# Hobby vs. Side Gig ?



## Jimmy44 (Jan 12, 2020)

Was just wondering how deep the IRS digs into this aspect of a business like rideshare.
Will they take into effect the pandemic and gas prices.


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## 25rides7daysaweek (Nov 20, 2017)

Jimmy44 said:


> Was just wondering how deep the IRS digs into this aspect of a business like rideshare.
> Will they take into effect the pandemic and gas prices.


It would be safe to assume the irs is getting a copy your 1099. My accountant was saying too many write offs could trigger an audit. I been making pretty good money but also pay my taxes...


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## Jimmy44 (Jan 12, 2020)

25rides7daysaweek said:


> It would be safe to assume the irs is getting a copy your 1099. My accountant was saying too many write offs could trigger an audit. I been making pretty good money but also pay my taxes...


You misinterpreted my entire post


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## Amsoil Uber Connect (Jan 14, 2015)

I don't believe so, however any documents like 1099's , they will be looking for you to self assess yourself on those to see if there is a match. Over stating your deductions may trigger them to look more closely.

There computer has first look.


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## Jimmy44 (Jan 12, 2020)

Amsoil Uber Connect said:


> I don't believe so, however any documents like 1099's , they will be looking for you to self assess yourself on those to see if there is a match. Over stating your deductions may trigger them to look more closely.
> 
> There computer has first look.


Must be my fault for people misinterpreting my question.
I just wanted to know if they would consider COVID factors in deciding if rideshare was a side hustle or a hoppy.


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## TobyD (Mar 14, 2021)

It doesn’t matter if it’s a side hustle to you, or a hobby. The IRS taxes income, regardless of if it was fun to you to earn it. If your hobby generates income, it’s taxable income. So call it whatever you want, but you have to pay taxes on it.


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## Amsoil Uber Connect (Jan 14, 2015)

Jimmy44 said:


> Must be my fault for people misinterpreting my question.
> I just wanted to know if they would consider COVID factors in deciding if rideshare was a side hustle or a hoppy.


They treat it like business. Hobby ? , that ship has sailed long ago.

Covid ? If were collecting EDD , here in CA. we are given a 10K deduction automaticly.



TobyD said:


> It doesn’t matter if it’s a side hustle to you, or a hobby. The IRS taxes income, regardless of if it was fun to you to earn it. If your hobby generates income, it’s taxable income. So call it whatever you want, but you have to pay taxes on it.


Only if it is a Revenue Taxable activity. And only if earnings were over 600 $.


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

TobyD said:


> It doesn’t matter if it’s a side hustle to you, or a hobby. The IRS taxes income, regardless of if it was fun to you to earn it. If your hobby generates income, it’s taxable income. So call it whatever you want, but you have to pay taxes on it.


I agree with @TobyD.


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

The IRS may increase the per mile rate for 2022. If they feel like it.


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## Michael - Cleveland (Jan 1, 2015)

In the US, business (or household employer) who pays an individual (one person) $600 or more in a calendar year for products or services is required by law to file a 1099 misc income form (of one flavor or another - there are several different types) with the IRS and provide a copy to the individual. 

The IRS makes no distinction for how the recipient of the money considers the service or product, be it a hobby, side-gig or full-time work.

So, yes, if you pay the same babysitter all year to watch your kids and they get $600/yr or more from you - you required to file a 1099.

The filing of a 1099 only shows that money was paid from one entity to another. It does not mean that the money received is classified in anyway other than that it is 'miscellaneous income'. It may very well be taxable - or the tax liability may completely offset by available deductions or tax credits that apply.


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## Trafficat (Dec 19, 2016)

TobyD said:


> It doesn’t matter if it’s a side hustle to you, or a hobby. The IRS taxes income, regardless of if it was fun to you to earn it. If your hobby generates income, it’s taxable income. So call it whatever you want, but you have to pay taxes on it.


Actually it matters a great deal. Sure hobby income is taxed... But there is no standard mileage deduction for a hobby. If IRS found rideshare to be a hobby it would quickly become a ghost town.

Without government subsidy, drivers cannot afford to do rideshare.


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## Jimmy44 (Jan 12, 2020)

Trafficat said:


> Actually it matters a great deal. Sure hobby income is taxed... But there is no standard mileage deduction for a hobby. If IRS found rideshare to be a hobby it would quickly become a ghost town.
> 
> Without government subsidy, drivers cannot afford to do rideshare.


