# Mileage deduction almost as much as earnings???



## Bandit704 (Sep 22, 2015)

Could I get some help here. If my mileage deduction is $40 and my earnings are $45, do I only pay taxes on $5. Only been driving part-time very little over the past few years but want to quit my full-time job.. not real sure how the mileage deduction and paying taxes on earnings work. I had a friend do my taxes the last few years when I claimed Uber earnings. Thanks for any help.


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## Wolfgang Faust (Aug 2, 2018)

Correct.
Your taxable income would be $5.


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## Uber's Guber (Oct 22, 2017)

Think of it this way*:*
You're trading vehicle-depreciation for a paycheck.


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## Bandit704 (Sep 22, 2015)

Thank you both very much


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## jgiun1 (Oct 16, 2017)

Bandit704 said:


> Thank you both very much


Just can't show loss for more than two years or the IRS will ***** slap and turn you're gig into a hobby.


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

Your math looks right from what i know,

The issue is that uber's pay is bottom of the bucket for being paid to use your own vehicle.

Pappa john's pays hourly + mileage reimbursement plus tips..

Once you add all that up it's close to $20 an hour.


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## Seamus (Jun 21, 2018)

Bandit704 said:


> Could I get some help here. If my mileage deduction is $40 and my earnings are $45, do I only pay taxes on $5. Only been driving part-time very little over the past few years but want to quit my full-time job.. not real sure how the mileage deduction and paying taxes on earnings work. I had a friend do my taxes the last few years when I claimed Uber earnings. Thanks for any help.


should be LESS than $5 by the time you factor your other expenses such as cellphone, supplies, etc.etc..


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## SinTaxERROR (Jul 23, 2019)

jgiun1 said:


> Just can't show loss for more than two years or the IRS will @@@@@ slap and turn you're gig into a hobby.


I thought a loss can be shown for 5 years. A loss can also be carried for 20 years (rolled over) if I am not mistaken.


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## WAHN (May 6, 2019)

SinTaxERROR said:


> I thought a loss can be shown for 5 years. A loss can also be carried for 20 years (rolled over) if I am not mistaken.


Dear God, please, no fancy tax gymnastics.  We gig workers aren't equipped for that.

https://www.irs.gov/publications/p536


Bandit704 said:


> Only been driving part-time very little over the past few years but want to quit my full-time job.


You gotta think on that one very hard. It's a major risk, especially if you have anybody other than yourself depending on you.


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## Seamus (Jun 21, 2018)

WAHN said:


> You gotta think on that one very hard.


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## Older Chauffeur (Oct 16, 2014)

Maybe you already do this, but you need to keep a mileage log to back up your mileage deduction claim.


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## tohunt4me (Nov 23, 2015)

Bandit704 said:


> Could I get some help here. If my mileage deduction is $40 and my earnings are $45, do I only pay taxes on $5. Only been driving part-time very little over the past few years but want to quit my full-time job.. not real sure how the mileage deduction and paying taxes on earnings work. I had a friend do my taxes the last few years when I claimed Uber earnings. Thanks for any help.


you are doing it WRONG !

Deductions should be MORE than earnings !



jgiun1 said:


> Just can't show loss for more than two years or the IRS will @@@@@ slap and turn you're gig into a hobby.


3 years.
Im good.took a year off.


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## islanddriver (Apr 6, 2018)

All you need to do do is show $1.00 profit peryear and your not a hobby.


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## doyousensehumor (Apr 13, 2015)

tohunt4me said:


> you are doing it WRONG !
> 
> Deductions should be MORE than earnings !


That is correct. My deductions last year were higher than income.


islanddriver said:


> All you need to do do is show $1.00 profit peryear and your not a hobby.


That is my understanding.

AFAIK, you don't have to claim ALL of your expences.

I record everything, in case of audit, you may need more deductions.


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## Older Chauffeur (Oct 16, 2014)

doyousensehumor said:


> AFAIK, you don't have to claim ALL of your expences.


From the IRS on that subject:
A self-employed individual is *required* to report *all* business income and deduct *all* allowable business *expenses* (see above for source). They *do* not *have* the option of reporting what is most beneficial. ... If your client insists on not *claiming all expenses*, due diligence dictates *you do* not prepare the return.Aug 3, 2018


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## doyousensehumor (Apr 13, 2015)

Older Chauffeur said:


> From the IRS on that subject:
> A self-employed individual is *required* to report *all* business income and deduct *all* allowable business *expenses* (see above for source). They *do* not *have* the option of reporting what is most beneficial. ... If your client insists on not *claiming all expenses*, due diligence dictates *you do* not prepare the return.Aug 3, 2018
> View attachment 342188
> View attachment 342188
> ...


