# Lyft lower rates will raise IRS audit flags



## Lessthanminimum (Nov 5, 2017)

The IRS is not functioning very well anymore when it comes to auditing taxpayers. Specifically, I'm talking about high-income taxpayers. That requires analysts and the IRS has lost a lot of them. There are no plans to replace most lost analysts. This means a lot of high earning taxpayers are breathing a sigh of relief.

The IRS is now relying more on an automated flags audit system. These audits and notices can be generated without any need for human interaction. They target lower earning taxpayers with uncomplicated returns. The system flags your return based on something you put in it, and that's it you are being audited.

Enter Lyfts new mileage rates in the $0.30 to $0.40 range. Obviously if you're driving for these rates you're working for less than the IRS standard mileage rate. You're going to be claiming a loss on all that income. These are the kinds of filings that are often flagged. Basically, the IRS is flagging your return because it doesn't make any sense. It defies logic that anyone would do a business where they lost money on every ride. So now they're going to dig a little deeper.

If anyone here has dealt with the IRS on a tax matter or audit they will tell you what a pain in the ass it is. The burden is always on the taxpayer. And whether your earnings are $500, $5,000, $10,000 or $50,000 the IRS doesn't care. They are relentless. You will give them exactly what they want or they will continue to pursue you. 

So the next time you pick up that Lyft ride for $0.30 or $0.40 a mile think about it. Is this really worth my time? Could this be opening myself up to scrutiny later with my IRS return? Is the advance I'm getting from Lyft using the equity in my car worth this kind of risk? 

Since the content of my post is something I'm very familiar with these are the kinds of questions I would be asking myself if I still drove for Lyft.


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## Disgusted Driver (Jan 9, 2015)

You are preaching to the choir. The problem is that the morons in my area who are still driving for Lyft at 30 cents a mile don't even know what they are being paid or what their expenses are. It's desperation and denial at its finest.


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## mbd (Aug 27, 2018)

Lessthanminimum said:


> The IRS is not functioning very well anymore when it comes to auditing taxpayers. Specifically, I'm talking about high-income taxpayers. That requires analysts and the IRS has lost a lot of them. There are no plans to replace most lost analysts. This means a lot of high earning taxpayers are breathing a sigh of relief.
> 
> The IRS is now relying more on an automated flags audit system. These audits and notices can be generated without any need for human interaction. They target lower earning taxpayers with uncomplicated returns. The system flags your return based on something you put in it, and that's it you are being audited.
> 
> ...


Chances of irs auditing a RS rider, less than 1%
250k or more, your chances go up a lot .
Btw, dealing with them is easy ... don't spend $$$ on negotiators... they will try to scare you.
Just go to the local irs office and tell the truth... you can even call over the phone and they will listen to you.


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## O-Side Uber (Jul 26, 2017)

Lessthanminimum said:


> The IRS is not functioning very well anymore when it comes to auditing taxpayers. Specifically, I'm talking about high-income taxpayers. That requires analysts and the IRS has lost a lot of them. There are no plans to replace most lost analysts. This means a lot of high earning taxpayers are breathing a sigh of relief.
> 
> The IRS is now relying more on an automated flags audit system. These audits and notices can be generated without any need for human interaction. They target lower earning taxpayers with uncomplicated returns. The system flags your return based on something you put in it, and that's it you are being audited.
> 
> ...


You're probably right about everything you said here, but at the end of the day we are working for around minimum wage. It seems silly to go after rideshare drivers. If we were getting $1.50 per mile , I think we would all be willing to pay the IRS something. But we don't, so most of us write off the gas and maintenance until we don't owe anything. That's why the state and government are going after Uber and Lyft. They know we're getting hosed and that these companies bring in billions....they want their slice!! Uber and Lyft got greedy and now this is going to cost them more than if they had just kept a decent amount per mile.

I thought most of the turbo tax type software check for the same red flags that you're talking about? I always run the checker and see if they agree that my return LOoKs legit before I hit send ?


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## Seamus (Jun 21, 2018)

They will easily understand the loss doing rideshare. What causes the loss is mileage. They can quickly and cheaply require mail audits of your mileage log. Costs them next to nothing to require you to send it in to them. If it’s non compliant (which many will be) bang.....deduction removed.....taxes owed.

An accountant who does a lot of rideshare tax returns nationwide has noted an increase in mail mileage log audits.


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## oldfart (Dec 22, 2017)

Not rideshare , but last year I had a $35000 capital gain, the tax on this was $0
but it was reported on the wrong 1099 
So the IRS treated it as income and sent me a bill for $12000

I sent them the contract between me and the buyer and as well as proof of what I paid for the asset said in a letter that the 35k was in fact a capital gain. 

And they sent me a letter telling me I owed them nothing 

This wasn’t my first run in with the IRS i was audited for my rental property returns in the middle 1970’s. I went to the local office with my spreadsheets for each property with an entry for every rent payment and every expense as well as a bag full of receipts They accepted my return as filed

So the point of the story is, keep good records. For us that means a mileage log


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## 1974toyota (Jan 5, 2018)

Lessthanminimum said:


> The IRS is not functioning very well anymore when it comes to auditing taxpayers. Specifically, I'm talking about high-income taxpayers. That requires analysts and the IRS has lost a lot of them. There are no plans to replace most lost analysts. This means a lot of high earning taxpayers are breathing a sigh of relief.
> 
> The IRS is now relying more on an automated flags audit system. These audits and notices can be generated without any need for human interaction. They target lower earning taxpayers with uncomplicated returns. The system flags your return based on something you put in it, and that's it you are being audited.
> 
> ...


