All Posts

For taxation purposes, having it as a sole-proprietor or an LLC will make no difference. You should consult an attorney to see the benefits of being a sole-proprietor or forming an entity for your rental home.

No, the mileage from your home to your first rider are considered commuting miles and are not deductible.  Same for the mileage form your last rider to home.   You can see an example of a log in IRS Publication 463 page 39.

Yes, both vehicle insurance and depreciation can be allowed as expenses for tax purposes if your vehicle is used for both personal and business use. However, there are crucial rules and limitations you need to follow.   Vehicle Insurance as an Expense You can deduct the business portion: If you use your vehicle for both personal and business purposes, you can only deduct the percentage of your auto insurance premiums (and other vehicle expenses) that is attributable to your business use. For example, if you use your vehicle 60% for business and 40% for personal activities, you can deduct 60% of the insurance cost.     Method Matters: Actual Expense Method: If you choose to deduct your actual vehicle expenses, you will include your insurance premiums, along with gas, oil, repairs, maintenance, registration fees, and depreciation (or lease payments). You then multiply the total of these expenses by your business-use percentage (business miles / total miles).   Standard Mileage Rate Method: If you choose to use the standard mileage rate (a cents-per-mile rate set by the IRS annually), you cannot also deduct actual expenses like insurance, gas, oil, or depreciation. The standard mileage rate is designed to cover these costs. You can still deduct business-related parking fees and tolls in addition to the standard mileage rate.   Record Keeping is Key: Regardless of the method you choose, you must keep detailed and accurate records of your mileage, separating business miles from personal miles. This is essential for determining your business-use percentage. Vehicle Depreciation for Tax Purposes Yes, the vehicle can be depreciated for tax purposes if it's used for business, even if it's also used for personal use. Requirements for Depreciation: The vehicle must be owned by you. It must be used in your business or income-producing activity. It must have a determinable useful life and be expected to last more than one year.   Just like with insurance, you can only depreciate the business-use portion of the vehicle's cost. You must keep records to prove your business-use percentage. Actual expense method: The IRS allows you to depreciate the vehicle using the Modified Accelerated Cost Recovery System (MACRS), which typically classifies vehicles as five-year property. Standard Mileage Rate Method: If you use the standard mileage rate, depreciation is already built into the rate, so you cannot deduct it separately. To accurately determine your business-use percentage for both insurance and depreciation, you need to maintain a reliable mileage log.  For rideshare/delivery, session-based logging or a mileage tracking app is highly recommended. Choosing Your Method: You generally have to choose either the standard mileage rate or the actual expense method for a vehicle in the first year it's placed in service for business. If you use the standard mileage rate in the first year, you can switch to the actual expense method in later years. If you choose actual expenses in the first year, you generally cannot switch to the standard mileage rate for that vehicle in subsequent years. It's often beneficial to calculate both ways in the first year to see which yields a higher deduction. Standard Mileage vs. Actual Expenses: Getting the Biggest Tax Deduction Please refer to this link for more info. @Letty7 Thanks for the question!!  

