# Tax Threshold



## jm100588 (Sep 9, 2018)

What is the amount I must make in order to pay taxes? I just started Uber as part time and would like to avoid paying the taxes which I think is doable since we are already near the end of the year. Ive gotten three different answers wondering if anybody can clarify this for me.

1. $20,000/year
2. $600/year
3. $400/year

Also wondering if this is in combination with Lyft or is Lyft a whole separate tax entity. 

Thanks


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## RDWRER (May 24, 2018)

You avoid paying the taxes by driving Uber. Just by working them you’re incurring a negative profit. Yes you’re getting cash in your pocket but you’re exchanging mileage for cash at an unsustainable rate. You use Uber as a second job to lower the amount of taxes you pay on your first.


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## qaz (Oct 17, 2016)

If you don’t itemize, you will not pay taxes as an individual on the first $12,000* (the standard deduction). After that, you will pay 10% on up to $9,525*. Contributing to an IRA will decrease your tax liability. Do it.

*this is on net profit, after deductible business expenses, which should be at least half (more like three-fourths) of what you’re making.


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## RogerJS (Aug 5, 2015)

jm100588 said:


> What is the amount I must make in order to pay taxes? I just started Uber as part time and would like to avoid paying the taxes which I think is doable since we are already near the end of the year. Ive gotten three different answers wondering if anybody can clarify this for me.
> 
> 1. $20,000/year
> 2. $600/year
> ...


Not sure exactly what your asking but .. let me share this ...
UBER and Lyft provide separate 1099 tax forms.( independent contractor) 
You can declare apx 52 cents per mile driven it changes each year as an expense against your income, along with misc items such as cell phone , car washes but not car repair or service or fuel . 
This includes total mileage not only on the trip but also dead heading , driving to and from starting points .

Most drivers who understand how the tax rules work legally won't end up owing anything as your expenses will most likely be close to your total income.


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## SCdave (Jun 27, 2014)

Is the question
- Not file taxes because your total earned income will be low ( in $100s)

- Not pay taxes / no tax liability?
- This is different. Many Uber/Lyft drivers can make $1000s or $10,000+ or even $30,000 and have enough in tax deductions to have "zero tax liability (file taxes but not pay taxes) ?

Need to know which?


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## LoveBC (May 16, 2017)

Learn what a schedule C is. You are not a w-2 employee so your question is not applicable to the situation.


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## qaz (Oct 17, 2016)

Here are some examples.

1. You made $20,000 in Uber and Lyft combined. Your business deductions (schedule C) are, let’s say, $13,000. You pay zero taxes because your net profit was $7,000, which is less than the 12k standard deduction.

2. You made $30,000. Your business expenses were, let’s say, $22,000. You have taxable income of $8,000. You’ll pay 10% of 8,000, or $800.

3. You made $40,000. Your net income is $15,000. You’ll pay 12% (it’s now a higher bracket) of your net income.


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## Shankster (Sep 16, 2016)

qaz said:


> Here are some examples.
> 
> 1. You made $20,000 in Uber and Lyft combined. Your business deductions (schedule C) are, let's say, $13,000. You pay zero taxes because your net profit was $7,000, which is less than the 12k standard deduction.
> 
> ...


What about self employment tax? That alone is 15% on net business income.
In each of your examples, there will be a 15% SE Tax on the net profit in addition to the regular income tax on your taxable income.

So the key is to show as little net profit as possible in order to avoid the 15% SE tax.


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## Uncle-not-Ant (Oct 14, 2016)

qaz said:


> If you don't itemize, you will not pay taxes as an individual on the first $12,000* (the standard deduction). After that, you will pay 10% on up to $9,525*. Contributing to an IRA will decrease your tax liability. Do it.
> 
> *this is on net profit, after deductible business expenses, which should be at least half (more like three-fourths) of what you're making.