I stand corrected. Thanks for the info.


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## Zaarc (Jan 21, 2019)

Looks like you are driving too many dead miles.


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## lyft_rat (Jul 1, 2019)

Bandit704 said:


> Could I get some help here. If my mileage deduction is $40 and my earnings are $45, do I only pay taxes on $5. Only been driving part-time very little over the past few years but want to quit my full-time job.. not real sure how the mileage deduction and paying taxes on earnings work. I had a friend do my taxes the last few years when I claimed Uber earnings. Thanks for any help.


If you are tax free, or nearly so, you either really did not make much or you generously padded your miles reported or otherwise cheated (for example, not reporting cash tips). It is the American way.


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## Ssgcraig (Jul 8, 2015)

Bandit704 said:


> Could I get some help here. If my mileage deduction is $40 and my earnings are $45, do I only pay taxes on $5. Only been driving part-time very little over the past few years but want to quit my full-time job.. not real sure how the mileage deduction and paying taxes on earnings work. I had a friend do my taxes the last few years when I claimed Uber earnings. Thanks for any help.


Your standard mileage deduction is $.58 a mile versus itemizing everything. It would depend on your market in the translation to what percentage of earnings versus taxable income.


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## UberTaxPro (Oct 3, 2014)

Bandit704 said:


> Could I get some help here. If my mileage deduction is $40 and my earnings are $45, do I only pay taxes on $5. Only been driving part-time very little over the past few years but want to quit my full-time job.. not real sure how the mileage deduction and paying taxes on earnings work. I had a friend do my taxes the last few years when I claimed Uber earnings. Thanks for any help.


As a sole proprietor you pay taxes on the "net" profit of your business. Unless you have other deductions like cell phone expenses etc... you'd pay tax on the $5


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

Ssgcraig said:


> Your standard mileage deduction is $.58 a mile versus itemizing everything. It would depend on your market in the translation to what percentage of earnings versus taxable income.


At Orlando rates.,.

For every unpaid mile you don't take a customer it completely wipes out the taxable profit from...

58 paid miles (at 75 mph)
19.33 paid miles (at 60 mph)
5.27 paid miles (at 20 mph)


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## raisedoncereal (Jun 5, 2019)

How will the IRS be able to know/differentiate which vehicle you used for ride sharing? Say you rent a car for r/s but also bought a POS that you claimed you used to do r/s. Will they be able to tell whether or not you used the rental primarily?


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## islanddriver (Apr 6, 2018)

By the milage on the car


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## UberTaxPro (Oct 3, 2014)

raisedoncereal said:


> How will the IRS be able to know/differentiate which vehicle you used for ride sharing? Say you rent a car for r/s but also bought a POS that you claimed you used to do r/s. Will they be able to tell whether or not you used the rental primarily?


Unfortunately the IRS doesn't have to know/differentiate. It is your responsibility to make it clear for them by verifiable mileage log(s).


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## FLKeys (Dec 27, 2018)

jgiun1 said:


> Just can't show loss for more than two years or the IRS will @@@@@ slap and turn you're gig into a hobby.


Pretty sure this is incorrect. While it is the first thing that is looked at when determining a business vs a hobby, there are other determining factors that differentiate a business from a hobby.

Some markets pay drivers less than the standard mileage rate, so in those cases it is impossible to make a taxable profit.

From the IRS

Question
How do you distinguish between a business and a hobby?
Answer
In making the distinction between a hobby or business activity, take into account all facts and circumstances with respect to the activity. A hobby activity is done mainly for recreation or pleasure. No one factor alone is decisive. You must generally consider these factors in determining whether an activity is a business engaged in making a profit:

Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.
Whether the time and effort you put into the activity indicate you intend to make it profitable.
Whether you depend on income from the activity for your livelihood.
Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
Whether you change your methods of operation in an attempt to improve profitability.
Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
Whether you were successful in making a profit in similar activities in the past.
Whether the activity makes a profit in some years and how much profit it makes.
Whether you can expect to make a future profit from the appreciation of the assets used in the activity.
You may find more information on this topic in section 1.183-2 (b) of the Federal Tax Regulations.


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