# New Car For Uber?



## 142605 (Mar 4, 2018)

It seems everyone says that using a new car for Uber is really dumb... and I understand why. But someone was telling me that it can actually make sense tax-wise if you take the depreciation?

I'm not tax savy enough to understand what circumstance, if any, that would make sense but I am curious if anyone knows?


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## LoveBC (May 16, 2017)

New car for uber X only makes sense if you’re a part timer who is only driving enough to make the car payment. 

If you’re driving Uber for actual income a new car is the stupidest thing you could do.

In simplest terms:

At base UberX rates in Los Angeles. 79.5¢ per mile.

Assume 50% of the miles you drive are paid and 50% are dead miles.

This brings your actual pay to 39.75¢ per mile

Standard Depreciation on a vehicle is 54.5¢ per mile.

You are simply cashing out your cars value a little at a time. You are making zero actual profit.


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## 142605 (Mar 4, 2018)

LoveBC said:


> New car for uber X only makes sense if you're a part timer who is only driving enough to make the car payment.
> 
> If you're driving Uber for actual income a new car is the stupidest thing you could do.
> 
> ...


Hello - I was told if you use a business depreciation schedule for a new car _instead_ of a standard mile deduction that it changes the math significantly.


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## FrankLStanton (Oct 18, 2016)

The new law may have new exclusions or limits as to what you can/can not deduct. Generally, business people will lease as the business usage portion of the lease payment can be deducted and you preserve some cash flow over purchasing. Too many variables for a binary answer.


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## 142605 (Mar 4, 2018)

FrankLStanton said:


> The new law may have new exclusions or limits as to what you can/can not deduct. Generally, business people will lease as the business usage portion of the lease payment can be deducted and you preserve some cash flow over purchasing. Too many variables for a binary answer.


What do you mean by "business people"? Also, I was asking about buying not leasing, if that matters?


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## FrankLStanton (Oct 18, 2016)

Generally speaking, those looking for business deductions are 'business people'. My point was simply to note that business people that utilize a vehicle for work will lease vs purchase, traditionally speaking, 

I would suggest you seek the response from a tax professional to your purchase/depreciation question as there are a number of variables that have to be considered to determine if it makes sense.


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## 142605 (Mar 4, 2018)

FrankLStanton said:


> Generally speaking, those looking for business deductions are 'business people'. My point was simply to note that business people that utilize a vehicle for work will lease vs purchase, traditionally speaking,.


So anyone driving for Uber is a business person right? I still don't get what you meant.



FrankLStanton said:


> I would suggest you seek the response from a tax professional to your purchase/depreciation question as there are a number of variables that have to be considered to determine if it makes sense.


The reason I asked here instead of a tax professional is a) I don't have a tax professional and b) I figured this would apply to a lot of other forum participants... plus there appears to be a tax professional or two with specific knowledge hanging out here.


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## FrankLStanton (Oct 18, 2016)

I think you got your answers in the Tax forum. UberTaxPro is rarely off point.


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## stevenh1975 (Aug 4, 2015)

A tax deduction only makes sense if your income puts you into a higher income tax bracket. If you are making less than $50,700 (38,700 for 12% federal tax + 12,000 standard deduction) I would say don't bother with it.

There is a limit of depreciation. 
If you drove your car 100% for uber then you can deduct $11160 for you tax for the first year. 
And based on MACRS deduction table, the first year is 20% of your cars value so as long as your car is less than $55,800 you can take the full amount of tax benefit.


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## 142605 (Mar 4, 2018)

stevenh1975 said:


> A tax deduction only makes sense if your income puts you into a higher income tax bracket. If you are making less than $50,700 (38,700 for 12% federal tax + 12,000 standard deduction) I would say don't bother with it.
> 
> There is a limit of depreciation.
> If you drove your car 100% for uber then you can deduct $11160 for you tax for the first year.
> And based on MACRS deduction table, the first year is 20% of your cars value so as long as your car is less than $55,800 you can take the full amount of tax benefit.


Thanks. I make over that for my day job and drive my car 98% for Uber (I work at home). In fact I only bought the car for Uber after not having one for years. Does that change the math?


