# standard deduction vs. actual expenses



## heynow321 (Sep 3, 2015)

for 2018 I finally decided to take rideshare seriously and track all miles driven for business purposes as well as expenses via the Intuit self employed app. 

In summation, my business miles were 30,478 with quickbooks claiming the standard mileage deduction would be $16,661. I need to go through the expenses with a fine tooth comb and make sure everything is included (I'm pretty sure interest on the vehicle loan isn't included at the moment). 

QB is saying my tracked expenses were $12,626. Am I correct in assuming that if I can get my tracked expenses above $16,661 I should use the actual expense method right? According to QB, I'm looking at a hefty tax bill (over $4k) so I'm hoping to try to reduce that. I used H&R block last year and they were utterly useless in terms of actually saving me anything meaningful. 

Unfortunately (or maybe fortunately) I'm in a market where a real profit is attainable (for now). Are there any other ways of materially increasing expenses? I also have a roth IRA I have contributed to yet but I did that last year and my tax bill didn't come down very much :/


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## BobMarley (Feb 12, 2019)

heynow321 said:


> for 2018 I finally decided to take rideshare seriously and track all miles driven for business purposes as well as expenses via the Intuit self employed app.
> 
> In summation, my business miles were 30,478 with quickbooks claiming the standard mileage deduction would be $16,661. I need to go through the expenses with a fine tooth comb and make sure everything is included (I'm pretty sure interest on the vehicle loan isn't included at the moment).
> 
> ...


First off the Roth IRA contribution isn't a tax deduction. You get a credit if your net income is under a certain amount. Look into opening a traditional IRA, or if you also have a "day" job, then contribute more to your 401k if you can. Secondly, be careful about switching to actual expenses, because I don't think you can ever switch back to mileage with the same vehicle in another tax year (double check though).


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## UberTaxPro (Oct 3, 2014)

BobMarley said:


> First off the Roth IRA contribution isn't a tax deduction. You get a credit if your net income is under a certain amount. Look into opening a traditional IRA, or if you also have a "day" job, then contribute more to your 401k if you can. Secondly, be careful about switching to actual expenses, because I don't think you can ever switch back to mileage with the same vehicle in another tax year (double check though).


"Secondly, be careful about switching to actual expenses, because I don't think you can ever switch back to mileage with the same vehicle in another tax year (double check though). " Correct!


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## heynow321 (Sep 3, 2015)

BobMarley said:


> First off the Roth IRA contribution isn't a tax deduction. You get a credit if your net income is under a certain amount. Look into opening a traditional IRA, or if you also have a "day" job, then contribute more to your 401k if you can. Secondly, be careful about switching to actual expenses, because I don't think you can ever switch back to mileage with the same vehicle in another tax year (double check though).


Yes you are correct on both points. I meant to say traditional ira.


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## FLKeys (Dec 27, 2018)

Look into starting a SEP IRA for any Rideshare profits. Defer the taxes until you retire. 

SEP IRA's for self employed generally do not change the contributions you make to employer based retirement plan if you have one. You can contribute two both.


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## SamuelB (Aug 29, 2018)

UberTaxPro said:


> "Secondly, be careful about switching to actual expenses, because I don't think you can ever switch back to mileage with the same vehicle in another tax year (double check though). " Correct!


Isn't that just for the first year you put your car in service? The way I understand it is the first year you put your car in service for business if you use SMD then you can switch between actual expenses and SMD in subsequent years. If you use actual expenses the first year you have to stick with that for the entire life of the car.


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## Z129 (May 30, 2018)

SamuelB said:


> Isn't that just for the first year you put your car in service? The way I understand it is the first year you put your car in service for business if you use SMD then you can switch between actual expenses and SMD in subsequent years. If you use actual expenses the first year you have to stick with that for the entire life of the car.


That is how I have understood that rule as well.


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## UberTaxPro (Oct 3, 2014)

SamuelB said:


> Isn't that just for the first year you put your car in service? The way I understand it is the first year you put your car in service for business if you use SMD then you can switch between actual expenses and SMD in subsequent years. If you use actual expenses the first year you have to stick with that for the entire life of the car.





Z129 said:


> That is how I have understood that rule as well.


No, it's not just the first year. You can switch from mileage method to actual expenses ONCE for any particular vehicle. Also if you do switch from mileage to actual, you'll have to recapture some of the depreciation that was included in the SMR.


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## Skinny1 (Sep 24, 2015)

Yep profitable rideshare sucks.... that bill you have is just above my SE portion ... and I’m a part timer .

I set up a solo 401k last year. If I’m not putting away my money im really doing this for nothing ....if I factor in taxes, expenses. 

401k/IRA does nothing for the SE part that you will always owe on profit.


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## Eugene73 (Jun 29, 2017)

pad your miles until profit hits zero


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