# Tax experiment for an Uber/Lyft newbie. And..... oh, my.



## Hornplayer (Jan 17, 2019)

I started doing Uber/Lyft in January 2019. Didn't do any in 2018 or earlier. So Uber does not show up on any tax documents for the 2018 tax year, that I have to send in by April 15, 2019.

I've already finished my taxes for that year and sent them in, ouch. But it's done.

So I asked myself, what if I HAD done Uber/Lyft in 2018? How would my taxes for this last year have changed?

Pulled up my old taxes from 2018, and tossed on an extra $30,000 for the year, pretending I had gotten that much from Uber and Lyft. (after saving this imaginary version under a different file name).

Popped in the extra $30K as an (imaginary) 1099-MISC. Couldn't find how in TurboTax to put it in as a 1099-K, which I understand is what the rideshare co's give you.

And suddenly owed $14,000 more in taxes, to the Fed ($12K) and the state ($2K).

(Wife still works and brings in a moderately good salary, and I get Social Security, we're in a 22% Federal tax bracket.)

Anyone else had this charming experience? For real in your cases?

Please tell me I'm asleep and just having a bad dream. Please. I don't REALLY have to turn over nearly half of what I earned from Uber/Lyft, to the gummint, do I?


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## NotMe (Sep 5, 2017)

Without mileage deductions extra $30k will probably lead to expected result. However if you write off all mileage which you put on your car in order to make $30k than situation will drastically improve.


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## 1.5xorbust (Nov 22, 2017)

Did you apply the $.535 per mile that you would have in expense write off in order to obtain that $30k? I’m thinking 60k miles roughly so you would have had a loss of $2100 on that additional income.


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## Trafficat (Dec 19, 2016)

Sounds about right. Unless you are a low tiered earner, thanks to self-employment tax, you owe about 37% of your earnings in taxes to the feds. Should be closer to $11K than $12K owed to the feds.

But keep in mind, the same thing is true with your day job too. It seems less bad because the company pays payroll tax which is hidden from you, but the reality is the company has to pay a substantially higher amount for your wages than you see because they are paying this hidden payroll tax. 

However, did you factor into your calculation your deduction for mileage? That should help.


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## Hornplayer (Jan 17, 2019)

1.5xorbust said:


> Did you apply the $.535 per mile that you would had to drive in order to obtain that $30k? I'm thinking 60k miles roughly so you would have had a loss of $2100 on that additional income.


Hmm, I didn't. Just popped in the $30K as I said, no frills.

But this last year (without Uber/Lyft) we got a surprise. Standard Deduction has been made larger, and even with the mortgage interest and some other things we entered (we do that every year), TurboTax says we'd pay less taxes if we simply take the Standard Deduction this year. So we did.

Maybe if I had the Uber/Lyft pay, with the $.535/mile deduction you mentioned, the Std Ded would no longer be the way to go. I'll pop that $.535/mile in next and see what happens.



Trafficat said:


> Sounds about right. Unless you are a low tiered earner, thanks to self-employment tax, you owe about 37% of your earnings in taxes to the feds.


What's "Self-employment Tax"?

(Why do I get the feeling I'm not going to like the answer to that question, no matter what it is?) >:-O

On edit:

Hmm, a quick trip to https://www.irs.gov/businesses/smal...oyment-tax-social-security-and-medicare-taxes

and I find:



> Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.
> 
> *Self-Employment Tax Rate*
> The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).


Hmm, I _didn't_ fill out a Form SE, which the IRS says is what you list this on. Might I owe MORE than the almost-50% I already found, before I start putting in the $.535/mile writeoff next?


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## Tarvus (Oct 3, 2018)

Hornplayer said:


> Maybe if I had the Uber/Lyft pay, with the $.535/mile deduction you mentioned, the Std Ded would no longer be the way to go. I'll pop that $.535/mile in next and see what happens.


The $.545/mile was for tax year 2018. For 2019 it is $.58 per mile. It is not a 'deduction" as in the typical deductions you itemize. It is an expense deducted on your schedule C and is subtracted from gross revenue. The balance (if any) then becomes income and is subject to the same new and larger standard deduction you used in preparing 2018 taxes.



Hornplayer said:


> Hmm, I _didn't_ fill out a Form SE, which the IRS says is what you list this on. Might I owe MORE than the almost-50% I already found, before I start putting in the $.535/mile writeoff next?


In all likelihood, you will not show much (if any) profit on your schedule C for rideshare as a first year driver. This self-employment tax is only owed on any rideshare profit and will probably not be much. The more likely scenario is that you will be able to show a loss and use it to offset some other income thereby reducing your overall tax rate.

That $.58 expense is calculated on total rideshare miles driven, not just passenger miles. Keep meticulous mileage logs.


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## Fuzzyelvis (Dec 7, 2014)

Hornplayer said:


> Hmm, I didn't. Just popped in the $30K as I said, no frills.
> 
> But this last year (without Uber/Lyft) we got a surprise. Standard Deduction has been made larger, and even with the mortgage interest and some other things we entered (we do that every year), TurboTax says we'd pay less taxes if we simply take the Standard Deduction this year. So we did.
> 
> ...


You clearly have a lot to learn. But FIRST: are you tracking your miles? You need a log for the IRS.

The chances are that when you deduct those miles you will have NO or very little additional income unless you're in a great (well, not completely sucky like most) market.

But you need to learn about self employment tax, and schedule C.

The standard deduction is a separate issue from your business....just go to IRS.gov and READ.


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## SOLA-RAH (Dec 31, 2014)

Hornplayer said:


> I started doing Uber/Lyft in January 2019. Didn't do any in 2018 or earlier. So Uber does not show up on any tax documents for the 2018 tax year, that I have to send in by April 15, 2019.
> 
> I've already finished my taxes for that year and sent them in, ouch. But it's done.
> 
> ...


That $30k you popped in was *NET* income. To get a net income of $30k on uber you had to gross $60-$90k, which is dependent on a wide variety of factors. And you can only get your gross that high by working full-time hours (likely 50+ every week).

From your posts, you have a ton to learn on the tax situation and have mixed some things up. Brush up on self-employment taxes, mileage/expense tracking, SEP-IRA contributions, and realize that the standard mileage deduction has nothing to do with the standard/itemized deduction.


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