You are forgetting the 15+ Percent Self Employment Tax from profit dollar number one

Every dollar of profit is subject to Self Employmet Tax of over 15%


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## qaz (Oct 17, 2016)

Uncle-not-Ant said:


> You are forgetting the 15+ Percent Self Employment Tax from profit dollar number one
> 
> Every dollar of profit is subject to Self Employmet Tax of over 15%


I thought I knew what I was talking about.


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## Uncle-not-Ant (Oct 14, 2016)

Not so much...don't play a CPA on TV


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## LAuberX (Jun 3, 2014)

Uncle-not-Ant said:


> You are forgetting the 15+ Percent Self Employment Tax from profit dollar number one
> 
> Every dollar of profit is subject to Self Employmet Tax of over 15%


Exactly.

Another way Uber is ruining your future. Your Social Security is based on an average of 35 years taxable income... Having years of no income just lowers your pay out at the end.

Save taxes now eat dog food later.

The gig economy way.


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

jm100588 said:


> What is the amount I must make in order to pay taxes? I just started Uber as part time and would like to avoid paying the taxes which I think is doable since we are already near the end of the year. Ive gotten three different answers wondering if anybody can clarify this for me.
> 
> 1. $20,000/year
> 2. $600/year
> ...


*The real indicator of whether or not you'll owe taxes is how much you made per total driven miles.

So take the total you made, divided by the total number of miles you drove...and you get a number

<54.5c per mile PER TOTAL MILES= no taxes owed
>54.5c per TOTAL MILES= taxes owed
*
_*(as to how to calculate how much you will owe? That's very very very complicated and varies massively by state)*_

*My number is about $1.12 per total mile driven. (i will owe taxes on my taxi income)

Uberx drivers in Orlando are usually in the 35-40c range. (uberX drivers will not)

It's really that simple...

What city your in,
What class of vehicle you drive...

Both of those have a bigger impact that how much you made total!

And in the event of an Audit, they will HAMMER YOU for not reporting all your sources of income.*


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## jm100588 (Sep 9, 2018)

SCdave said:


> Is the question
> - Not file taxes because your total earned income will be low ( in $100s)
> 
> - Not pay taxes / no tax liability?
> ...


Im asking in regards to the first option, I will be making in the $100s as I only drive on Sundays and drive for multiple platforms plus there is only 4 months remaining in the year. We are looking at less than $500-$600.


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## SCdave (Jun 27, 2014)

jm100588 said:


> Im asking in regards to the first option, I will be making in the $100s as I only drive on Sundays and drive for multiple platforms plus there is only 4 months remaining in the year. We are looking at less than $500-$600.


My guess is that your Gross will be over $600+ and you will likely have to file.

Make sure you are tracking your deductions. The biggest being starting and ending odometer / total mileage for each day you drive.

If you are a student and your parents claim you as a dependent, there are some other IRS rules where I believe you can make more than the $600 and not have to file yourself but I don't know the exact rules. If this is your situation, you'll have to research it future.

Just prepare like you will be filing. Track your mileage.


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## SEAL Team 5 (Dec 19, 2015)

jm100588 said:


> What is the amount I must make in order to pay taxes? if anybody can clarify this for me.
> 
> 3. $400/year


There are 2 type of taxes in this business that you must pay. (Assuming you *DO NOT *incorporate)

Self Employment Tax and Income Tax.
$400/year is the minimum you can earn when you must start paying Self Employment Tax.



jm100588 said:


> Also wondering if this is in combination with Lyft or is Lyft a whole separate tax entity.


You will receive a different 1099 with seperate TIN (tax identification number) from each entity you contract with. You will combine all your revenue on your Schedule C return and deduct expenses from that


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## stevenh1975 (Aug 4, 2015)

I work partime and I gross about 500-800 a week. So I think you will be making more than $600 gross if you do more than 5hrs a week.


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## Lee239 (Mar 24, 2017)

jm100588 said:


> What is the amount I must make in order to pay taxes? I just started Uber as part time and would like to avoid paying the taxes which I think is doable since we are already near the end of the year. Ive gotten three different answers wondering if anybody can clarify this for me.
> 
> 1. $20,000/year
> 2. $600/year
> ...