Now that was my original question and concer


Trafficat said:


> Actually it matters a great deal. Sure hobby income is taxed... But there is no standard mileage deduction for a hobby. If IRS found rideshare to be a hobby it would quickly become a ghost town.
> 
> Without government subsidy, drivers cannot afford to do rideshare.


Thank you for addressing my concern when I initially posted.


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## Michael - Cleveland (Jan 1, 2015)

Trafficat said:


> Without government subsidy, drivers cannot afford to do rideshare.


*You are absolutely right!! *
But, I have to take issue with the 'subsidy' bit. Just because certain revenue is non-taxble (ie some business expenses) and the fact that the government allows for easier tracking of expenses for the business use of a vehicle (vis-à-vis the std mileage deduction) instead of having to track all mileage and every penny spent and have to calculate depreciation does not make that a government subsidy. It is simply an amount of income on which you do not owe income taxes. It's not some handout from the government/public. In the US, many, if not most, business expenses are not taxed as income (for obvious reasons). lol!


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## Michael - Cleveland (Jan 1, 2015)

Jimmy44 said:


> Now that was my original question and concer
> Thank you for addressing my concern when I initially posted.


Man, I sure wish your original question had actually just asked:
"_If I drive as a hobby with no concern for being profitable, can I still take the std mileage deduction?_"
Would have made it a lot easier on us! lol

In any case, it's far more complex an issue than we're making out to be. 
As I mentioned, the IRS couldn't care less if something is a hobby or a vocation. They are about the flow of money. 

If you lose money on your business of rideshare for more than 2 consecutive years (or something like that) then the IRS can disallow business expense deductions on the endeavor and claim that since you never had the intention (or ability) to make a profit, it is not a legitimate business enterprise. 

Conversely, if your hobby of antique car restoration turns into a money exchanging enterprise because you end up selling Ford Model As and Studebakers for $$, then your hobby is now a business and you can deduct expenses and pay taxes on net income from the business.


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## Jimmy44 (Jan 12, 2020)

Michael - Cleveland said:


> Man, I sure wish your original question had actually just asked:
> "_If I drive as a hobby with no concern for being profitable, can I still take the std mileage deduction?_"
> Would have made it a lot easier on us! lol
> 
> ...


Does anyone know of any rideshare driver being denied mileage deduction because of his rideshare job being a hobby ?


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## bobby747 (Dec 29, 2015)

Jimmy44 said:


> Must be my fault for people misinterpreting my question.
> I just wanted to know if they would consider COVID factors in deciding if rideshare was a side hustle or a hoppy.


no, income- expenses - write off's taxes. no breaks that i know of. if you are a weekend warrior and get alot of surge with low miles you owe. in my case big income low miles. actual duct. i will owe..


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## Michael - Cleveland (Jan 1, 2015)

Jimmy44 said:


> Does anyone know of any rideshare driver being denied mileage deduction because of his rideshare job being a hobby ?


*Here are nine things taxpayer must consider when determining if an activity is a hobby or a business:*

Whether the activity is carried out in a businesslike manner and the taxpayer maintains complete and accurate books and records.

Whether the time and effort the taxpayer puts into the activity show they intend to make it profitable.

Whether they depend on income from the activity for their livelihood.

Whether any losses are due to circumstances beyond the taxpayer's control or are normal for the startup phase of their type of business.

Whether they change methods of operation to improve profitability.

Whether the taxpayer and their advisors have the knowledge needed to carry out the activity as a successful business.

Whether the taxpayer was 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 the taxpayers can expect to make a future profit from the appreciation of the assets used in the activity.







Earning side income: Is it a hobby or a business? | Internal Revenue Service


Tax Tip 2020-108, August 25, 2020 — Whether it's something they've been doing for years or something they just started to make extra money, taxpayers must report income earned from hobbies in 2020 on next year's tax return.




www.irs.gov


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## Jimmy44 (Jan 12, 2020)

bobby747 said:


> no, income- expenses - write off's taxes. no breaks that i know of. if you are a weekend warrior and get alot of surge with low miles you owe. in my case big income low miles. actual duct. i will owe..


Very interesting I appreciate your well thought and knowledgeable input.


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## Jimmy44 (Jan 12, 2020)

Michael - Cleveland said:


> *Here are nine things taxpayer must consider when determining if an activity is a hobby or a business:*
> 
> Whether the activity is carried out in a businesslike manner and the taxpayer maintains complete and accurate books and records.
> Whether the time and effort the taxpayer puts into the activity show they intend to make it profitable.
> ...