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## stevenh1975 (Aug 4, 2015)

Authority said:


> Thanks. I make over that for my day job and drive my car 98% for Uber (I work at home). In fact I only bought the car for Uber after not having one for years. Does that change the math?


I don't think it change that much since 98% equals to about 10,936.
Depends on how much you get day time, if you are in the higher bracket and you account for federal and state tax, the 10936 could land you somewhere around $4,600 in total tax saved. But don't take my word for it since I am not a CPA.

I too thinking about getting a new car for uber, just get the cheapest option.


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## 142605 (Mar 4, 2018)

stevenh1975 said:


> I don't think it change that much since 98% equals to about 10,936.
> Depends on how much you get day time, if you are in the higher bracket and you account for federal and state tax, the 10936 could land you somewhere around $4,600 in total tax saved. But don't take my word for it since I am not a CPA.
> 
> I too thinking about getting a new car for uber, just get the cheapest option.


I really don't know how this works but I feel like I'm going to owe a lot in taxes so if I can "lose" a lot on rideshare it might be worth it.


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## stevenh1975 (Aug 4, 2015)

Authority said:


> I really don't know how this works but I feel like I'm going to owe a lot in taxes so if I can "lose" a lot on rideshare it might be worth it.


What do you mean by you owe a lot of tax. You mean the tax you have to pay to make up the difference at end of year? Or the total tax you suppose to pay for the entire year.

So I was thinking about getting one of those plug-in cars, which would give me 7,500 tax credit, plus the deduction from new uber car that means I pay no tax for the whole year.


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## 142605 (Mar 4, 2018)

What I meant was, my other work is also 1099, hs no tax withheld, and no deductions. So I will owe a lot. So the more I can lose on rideshare the better right?


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## stevenh1975 (Aug 4, 2015)

Authority said:


> What I meant was, my other work is also 1099, hs no tax withheld, and no deductions. So I will owe a lot. So the more I can lose on rideshare the better right?


You better pay your quarter estimate tax otherwise u gonna end up with interest on your tax. To avoid that you can buy a new car and deduct the expense per depreciation chart. And hopefully you don't end up with enough tax liability that results in interest.


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## 142605 (Mar 4, 2018)

That’s a whole other can of worms... I have almost $100K in tax liens already.


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

Authority said:


> It seems everyone says that using a new car for Uber is really dumb... and I understand why. But someone was telling me that it can actually make sense tax-wise if you take the depreciation?
> 
> I'm not tax savy enough to understand what circumstance, if any, that would make sense but I am curious if anyone knows?


The most important reason why NOT is very simple.

A new car won't last 5 years on uber/lyft driving full time.

But but but... Toyota has a 60 month warranty

Well that 60 month warranty is only going to last... 10 months of full time driving. your 36 month bumper to bumper warranty is going to be dead in 4-5 months.

About the tax issue?

Technically you are correct, if one drove 70,000 miles you could write off $37,450. Enough to buy a NEW CAR.

That's the standard mileage rate, which you can use if your driving a 2018 Caddilac escalade or a 2003 dodge neon as an uber car.

I'm not joking either, the IRS would allow you to use the same deduction just based on the mileage.

THE NEXT PROBLEM.

if you drive 70,000 miles you arn't going to make $37,450. Most drivers owe no taxes in the first place, YUP.. Scruber/gryft drivers don't make enough to owe any taxes, by IRS standards they all lose money.

Which means it doesn't matter what kind of car you drive, because...

YOU WON'T PAY ANY TAXES ANYWAY!

This is the ideal car for uber in Orlando... $4,000-5500 (throwing out the idiot that's asking for 8,000) That's only $233-313 a month if you can keep it 18 month loan. (Which for used car working full time is about what i expect)

If i could actually make money doing uber here this is what i would get. 2005, 2 years left on it for uber, and by the time 2 years is over i'll have 10 years left.










A new one is 30,000

on a 3 year loan that's $846 a month.

But Mr Unicorn... I can get a 5 year loan that's only $541 a month!