ROFLMAO, just go to there office in your beat up Lyft mobile, pants with holes in them, raggatty shirt, really old sneakers, don't shower for a week,or shave,have a cane, and tell them whats up?+ like some posters above, keep records. jmo


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## nouberipo (Jul 24, 2018)

Lessthanminimum said:


> The IRS is not functioning very well anymore when it comes to auditing taxpayers. Specifically, I'm talking about high-income taxpayers. That requires analysts and the IRS has lost a lot of them. There are no plans to replace most lost analysts. This means a lot of high earning taxpayers are breathing a sigh of relief.
> 
> The IRS is now relying more on an automated flags audit system. These audits and notices can be generated without any need for human interaction. They target lower earning taxpayers with uncomplicated returns. The system flags your return based on something you put in it, and that's it you are being audited.
> 
> ...


Exactly......logically they will want to know why you are paying Uber and Lyft to drive for them while simultaneously trashing what is/was one of your more expensive possessions. Lawmakers in California, and the rest of the country, need to get data from the IRS to really see how workers/employees are being exploited. Data manipulation by Lyft and Uber is basically lying to investors and the public while IRS data will show the factual numbers.


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## leroy jenkins (May 27, 2015)

there's a rule that you can't claim losses from a hobby. and as OP said, the algorithm is going to think no sane person would be losing money on purpose.....but the red flag will come up when you file multiple years of losses


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## Illini (Mar 14, 2019)

1974toyota said:


> ROFLMAO, just go to there office in your beat up Lyft mobile, pants with holes in them, raggatty shirt, really old sneakers, don't shower for a week,or shave,have a cane, and tell them whats up?+ like some posters above, keep records. jmo


Ugh, it's going to cost me a fortune to improve my appearance that much.


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## leroy jenkins (May 27, 2015)

Illini said:


> Ugh, it's going to cost me a fortune to improve my appearance that much.


no worries. it's all done by mail now a days if you're the one in 100 person who gets a mail audit.


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## nonononodrivethru (Mar 25, 2019)

I think that for once the government and IRS understand that low unemployment is great for our economy, so they don't care about auditing rideshare drivers.


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

In order for a cab driver to have as fubar taxes as an uber driver...

they would have to be... on average paying $75 to rent the taxi, $25 for gas and tolls and then only report _$50 in revenue._

It's a HUGE redflag for the IRS, and rightfully so.

They will automagically assume there's another $150 in revenue they _aren't_ seeing. OR the other possibility is that your padding your mileage count by about 400%.

In all liklihood.... the IRS mathmagicians are going to set their mathmagical spells to detect my above taxi scenario.

Your returns are gonna get red-flagged because the IRS would have to be high as a kite to believe those numbers in _*any other industry*_*.*


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## Jo3030 (Jan 2, 2016)

I kind of want IRS to audit like all the drivers that have this new rate
Then it will create a massive crap show and hopefully get on the news.
IRS auditing poor drivers that can't even do basic math and the repercussions of that.
I sense tons of drivers quitting after they get audited.


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## touberornottouber (Aug 12, 2016)

I think they will probably adjust their procedures after seeing millions of drivers taking a loss. But shortly thereafter the government and the media will probably step in. I mean 30 cents a mile is totally ridiculous.


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## Jo3030 (Jan 2, 2016)

When 100K drivers start getting audited, it's gonna get pretty.


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## itendstonight (Feb 10, 2019)

so what would be unreasonable milage to deduct? I’m at about 1.5 miles per $ made. Will owe a few hundred. Was part time. Only claiming milage, nothing else. Any red flag there?


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## nonononodrivethru (Mar 25, 2019)

itendstonight said:


> so what would be unreasonable milage to deduct? I'm at about 1.5 miles per $ made. Will owe a few hundred. Was part time. Only claiming milage, nothing else. Any red flag there?


Claim your phone, sir!


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## Jo3030 (Jan 2, 2016)

I'm gonna say claiming 2 miles per dollar made is probably about right.
It will make you be in the negative.
However, don't be in the negative 3 years in a row. 
Heck, I'd only do it once and then find a way to make sure you don't run afoul of what IRS wants folks to do.

The whole purpose isn't to write off 100K miles and lose 50k.


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## leroy jenkins (May 27, 2015)

itendstonight said:


> so what would be unreasonable milage to deduct? I'm at about 1.5 miles per $ made. Will owe a few hundred. Was part time. Only claiming milage, nothing else. Any red flag there?


probably if you're in the top 0.1% of everyone who lists driver as their occupation. 500,000 miles per year....you're using a Cessna as an Uber.

That said...IRS will have bigger fish to fry. So be in the ballpark and you'll be ok. Unless you're totally unlucky and you're the one person in the country who gets audited randomly.

the biggest red flag is being negative for several years in a row. Not just for Uber but anything. Then the IRS will say your business is really a hobby and make you prove your deductions.



Jo3030 said:


> When 100K drivers start getting audited, it's gonna get pretty.


100,000/360 days = 277 miles per day. 277miles/10 hours = 28mph. So ya, 100,000 miles is pushing it even if you're a suburban driver.

Golden rule in life: don't be stupid.


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## New2This (Dec 27, 2015)

leroy jenkins said:


> 100,000/360 days = 277 miles per day. 277miles/10 hours = 28mph. So ya, 100,000 miles is pushing it even if you're a suburban driver.
> 
> Golden rule in life: don't be stupid.


I think @Jo3030 meant 100,000 individual drivers get audited


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