Your biggest concern is SECA tax which is self employed FICA tax and is 15.3% and is for any profit over $400 I think.

Your gross pay earnings do not count you have to deduct 54.5 cents for every mile driven from when you get a ping to your last ride and while you are driving with the app on looking for rides.

If you are in a busy and higher pay rate area you will have income because you will have less dead miles.

In cities like Orlando when they make like 58 cents a mile it's all loss basically. In cities where your cut is over $1 per mile you should make an income.

Then you have income tax after that. If this is your only job your net earnings you can make up to $12K and not pay taxes I think. But you also have state taxes in many states to worry about.



stevenh1975 said:


> I work partime and I gross about 500-800 a week. So I think you will be making more than $600 gross if you do more than 5hrs a week.


Not in Orlando Fl. Detroit rate was also very low for a long time.

Also make sure to log and keep a record of all your miles driven while doing Uber or Lyft with the app on. Uber does track it too but your numbers may be a few % higher.

If you earned $1500 a year part time driving gross, and drove 3000 miles you do not owe any taxes but still have to file. If you earn $15,000 and drove 30,000 miles you owe no taxes, neither SECA, state or federal.

I drove for 2 months. My net earnings were negative $250.00 for the year.


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## stevenh1975 (Aug 4, 2015)

Do you know how 


Lee239 said:


> Your biggest concern is SECA tax which is self employed FICA tax and is 15.3% and is for any profit over $400 I think.
> 
> Your gross pay earnings do not count you have to deduct 54.5 cents for every mile driven from when you get a ping to your last ride and while you are driving with the app on looking for rides.
> 
> ...


Do you know how much cell phone bill can be deducted ? 50%? 
And if you net 9000 a year and this is your only job are you eligible for earned income tax credit ?


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## Lee239 (Mar 24, 2017)

stevenh1975 said:


> Do you know how
> 
> Do you know how much cell phone bill can be deducted ? 50%?
> And if you net 9000 a year and this is your only job are you eligible for earned income tax credit ?


If you use your phone for Uber you can deduct the % you use. I didn't have to deduct mine, but I used my phone and date mostly for Uber so I would have deducted 75% or more in fact I had to upgrade to a more expensive unlimited plan. https://www.hurdlr.com/blog/16-tax-deductions-uber-drivers-can-use-immediately

I think you can with 9K net earnings. https://www.irs.gov/credits-deducti...ncome-limits-maximum-credit-amounts-next-year But I don't know amounts, I think up to $15K is 519 credit, but I don't know if it depends on the amount you earned.


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## NOXDriver (Aug 12, 2018)

unless you have expenses that are over the standard deduction amount ($12000 single/$24000 married) expensing miles is not worth it.

You have to drive at about 24000 miles on Uber to break the $12000 standard deduction threshold. 48000 miles for married. SOME people will do that easy, others will not. So if you can put 2k miles on your car every month then itemizing will be a benefit. but if you are a part timer you will lose money this way. 

At best, you can hope to pay $0 in taxes. No one is getting refunds from expenses alone.... you need some sort of tax credit to get money back. Expenses just lower you EARNINGS. Not your tax bill. So if you make $36000 and take the $12000 standard deduction you only pay taxes on $24000. See, it lowers your earnings, which lowers the amount of tax you owe. At best you can expense out to $0 income and owe $0 taxes. Now if you make less than the poverty level or are eligible for TAX CREDITS then things get wacky.


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## stevenh1975 (Aug 4, 2015)

NOXDriver said:


> unless you have expenses that are over the standard deduction amount ($12000 single/$24000 married) expensing miles is not worth it.
> 
> You have to drive at about 24000 miles on Uber to break the $12000 standard deduction threshold. 48000 miles for married. SOME people will do that easy, others will not. So if you can put 2k miles on your car every month then itemizing will be a benefit. but if you are a part timer you will lose money this way.
> 
> At best, you can hope to pay $0 in taxes. No one is getting refunds from expenses alone.... you need some sort of tax credit to get money back. Expenses just lower you EARNINGS. Not your tax bill. So if you make $36000 and take the $12000 standard deduction you only pay taxes on $24000. See, it lowers your earnings, which lowers the amount of tax you owe. At best you can expense out to $0 income and owe $0 taxes. Now if you make less than the poverty level or are eligible for TAX CREDITS then things get wacky.


