents. I find the mileage to be easier and more lucrative because I leave myself online as I am driving about town doing errands so the mileage is deductible because I'm working.


Also all these electricity etc expenses someone is quoting won't fly. The IRS has come down harder on home offices. So trying to deduct part of your home as a business expense is much more difficult. For the phone you could deduct all of the phone you use from uber but if you use your own you can only deduct the business use. Used to be you could deduct the calls that were business as a percentage. Not sure how to work that with a data plan but I'm sure it is addressed somewhere now that smartphones are necessary. Now if you ONLY used the data for ubering it would all be deductible but who does that? 
Personally I have always found the mileage is the better way to go with car expenses and its easier too.
Oh all those bottles of water and mints that I DO NOT CARRY are deductible. I guess I could say that the bottled water I drink is being given to customers and deduct all my water and snacks that way....IF I were to lie.


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## MoneyUber4

Disgusted Driver said:


> You are correct in your approach however there is a second way. Instead of deducting actual auto expenses you can simply take the standard $.56 per mile deduction that the IRS allows. It's easier and quite possibly gives you a slightly larger deduction. The thing to remember is you can't do both. If you take the mileage then you can't deduct tires or insurance as well, it's included in the 56 cents. I find the mileage to be easier and more lucrative because I leave myself online as I am driving about town doing errands so the mileage is deductible because I'm working.


I understand. I usually run both system and I file the best legal return.


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## SuperDuperUber

MoneyUber4 said:


> I understand. I usually run both system and I file the best legal return.


What are you talking about? You can't do both mileage deduction and actual expenses. You are talking out of your ass.


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## scrurbscrud

Disgusted Driver said:


> You are correct in your approach however there is a second way. Instead of deducting actual auto expenses you can simply take the standard $.56 per mile deduction that the IRS allows. It's easier and quite possibly gives you a slightly larger deduction. The thing to remember is you can't do both. If you take the mileage then you can't deduct tires or insurance as well, it's included in the 56 cents. I find the mileage to be easier and more lucrative because I leave myself online as I am driving about town doing errands so the mileage is deductible because I'm working.


Actually you can take documented legit costs if they are 'actually' higher than the IRS allowance from what I understand. I haven't tried it in ride share but I have in another biz without repercussions.


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## MoneyUber4

SuperDuperUber said:


> What are you talking about? You can't do both mileage deduction and actual expenses. You are talking out of your ass.


Very good. That tell me that you know sh..t - What I said; You should run both scenarios and get the one that give you the best return.
But since you know sh..t. Ask you accountant or pay for some education on it.


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## Tommyo

Anyone receive a 2014 1099 Form yet from Uber/Rasier?


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## bfgray

SuperDuperUber said:


> What are you talking about? You can't do both mileage deduction and actual expenses. You are talking out of your ass.


I think @MoneyUber4 was saying to run the numbers for both scenarios to see which comes out higher, and submit that one (the higher of the two). If I'm understanding correctly, the suggestion was that one does the leg work on both to make sure you're choosing the smartest option.


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## DieselkW

As far as miles, you can count the miles driving to to the pax, as that is not "commuting". Your Uber documents will not support those miles, so if you're audited, you need to pencil whip a mileage log if you don't keep one.


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## makinthemagic

good4life said:


> As an independent contractor, I would think the 20% fee imposed by Uber and Lyft would be deductible on my Federal taxes. My rationale is that this fee is basically paid for the receipt of leads that need rides and as such, is an expense incurred for the purpose of generating income and therefore should be deductible. Why would this fee not be deductible or is it actually deductible?


It is absolutely deductible.


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## DieselkW

Deductible from what income? Your 1099 is going to have it "deducted" for you. You can't deduct it twice.

Using easy numbers: Your 1099 shows you "earned" $8000 based on $10000 in fares. The 20% of the income you never saw has already been deducted and you paid no taxes on that $2000 Uber helped themselves to.

You try and deduct that $2000 in fees Uber imposed from the $8000 in "earnings" you will find nastygrams from the IRS in your mailbox that won't go away and can't be ignored.


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## LAuberX

DieselkW said:


> Deductible from what income? Your 1099 is going to have it "deducted" for you. You can't deduct it twice.
> Using easy numbers: Your 1099 shows you "earned" $8000 based on $10000 in fares. The 20% of the income you never saw has already been deducted and you paid no taxes on that $2000 Uber helped themselves to.
> You try and deduct that $2000 in fees Uber imposed from the $8000 in "earnings" you will find nastygrams from the IRS in your mailbox that won't go away and can't be ignored.


Uber does not take it from the 1099K they issue, here is a note about it form turbotax:

Another thing Uber drivers need to be aware of is that the 1099-K (and 1099-MISC) you receive *shows the total amount that Uber collected for your rides*; it does *not *have their fees, commissions, safe rider fees or phone rental payments taken out. You need to *deduct* those as part of your business expenses along with the mileage you drove. If you didn't keep track of the mileage or the amounts Uber withheld (commissions etc) look on the 2014 Tax Information link on the payments page of your Uber driver account. There is a summary sheet linked at the bottom and it shows the fees they took out as well as the mileage for the trips (*your mileage may actually be more *as you drove around waiting for a hit.)


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## DieselkW

whoa.... thanks for the schooling in that... so does that mean Uber is not paying any tax on the income generated by TNC drivers? Nice trick.


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## UberDriverTaxExpert

Trust me this will not be overlooked by the IRS. Computer matching is used by the IRS to ensure that the number you file on your tax return match your 1099 MISC


Why in the world would you want to prepare your own taxes? Why risk an audit? Why are you not focusing on growing your business? Taking a loss (while legal) on a schedule C will increase your chance of an audit dramatically. You better have all your i's dotted and t's crossed. You have so many great tax options like possibly depreciating your vehicle OR setting up your own retirement plan OR getting advice that will help you plan for the future. Is it really a good idea to reduce all your earnings down to nothing just to get a refund OR not pay taxes? If you have the legit deductions then OK but one day you will apply for social security and receive $200 a month instead of $3000 a month. Work hard but smart. Hire a professional that knows your industry and can guide you into the future.


Imagine if you made $75,000 as an UBER driver and you were able to reduce your income by $12,500 and put this away for your retirement (Simple IRA)? Then add in your deductions....Your income could be reduced dramatically resulting in you owing little or no taxes and you are on your way to putting possibly $500,000 away over twenty years based on the right investments etc. (no guarantee on the $500k (bear markets) but the potential is there$250,000 investment plus profits over a twenty year period). Compounding interest etc.


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