# To report Uber income as a loss?



## marlon

Hi, Guys:

Last year I made a total of $7000 from Uber driving with a new Prius car, before the Uber fee. Do you think it is possible to report it as a loss after deducting all expenses?

As a Uber driver, do you guys overall pay tax at all? I meant if everything is considered, there is not much profits left. How do you think about this and how do you file your tax return? This is my first time to do this for Uber.

Thank you.


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## UberTaxPro

if you have a loss report a loss, if you have a profit report a profit. just be sure to have all records either way.


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## Tequila Jake

Uber reports everything it receives as revenue to you. Fare, rider fee, tolls, event fees, etc. On Schedule C, you will report all that as your total revenue. Under the various expense categories, subtract out Uber's commission, the rider fees, tolls, other fees.

Also subtract out your other expenses. Business mileage at the standard mileage rate or actual expenses method.

After subtracting all that it's reported over to your 1040 as a profit or loss.

If you have a profit, you also have to complete Schedule SE for reporting Social Security earnings.


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## marlon

How to report the business mileage? Uber only provides " On-trip mileage only. Additional mileage may be deductible". That's quite a small number. I think the actual mileages used for Uber should be several times large. 

Also, if I take a standard mileage deduction, can I still deduct other expenses, such as the maintenance and depreciation of the vehicle? Thank you.


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## Tequila Jake

marlon said:


> How to report the business mileage? Uber only provides " On-trip mileage only. Additional mileage may be deductible". That's quite a small number. I think the actual mileages used for Uber should be several times large.
> 
> Also, if I take a standard mileage deduction, can I still deduct other expenses, such as the maintenance and depreciation of the vehicle? Thank you.


Yes, your deductible mileage should be much larger. You should keep a daily log of your odometer reading for tracking. This will be necessary if the IRS questions your deduction.

If you take the standard deduction you can not deduct mileage or depreciation.

If you take actual expenses, they'll have to be apportioned based on the business mile percentage so again, you'll need the detailed mileage logs.


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## Older Chauffeur

I think Tequila Jake meant to say that if you take the standard mileage deduction, you can't deduct maintenance or depreciation, as you asked about.


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## Robert McLendon

Tequila Jake said:


> Yes, your deductible mileage should be much larger. You should keep a daily log of your odometer reading for tracking. This will be necessary if the IRS questions your deduction.
> 
> If you take the standard deduction you can not deduct mileage or depreciation.
> 
> If you take actual expenses, they'll have to be apportioned based on the business mile percentage so again, you'll need the detailed mileage logs.


This all makes sense. Do you run into trouble with having Uber classified as a hobby if you declare as loss for more than 3 years?


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## UberTaxPro

Robert McLendon said:


> This all makes sense. Do you run into trouble with having Uber classified as a hobby if you declare as loss for more than 3 years?


While it's true that if your business does not turn a profit in 3 of the last 5 years the IRS might begin to suspect you have a hobby and not a business, it's not however the single factor in their decision. Even if your business never turns a profit you can still keep it a business under the tax law by being proactive and meeting as many of the IRS's requirements as possible. Along with this comes the ability to offset other income with the business losses. If your business comes under the IRS's hobby spotlight there are nine factors that will be evaluated. The nine factors are:

1. The manner in which the taxpayer carries on the activity. Do they complete accurate books? Were records used to improve performance?

2. The expertise of the taxpayer or his advisers. Did they consult with experts?

3. The time and effort expended by the taxpayer in carrying on the activity. Do they devote much of their personal time and effort?

4. The expectation that the assets used in the activity may appreciate in value. Is the plan to generate profits through asset appreciation?

5. The success of the taxpayer in carrying on similar or dissimilar activities.

6. The taxpayer's history of income or losses with respect to the activity.

7. The amount of occasional profits. Even a single year of profits can be a strong indication that an activity is not a hobby.

8. The financial status of the taxpayer.

9. Does the activity lack elements of personal pleasure or recreation? If the activity has large personal elements it is indicative of a hobby.

As factors 4 thru 9 are out of most business owners control, effort should be put into making sure your business complies with factors 1 thru 3. You don't have to have all nine, however the more the better. Generally, you should:


Treat your business as a business, keep records, and use those records to evaluate your business.
 Seek knowledge and professional advice about your business
 Keep time records of your participation in the business.


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## Mars Troll Number 4

Robert McLendon said:


> This all makes sense. Do you run into trouble with having Uber classified as a hobby if you declare as loss for more than 3 years?


I'll give you an example of a Hobby,

I have a race car... I sink money into it... I race it, I have a sponsor... He sticks temporary logos on the car on race day...

He pays me...

Profit...

LOL!

It's a hobby for sure...

doing uber is supposed to be profitible... the fact that your losing money puts you in the 96% of uber drivers that quit within 1 year.


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## jester121

Indeed. Even a dullard IRS agent would never confuse Uber driving with a hobby.


