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What can an UBER driver deduct?
AS an UBER driver what can you deduct as expenses? Can you deduct your cell phone, water and gum you buy for people, clothes to wear when driving?Vehicle Maintenance, Washing of the car, insurance for the car? car payment? What are some things I should probably keep track of for my taxes next year?
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While the above is a very thorough answer, it is a bit much for what an Uber Driver needs to know. So here’s the skinny…
You would be at a gross disadvantage if you chose to deduct your actual car maintenance expenses as indicated in the long post above. Uber drivers are better off (almost always) if the deduct the standard mileage rate. You can include detailing (cleaning) and car washes as added vehicle expenses. However if you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year. You cannot deduct depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance, or vehicle registration fees.
You can deduct the rental fee for an Uber phone but if you use your personal phone that’s a bit touchier… it would depend on the amount used for Uber vs your personal use. Water and gum you purchase for passengers yes, they are deductible as supplies.
Another thing Uber drivers need to be aware of is that the 1099-K (and 1099-MISC) you receive shows the total amount that Uber collected for your rides; it does not have their fees, commissions, safe rider fees or phone rental payments taken out. You need to deduct those as part of your business expenses along with the mileage you drove. If you didn't keep track of the mileage or the amounts Uber withheld (commissions etc) look on the 2014 Tax Information link on the payments page of your Uber driver account. There is a summary sheet linked at the bottom and it shows the fees they took out as well as the mileage for the trips (your mileage may actually be more as you drove around waiting for a hit.)
You will enter most of these expenses under Other Common Expenses on the business income and expenses page in TurboTax. When entering things look for the blue hyperlinks with tell me more. If you get really stuck, contact the TurboTax folks and they’ll walk you thru it.
For tracking your expenses , I suggest taking advantage of the free version of Quickbooks Self-Employment. You’ll find the link for this on the tax information page. The tax information page link you’ll find at the upper left of the Payments Page.
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<a href="http://www.washingtonpost.com/news/get-there/wp/2015/02/20/the-hidden-costs-of-being-an-uber-driver/" rel="nofollow" target="_blank">http://www.washingtonpost.com/news/get-there/wp/2015/02/20/the-hidden-costs-of-being-an-uber-driver/...>
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The tricky part with Uber is to define where the 'business location' starts. The first pick-up or the arrival to a 'busy area' would definitely be a 'business location', but just logging into Uber from home would not necessarily make it a business location (unless your home qualifies as your "Principal Place of Business").
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I have several clients that are Uber drivers and have discussed with them at length how they operate. The home office designation has nothing to do with the start point. The drivers nearly always travel around trying to get to a call and their starting point can be home or a sandwich shop where they stopped to eat. If they are available to get a call, then the miles are deductible no matter where they start. As I said previously, the exception would be when they drive to a nearby city for their starting point. My clients that do drive to another location before going available on the driver app know that they can't deduct miles if they aren't in available status which includes once they are no longer available and traveling home.
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To me, Revenue Rule 99-7 says it is not deductible (start on the VERY bottom of page 5 for the "holding"):
<a href="http://www.irs.gov/pub/irs-drop/rr-99-7.pdf#page=5" rel="nofollow" target="_blank">http://www.irs.gov/pub/irs-drop/rr-99-7.pdf#page=5</a>
The 1993 "Walker" Tax Court case had supported your thoughts, but the IRS immediately came out with Revenue Rule 94-47 (and several follow-up Rules, including 99-7) to redefine the rules and say they will NOT be following the Walker decision.
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