No you can't. a new car is only going to last you 3-4 years tops Which is about 1-2 years shorter than a 5 year loan is going to continue for.

18 months- used car
36 months- new car

And that's only if you can afford to properly maintain said car.

Which i highly doubt.



Authority said:


> What I meant was, my other work is also 1099, hs no tax withheld, and no deductions. So I will owe a lot. So the more I can lose on rideshare the better right?


This is a fascinating problem you have....

More than likely you'll come close to breaking even... so it won't help much.


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## 142605 (Mar 4, 2018)

Stevie The magic Unicorn said:


> The most important reason why NOT is very simple.
> 
> A new car won't last 5 years on uber/lyft driving full time.


Irrelevant... if I write it off, why would I care?



Stevie The magic Unicorn said:


> About the tax issue?
> 
> Technically you are correct, if one drove 70,000 miles you could write off $37,450. Enough to buy a NEW CAR.
> 
> ...


Irrelevant. On a new car, it wouldn't be standard deduction.



Stevie The magic Unicorn said:


> THE NEXT PROBLEM.
> 
> if you drive 70,000 miles you arn't going to make $37,450. Most drivers owe no taxes in the first place, YUP.. Scruber/gryft drivers don't make enough to owe any taxes, by IRS standards they all lose money.
> 
> ...


Irrelevant. As I thought I stated, I owe significant taxes from other work.



Stevie The magic Unicorn said:


> This is the ideal car for uber in Orlando... $4,000-5500 (throwing out the idiot that's asking for 8,000) That's only $233-313 a month if you can keep it 18 month loan. (Which for used car working full time is about what i expect)
> 
> If i could actually make money doing uber here this is what i would get. 2005, 2 years left on it for uber, and by the time 2 years is over i'll have 10 years left.


In LA, I doubt people would get into a car like that, and tips would be impossible.


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## 142605 (Mar 4, 2018)

I'd like to add that I understand what you're saying and don't disagree with your conclusions, just that they don't apply to the situation I described.

If your ONLY tax liability is income from Uber, then I agree that there's probably no way a new car makes sense.

I am still not convinced that under the right circumstance it might not make sense.


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## oldfart (Dec 22, 2017)

It’s almost impossible to do something to show a paper loss on your taxes to save any significant money

More than likely you will suffer a real loss greater than your tax savings 

But at least you will be driving a new car for a while

Show us your numbers and if it makes sense, I’ll buy a new car and send you a nice thank you card


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## 142605 (Mar 4, 2018)

oldfart said:


> Show us your numbers and if it makes sense, I'll buy a new car and send you a nice thank you card


As I said, I concede that for most people, especially someone who's only income is rideshare, that it would not work. But for someone with sufficient tax liability and first year bonus depreciation it might make sense.

https://www.marketwatch.com/story/u...e-new-tax-law-is-good-news-for-you-2018-03-06

On the other hand... when autonomous vehicles hit the market will the value of cars plunge?


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

Authority said:


> In LA, I doubt people would get into a car like that, and tips would be impossible.


A. Tips are impossible in a 2018 caddilac escalade 99% of the time.

B. You don't know uber very well do you?
the 2005s i linked fall into the requirements for both uber and lyft. (a 2008 or 2010 would probably bet better tbh looking at LA requirements)

https://www.uber.com/drive/los-angeles/vehicle-requirements/


_*15-year-old vehicle or newer (2003 OR NEWER)*_
4-door vehicle
Good condition with no cosmetic damage
No commercial branding
Pass a vehicle inspection
https://www.lyft.com/driver-application-requirements/california

Vehicle Requirements


2004 or newer:
_*Los Angeles*_





Authority said:


> Irrelevant. On a new car, it wouldn't be standard deduction.


Umm... your VASTLY underestimating how many miles you can drive doing this)

In just 18-24 hours a week i can put in 360-600 deductible miles, which is $192-$321

or (working 50 weekends a year) $9,600- $16,050 per year.
*but keep in mind in most markets you'll never make that much even working full time, hence the perpetual tax hole most drivers are in*

Up to $16,000 in deductions in a single year working WEEKENDS... JUST WEEKENDS.. your depreciation on most cars will be nowhere near that.