I think you got it wrong. Uber has nothing to do with itemized deduction. It is filed on Schedule C, which is separate from your personal deduction. And I work partime already racking up 3k miles/mo.


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## NOXDriver (Aug 12, 2018)

But then you can only expense against your business profits on schedule C. So it makes even less of a dent.

Your day job is not 'business profits'. Only your 1099 from Uber.

I think I did use the words EARNINGS in my previous post.


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## Lee239 (Mar 24, 2017)

NOXDriver said:


> unless you have expenses that are over the standard deduction amount ($12000 single/$24000 married) expensing miles is not worth it.
> 
> You have to drive at about 24000 miles on Uber to break the $12000 standard deduction threshold. 48000 miles for married. SOME people will do that easy, others will not. So if you can put 2k miles on your car every month then itemizing will be a benefit. but if you are a part timer you will lose money this way.
> 
> At best, you can hope to pay $0 in taxes. No one is getting refunds from expenses alone.... you need some sort of tax credit to get money back. Expenses just lower you EARNINGS. Not your tax bill. So if you make $36000 and take the $12000 standard deduction you only pay taxes on $24000. See, it lowers your earnings, which lowers the amount of tax you owe. At best you can expense out to $0 income and owe $0 taxes. Now if you make less than the poverty level or are eligible for TAX CREDITS then things get wacky.


that is not true the miles you drive does not equal your deduction.

Case in point. Jersey Shore rates are $1.70 a mile, if you deduct 2 miles for every mile driven that 1.27 per mile pay plus the per minute pay has to be deducted so you are making a net profit if you one dead mile 1 extra mile for every one driven.

But you don't factor in boost, busy times when you ride from one ride to another and don't deal mile, or surge which can wipe out your mileage deduction at least for that day or two, averaged out it makes a difference.


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## stevenh1975 (Aug 4, 2015)

you can put a lost against your regular income. I did it last year not sure if it changed this year.


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

Lee239 said:


> that is not true the miles you drive does not equal your deduction.
> 
> Case in point. Jersey Shore rates are $1.70 a mile, if you deduct 2 miles for every mile driven that 1.27 per mile pay plus the per minute pay has to be deducted so you are making a net profit if you one dead mile 1 extra mile for every one driven.
> 
> But you don't factor in boost, busy times when you ride from one ride to another and don't deal mile, or surge which can wipe out your mileage deduction at least for that day or two, averaged out it makes a difference.


$1.70 a mile is an EXTREME outlier in terms of price paid to the driver. Very few markets are over $1.00 per mile.

Let's assume it's $1.70 charged to the passenger. That's at least $1.10 paid to the driver per mile.

That's still over double of bottom markets and much much higher than many.

If $1.70 is paid to the driver it's 320% (over 3 times ) bottom markets

In Orlando you would need a ratio of 86% if your miles being paid...

Not to earn min wage,

Not to earn a profit.

In Order to break even...

It's closer to 30% of your miles being paid.

The simple truth is what market your in has a MUCH bigger impact on how much you will owe in taxes than how much money you make.

$40,000 in Orlando (in an X vehicle) will have a lower tax bill than $50 in New Jersey.

Orlando and a 50/50 paid to undpaid results in a tax hole of 30-45c Per paid for mile (while resulting in a positive 8c when 100% stopped), depending on your speed.

1 mile at 2X surge only knocks out 1.18- 1.85 unpaid miles. (Again depending on the speed of travel.) 60 mph it only knocks 1.18 miles of loss while at 20mph your up 1.85 miles.

Simply put most markets the margins are so low that it's virtually impossible to reach zero, let alone owe anything.

In Orlando one would expect to generate $12 in deductions for every $7-$10 they make.


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