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## Harry Seaward

UberTaxPro said:


> While it's true that if your business does not turn a profit in 3 of the last 5 years the IRS might begin to suspect you have a hobby and not a business, it's not however the single factor in their decision. Even if your business never turns a profit you can still keep it a business under the tax law by being proactive and meeting as many of the IRS's requirements as possible. Along with this comes the ability to offset other income with the business losses. If your business comes under the IRS's hobby spotlight there are nine factors that will be evaluated. The nine factors are:
> 
> 1. The manner in which the taxpayer carries on the activity. Do they complete accurate books? Were records used to improve performance?
> 
> 2. The expertise of the taxpayer or his advisers. Did they consult with experts?
> 
> 3. The time and effort expended by the taxpayer in carrying on the activity. Do they devote much of their personal time and effort?
> 
> 4. The expectation that the assets used in the activity may appreciate in value. Is the plan to generate profits through asset appreciation?
> 
> 5. The success of the taxpayer in carrying on similar or dissimilar activities.
> 
> 6. The taxpayer's history of income or losses with respect to the activity.
> 
> 7. The amount of occasional profits. Even a single year of profits can be a strong indication that an activity is not a hobby.
> 
> 8. The financial status of the taxpayer.
> 
> 9. Does the activity lack elements of personal pleasure or recreation? If the activity has large personal elements it is indicative of a hobby.
> 
> As factors 4 thru 9 are out of most business owners control, effort should be put into making sure your business complies with factors 1 thru 3. You don't have to have all nine, however the more the better. Generally, you should:
> 
> 
> Treat your business as a business, keep records, and use those records to evaluate your business.
> Seek knowledge and professional advice about your business
> Keep time records of your participation in the business.


Thanks for posting this.
I drove full time for about 6 months this year. I went back to a 9-5. Now I turn the app on for my commute to and from work. This year won't be a problem for taxes as I will have over $13k 'income' to report (will still be a loss due to mileage, however). My question is for upcoming years. If I continue looking for rides during my commute to work but get very few, will the high mileage/low income ratio cause the IRS start snooping around for hobby status right away, or will they see if I make any profit in the next 4 years? And when they declare hobby status, is it retroactive or only for the current filing year?


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## UberTaxPro

Harry Seaward said:


> Thanks for posting this.
> I drove full time for about 6 months this year. I went back to a 9-5. Now I turn the app on for my commute to and from work. This year won't be a problem for taxes as I will have over $13k 'income' to report (will still be a loss due to mileage, however). My question is for upcoming years. If I continue looking for rides during my commute to work but get very few, will the high mileage/low income ratio cause the IRS start snooping around for hobby status right away, or will they see if I make any profit in the next 4 years? And when they declare hobby status, is it retroactive or only for the current filing year?


Nobody knows for sure what the IRS might due but in my opinion I don't think the IRS would go after an Uber driver with the hobby tax issues. I'm with jester121 when he/she said "Even a dullard IRS agent would never confuse Uber driving with a hobby." However, schedule c filers are more at risk of being audited in general. So if you're using your schedule c losses to reduce the taxes on your 9-5 income be sure to have all your ducks in order with your record keeping. It's perfectly legal to use your schedule c losses to offset other income but the bookkeeping responsibility is 100% yours. Usually, the IRS will stay on the year they audit you for. If something comes out during the audit about previous years they've been known to look back 3 years. If they suspect fraud or something criminal they can look back as many years as they want.


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## Harry Seaward

UberTaxPro said:


> Nobody knows for sure what the IRS might due but in my opinion I don't think the IRS would go after an Uber driver with the hobby tax issues. I'm with jester121 when he/she said "Even a dullard IRS agent would never confuse Uber driving with a hobby." However, schedule c filers are more at risk of being audited in general. So if you're using your schedule c losses to reduce the taxes on your 9-5 income be sure to have all your ducks in order with your record keeping. It's perfectly legal to use your schedule c losses to offset other income but the bookkeeping responsibility is 100% yours. Usually, the IRS will stay on the year they audit you for. If something comes out during the audit about previous years they've been known to look back 3 years. If they suspect fraud or something criminal they can look back as many years as they want.


All of my mileage is tracked electronically via MileIQ. I get monthly statements of my mileage and at any time can get a spreadsheet showing every single trip including, date/time and origin/destination, so I don't see the record keeping being an issue. I just wondered if they would balk at $5k in mileage deductions when my Schedule C has little-to-no income.


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## UberTaxPro

Harry Seaward said:


> All of my mileage is tracked electronically via MileIQ. I get monthly statements of my mileage and at any time can get a spreadsheet showing every single trip including, date/time and origin/destination, so I don't see the record keeping being an issue. I just wondered if they would balk at $5k in mileage deductions when my Schedule C has little-to-no income.


As long as you can document your expenses and business efforts with legitimate records let them balk all they want. The question you should be asking yourself is can you document the $5k deductions with legitimate business records. If you can, go for it. If you can't produce the records you'll be asking for trouble. Never take deductions because you think the risk of audit (balking) is low. Schedule C filers with losses offsetting W2 income are audited substantially more than other taxpayers.


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## scrooge64

I have been a part-time driver since Labor Day. During these past 4 months, I have earned $3K in direct bank deposits. I have kept track of my mileage with MileIQ, and have racked up $2750 worth of deductible mileage. The cost of my MileIQ app is $6.47/month ($5.99/month + 8% sales tax). If I claim half of my monthly cell phone bill, that comes to $29/month. The result is that I am left with a taxable profit of $58 for this activity.

If I look at my income and expenses differently, by considering actual automotive expenses, I bought $710 worth of gas (with my 10 cent/gallon Smart Pay app), spent $260 on car washes (including a $160 unlimited pass for 90 days for this winter), and a $500 car servicing (oil change, new battery and brake work), I netted ~$1500. This does not count depreciation, though, as I have 8000 more miles on my car compared to an estimated 2500 miles I would have put on my car if I did not start Uber/Lyft driving.


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