Or working full time...
$936- 1,203 a WEEK

50 weeks a year...

$46,800- $60,150
*but keep in mind in most markets you'll never make that much even working full time, hence the perpetual tax hole most drivers are in*

That's MORE than you'll ever depreciate a car doing uber and lyft unless your using a car that's insane for the platform (Like a brand new $80,000 Tesla). But keep in mind full time your car is only going to last 3-4 years tops, even from brand spanking new. There's drivers who are on their 4th or 5th car since uber started up.

the per mile rate is actually a lot more than you would think.

for 200,000 miles it comes to $107,000 worth of deductions. A new car will easily last that long from zero miles. You should be able to get at least 250,000 miles out of it which should give you 200,000 deductible miles, OR 107,000. $107,000 is enough to buy/fuel and maintain a Toyota Sienna with another $15,000-$20,000 left over.


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## NOXDriver (Aug 12, 2018)

Stevie The magic Unicorn said:


> Technically you are correct, if one drove 70,000 miles you could write off $37,450. Enough to buy a NEW CAR.


This is a huge pile of BS.

You don't get $37,450 in cash. You get that amount to LOWER YOUR TAX PAYMENT (technically you lower your income, but its still not cash in your hand).

So if your Income was $47,450, you could use $37,450 to reduce your income to $10000 and pay taxes on that amount.

At no point to you 'get enough to buy a new car'. And the tax difference on $47k and $10k might be $6000?

Who in their right minds spends $37k to save $6000 on taxes? You've still SPENT $37,000!!!

Get REAL tax advice.. not the BS 'EXPENSE EVERYTHING!!!!' nonsense people spew out here.


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## 142605 (Mar 4, 2018)

Yeah he doesn’t seem to get it.

But in some cases when someone with a significant tax liability from other work the deductions could make it worth while. I’m still trying to figure out before the end of the year if that’s me.


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## NOXDriver (Aug 12, 2018)

Stevie The magic Unicorn said:


> Up to $16,000 in deductions in a single year working WEEKENDS... JUST WEEKENDS.. your depreciation on most cars will be nowhere near that.
> 
> Or working full time...
> $936- 1,203 a WEEK
> ...


Again this is FALSE.

You don't get $46,000-$60,150 IN CASH. You can REDUCE YOUR TAXABLE INCOME TO ZERO, but that's it.

Assume a driver makes $35,000 in 2017 is in the 15% tax bracket. You'd pay about $5k in taxes.

You can, AT MOST expense out $35,000 of income IF YOU ITEMIZE and end up with a tax bill on $0 of income.

So at most you can 'save' $5000 (or whatever you would normally have to pay).

At no point do you get a refund, at no point are you buying a new anything.

What kind of foolishness is it so spend $$$$ on a new caddie ($50k? $60k?) to save $5k in taxes???????


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## Older Chauffeur (Oct 16, 2014)

NOXDriver , post your original question in the taxes forum, where UberTaxPro will see it and help you out.


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## rideshare2870 (Nov 23, 2017)

Has anyone ever seen a janitor come out of a new Lexus truck? How about a fairly newish Lexus truck 7-8 years old? Yeah, me either. As a reflection of the 65 cents a mile, you should be driving a old Yaris, Civic, Camry, Corolla etc.


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## Older Chauffeur (Oct 16, 2014)

My apologies,  I addressed my post to NOXDriver instead of the OP, Authority. Still, the best tax advice is available in the taxes forum.


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## UberTaxPro (Oct 3, 2014)

Authority said:


> That's a whole other can of worms... I have almost $100K in tax liens already.


You'd be better off paying the liens than buying a new car.


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## NOXDriver (Aug 12, 2018)

Authority said:


> Yeah he doesn't seem to get it.
> 
> But in some cases when someone with a significant tax liability from other work the deductions could make it worth while. I'm still trying to figure out before the end of the year if that's me.