Very informative and useful !
Thank You !


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## SkidRow (Nov 26, 2016)

Jimmy44 said:


> Was just wondering how deep the IRS digs into this aspect of a business like rideshare.
> Will they take into effect the pandemic and gas prices.


Who did your taxes last year? Your mother or Willy the Wino?
Income is what is taxed.
Doesn't matter where it came from (gambling, drugs, prostitution).
You made money, you owe.


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## Jimmy44 (Jan 12, 2020)

SkidRow said:


> Who did your taxes last year? Your mother or Willy the Wino?
> Income is what is taxed.
> Doesn't matter where it came from (gambling, drugs, prostitution).
> You made money, you owe.


You like many misinterpreted my question !
I did not mention income you did.
The question of job vs. hobby has tons of variables.


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## bobby747 (Dec 29, 2015)

Ask an accountant


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## Amsoil Uber Connect (Jan 14, 2015)

Stevie The magic Unicorn said:


> The IRS may increase the per mile rate for 2022. If they feel like it.


Hmm,... this brings up a question. First since the IRS is nothing more than an Enforcement arm of Congress and bills it pass' into law / via the Treasury Dept. ... I wonder who or which really controls the per mile rate ?


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## SkidRow (Nov 26, 2016)

Jimmy44 said:


> You like many misinterpreted my question !
> I did not mention income you did.
> The question of job vs. hobby has tons of variables.


That's why I mentioned drugs, prostitution and gambling.
You got your hobbies, I got mine.


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## Daisey77 (Jan 13, 2016)

Jimmy44 said:


> Was just wondering how deep the IRS digs into this aspect of a business like rideshare.
> Will they take into effect the pandemic and gas prices.


I think you have to be showing no profit for three years in a row before it starts becoming an issue


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## Jimmy44 (Jan 12, 2020)

Daisey77 said:


> I think you have to be showing no profit for three years in a row before it starts becoming an issue


Thanks Daisey !


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## Guido-TheKillerPimp (Jan 4, 2021)

Jimmy44 said:


> Must be my fault for people misinterpreting my question.
> I just wanted to know if they would consider COVID factors in deciding if rideshare was a side hustle or a hoppy.


What in the hell are you asking?


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## MarkinOrl (10 mo ago)

Jimmy44 said:


> Was just wondering how deep the IRS digs into this aspect of a business like rideshare.
> Will they take into effect the pandemic and gas prices.


I got a vehicle log from Staples. I record every gas purchase to include where, price per gallon and number of gallons. Just detail every business expense and it wont matter. Plus only claiming legit, recorded expenses will avoid an audit or minimize one.


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

MarkinOrl said:


> I got a vehicle log from Staples. I record every gas purchase to include where, price per gallon and number of gallons. Just detail every business expense and it wont matter. Plus only claiming legit, recorded expenses will avoid an audit or minimize one.


you still need a mileage log.

Also the biggest issue is that some of your expenses are less tangible. let's say for instance that 1.5 years after you quit driving for uber, so like 2.5 year from now... your suspension finally gives out and needs $1,295 worth of repair work to get the car back on the road.

How do you go about writing off that repair 2.5 years from now? You quit driving years before, even thou 90% of the miles you _ever_ drove that car were for ridesharing.

using actual expenses is a ROYAL MESS because of these issues. Now a business owner has less of a mess on his hands because he will use cars only for business, thus actual expenses are much easier to tie to business use.

And you still need a mileage log anyway. Might as well just keep a good mileage log and use the standard mileage rate.


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## Jimmy44 (Jan 12, 2020)

Stevie The magic Unicorn said:


> you still need a mileage log.
> 
> Also the biggest issue is that some of your expenses are less tangible. let's say for instance that 1.5 years after you quit driving for uber, so like 2.5 year from now... your suspension finally gives out and needs $1,295 worth of repair work to get the car back on the road.
> 
> ...


If you use the mileage deduction there is not much more you can use.


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## Amsoil Uber Connect (Jan 14, 2015)

Stevie The magic Unicorn said:


> How do you go about writing off that repair 2.5 years from now? You quit driving years before, even thou 90% of the miles you _ever_ drove that car were for ridesharing.


File a 1040 X for that year. It is an Amended return. Probably not something one would want to do just for that.


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