California just passed Prop 22 where drivers will be reimbursed 30 cents per mile for expenses (gas, maintenance, etc.) Is this reimbursement taxable income?

[VolvoGirl]

Sounds to me like it should be included in your gross income on 1099Misc or 1099NEC which goes on Schedule C for self employment independent contractor income.  Then you can deduct your actual mileage as an expense to offset it.  

[Opus 17]

That depends.  On your federal tax return, reimbursements of work-related expenses are not taxable if the employer uses an accountable plan.  An accountable plan means that you are only reimbursed for legitimate business expenses that you prove with receipts, a mileage diary, or other acceptable proof.  (You must prove both the mileage you drove, and that it was for a legitimate business purpose.   The business has the burden of proof and has a lot of leeway in creating reimbursement forms for employees to use that will capture the required information.)

If the employer has a non-accountable plan, and does not require that you prove the purpose and amount of the expense, then the reimbursement is taxable income and must be included in your W-2 box 1 wages.  You can't deduct mileage as an expense because that deduction was eliminated by the 2018 tax cut law.  

Normally, the state would treat the mileage reimbursement the same as the IRS, but if Prop 22 modified that (making all mileage tax-free for example) that would be reflected on your state tax return but NOT your federal return.  The IRS follows federal law as to what is and is not taxable income. 

[Opus 17]

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@VolvoGirl wrote:

Sounds to me like it should be included in your gross income on 1099Misc or 1099NEC which goes on Schedule C for self employment independent contractor income.  Then you can deduct your actual mileage as an expense to offset it.  

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Oh, is this for contractors, or employees, or both?

For employees, see my other answer.  It is not W-2 income as long as the employer has an accountable plan.

The answer above is correct as it applies to independent contractors.  Everything of value that you receive for your services must be included in your gross income on box 1 of form 1099-NEC.  Then, you can deduct your mileage as a schedule C business expense using either the standard mileage method or the actual expense method.  Which you have probably been doing all along anyway. 

[xmasbaby0]

Where is the 30 cents per mile coming from?  As I read it, Prop 22 was about whether rideshare drivers like Uber and Lyft drivers should be considered as employees or independent contractors.    The measure passed in November, and rideshare drivers are still independent contractors--not W-2 employees.  Where is the "reimbursement" coming from?  

[Opus 17]

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@xmasbaby0 wrote:

Where is the 30 cents per mile coming from?  As I read it, Prop 22 was about whether rideshare drivers like Uber and Lyft drivers should be considered as employees or independent contractors.    The measure passed in November, and rideshare drivers are still independent contractors--not W-2 employees.  Where is the "reimbursement" coming from?  

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§7453(d)(4)

Prop 22 guarantees that drivers will receive minimum compensation ("earnings floor") of 120% of state minimum wage for "engaged time" plus 30 cents per "engaged" mile. 

[VolvoGirl]

Prop 22, see page 3 (page 32) Article 3 B (ii)

https://vig.cdn.sos.ca.gov/2020/general/pdf/topl-prop22.pdf 

Don't  know how Uber & Lyft will calculate it.  Do you turn in your mileage?

[xmasbaby0]

@Opus 17 Thanks----then the drivers are paid by Lyft Uber, etc. and report their self-employment income that included that 30 cents a mile, then the rideshare driver completes a schedule C and claims mileage as an expense.

[Opus 17]

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@VolvoGirl wrote:

Prop 22, see page 3 (page 32) Article 3 B (ii)

https://vig.cdn.sos.ca.gov/2020/general/pdf/topl-prop22.pdf 

Don't  know how Uber & Lyft will calculate it.  Do you turn in your mileage?

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The app tracks it.  Don't forget this is "engaged" mileage, they don't get paid driving to a pickup, only while engaged in a fare. 

[yukr]

It's for contractors. 

[yukr]

It's one of the benefits Uber started to offer after Prop 22, see image. 

[yukr]

Not anymore for Uber since mid of this year. They made changes to their pay structure and it factors in driving to the pick-up location. 

[xmasbaby0]

In your original question you asked if the money is taxable.  Yes it is taxable.  All of what you are being paid is taxable.  Then you enter your expenses on a Schedule C.

[yukr]

But, the .30/mi paid by Uber is to help cover expenses like gas and vehicle wear and tear, and the standard Federal mileage rate of .575/mi covers those expenses, so won't I be sort-of double dipping? I thought that you are not allowed to deduct mileage for which you are reimbursed. 

[yukr]

But, the 30 cents/mi that Uber pays me is to help cover expenses like gas and vehicle wear and tear, and the standard Federal mileage rate of 57.5 cents/mi covers those exact same expenses, so won't I be sort-of double-dipping? In other words, I would be taking the standard Federal 57.5 cents/mi deduction, which covers gas, maintenance, insurance, registration, etc., and getting reimbursed 30 cents/mi by Uber for those expenses. I thought that you are not allowed to deduct mileage for which you are reimbursed?