The amount of times where spending $37000 to 'save' $6000 on taxes makes sense is astronomically low. You would have to have some really complex (or shady) accounting going on for that to ever make sense.

Its a general (but almost always correct) statement to say: you cannot expense your tax problems away.


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## wontgetfooledagain (Jul 3, 2018)

If you have $100k in tax liens, you shouldn't be buying anything, especially a new car. Your arguments are not well-thought out.


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## 142605 (Mar 4, 2018)

wontgetfooledagain said:


> If you have $100k in tax liens, you shouldn't be buying anything, especially a new car. Your arguments are not well-thought out.


Just because you don't understand something doesn't mean it isn't well thought out. Tax liens expire.

In any case that has nothing to do with the broader question of buying a car to offset current year tax liability as it applies not just to me but to others like me who work Uber as a side hustle.

If it comes down to paying $30K in tax or buying a $30K car and using accelerated depreciation I'm all for the latter.


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

Stevie The magic Unicorn said:


> A. Tips are impossible in a 2018 caddilac escalade 99% of the time.
> 
> B. You don't know uber very well do you?
> the 2005s i linked fall into the requirements for both uber and lyft. (a 2008 or 2010 would probably bet better tbh looking at LA requirements)
> ...





Stevie The magic Unicorn said:


> *but keep in mind in most markets you'll never make that much even working full time, hence the perpetual tax hole most drivers are in*





NOXDriver said:


> Again this is FALSE.
> 
> You don't get $46,000-$60,150 IN CASH. You can REDUCE YOUR TAXABLE INCOME TO ZERO, but that's it.
> 
> ...


My math is to show that you'll never get a bigger deductible by buying a new car and deprecating it than to drive a 10 year old POS the same number of miles.

I'll rephrase to be more clear.

If you buy a new car for 50,000 your actual expenses will never reach $50,000 for the first year you own it. Not even with deprecation, however if you use the Per mile rate you can rack up $35,000 in deductions.

But if you drive a POS for 70,000 miles you can still write off $35,000 worth.


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## 142605 (Mar 4, 2018)

Stevie The magic Unicorn said:


> My math is to show that you'll never get a bigger deductible by buying a new car and deprecating it than to drive a 10 year old POS the same number of miles.
> 
> I'll rephrase to be more clear.
> 
> ...


I think we are having two different conversations.

My goal isn't to be as frugal as possible, and I assume there are at least some others who feel the same. I don't WANT to drive a POS even if you paid me.

What I want to do is take advantage of the tax laws. With a new car I can write off a significant percentage of the purchase with depreciation in the first year without driving ANY miles... and be a lot more comfortable when I do. I'm trying to generate losses to offset other income like many other part timers.

I guess we are both right in different circumstances?

By the way I am averaging about 10% in tips on UberX (no pools).


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## wontgetfooledagain (Jul 3, 2018)

Authority said:


> Just because you don't understand something doesn't mean it isn't well thought out. Tax liens expire.
> 
> In any case that has nothing to do with the broader question of buying a car to offset current year tax liability as it applies not just to me but to others like me who work Uber as a side hustle.
> 
> If it comes down to paying $30K in tax or buying a $30K car and using accelerated depreciation I'm all for the latter.


You clearly need an accountant.


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## oldfart (Dec 22, 2017)

Authority said:


> I think we are having two different conversations.
> 
> My goal isn't to be as frugal as possible, and I assume there are at least some others who feel the same. I don't WANT to drive a POS even if you paid me.
> 
> ...


I completely forgot about accelerated depreciation. It's been a long time since I had a business that needed any significant capital invested

You can do this with a used car too, can't you? And then the question becomes "if you take an accelerated depreciation deduction in the first year can you do the 54.5 cent standard mileage deduction in future years.

I gotta do some reading

Oh and if you want to offset some income, rental real estate can't be beat


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## osii (Aug 21, 2014)

Best way to go is to be patient and look for a car coming off lease with super low miles. K cars have 60k warranty's to subsequent buyers so if you can get a good deal on something for around $11k with under 30k miles, that seems to work. Mazdas also get a lot of bang for the buck.


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