You're asking excellent questions about vehicle deductions for mixed personal and business use, especially relevant for gig workers like Uber drivers. Here's a breakdown: Is vehicle insurance allowed as an expense if the vehicle is used for personal and business use? Yes, absolutely! If you use your vehicle for both business and personal purposes, you can deduct the business-use portion of your vehicle insurance premiums. Here's how it generally works: Determine your business-use percentage: This is crucial. You need to accurately track your mileage for both business and personal use. For example, if you drive 20,000 miles in a year, and 15,000 of those miles are for your Uber gig (picking up passengers, driving between fares, etc.), then your business-use percentage is 75% (15,000 / 20,000). Apply the percentage: You would then multiply your total annual vehicle insurance cost by that business-use percentage. So, if your annual insurance premium is $1,200 and your business use is 75%, you can deduct $900 ($1,200 x 0.75). Important Note: This deduction applies if you choose the "actual expense" method for your vehicle expenses. If you opt for the "standard mileage rate" (which is generally simpler), insurance is already included in that per-mile rate, so you cannot deduct it separately. Can the vehicle be depreciated for tax purposes? Yes, if you own the vehicle and use the "actual expense" method, you can depreciate it for tax purposes. Depreciation allows you to recover the cost of your vehicle over a period of years, reflecting its wear and tear and loss of value due to business use. Here's what to consider for depreciation: Actual Expense Method Only: Depreciation is part of the "actual expense" method. If you choose the standard mileage rate, depreciation is already factored into that rate. Business Use Requirement: To depreciate a vehicle, it must be used for business purposes at least 50% of the time. If your business use is less than 50%, you must use the slower "straight-line" depreciation method. Calculating Depreciation: You'll need the vehicle's "basis" (its purchase price plus certain fees and taxes). You'll apply your business-use percentage to this basis. The IRS has specific depreciation rules and limits (often referred to as "luxury auto" limits, even for non-luxury vehicles) based on the year the vehicle was placed in service and its gross vehicle weight rating (GVWR). You'll typically use IRS Form 4562, "Depreciation and Amortization," to calculate and report your depreciation. Vehicles are generally classified as "five-year property" for depreciation purposes, meaning the cost is recovered over six calendar years (due to a half-year convention in the first and last year). Section 179 Deduction and Bonus Depreciation: These can allow you to deduct a significant portion (or even the full cost, for heavier vehicles) of the vehicle's cost in the first year it's placed in service, provided certain conditions are met (like the 50% business use for Section 179). These are complex rules, and consulting a tax professional is highly recommended to determine eligibility and maximize these deductions. Recapture: Be aware that if your business use drops below 50% in later years after taking special depreciation, you may have to "recapture" (add back to income) some of the previously deducted depreciation. Choosing Between Standard Mileage Rate and Actual Expenses: For Uber drivers and other self-employed individuals with significant vehicle use, this is a key decision: Standard Mileage Rate: Pros: Simpler record-keeping (just track business miles). Cons: You cannot deduct individual expenses like gas, oil, repairs, maintenance, insurance, or depreciation separately. 2024 Rate: 67 cents per business mile. 2025 Rate: 70 cents per business mile. Actual Expense Method: Pros: Can result in a larger deduction if your actual vehicle expenses (including depreciation, insurance, gas, maintenance, etc.) are high. Cons: Requires meticulous record-keeping of all vehicle-related expenses (receipts for everything, detailed mileage logs for business vs. personal use). Recommendation: For gig workers like Uber drivers, accurate mileage tracking is paramount regardless of the method you choose. Many apps can help automate this. It's highly advisable to: Track all your business miles. Keep all receipts for vehicle-related expenses (gas, oil changes, repairs, insurance, car washes, tires, etc.). At tax time, calculate your deduction using both the standard mileage rate and the actual expense method to see which one yields a larger deduction.

Before I answer this, I'd like to clarify a few things about how I am reading your question. When you say that 100% of your income for the business comes in a W-9, I am assuming you mean a 1099. And when you say you filed your personal income tax return reporting the complete W-9, I again assume you mean that you included the 1099. A W-9 form contains no income; it primarily includes your name, address and Social Security or EIN. It is given to the business you are contracting with, and they use it to prepare and give you a 1099. The 1099 is what contains your income for tax purposes.   If you are a single member LLC or sole proprietor, you do not need to file a separate business tax return. There is not a quarterly business tax return either, but I believe what you are referring to are quarterly estimated tax payments, which 1099 income recipients do use to avoid underpayment penalties. You said that you have considerable withholding already from your paycheck. I suggest you run a projection for the entire year and see where you land. If you will likely owe, then make the quarterly estimated tax payments. If you'll have a refund, then I'd not pay anything. Here's a tax calculator you can use:  TaxCaster Tax Calculator. Note: the calculator is still pointed to the 2024 tax year, but you can still use it to reasonably estimate 2025. Just answer the questions as if it's 2025 instead of 2024.   I hope this extra info is helpful! Please post again if you have any other questions about this. Thanks!

Since your nail tech business is an LLC, then no you can not use the EIN number for any other business. Each business (like a multi-member LLC, corporation, or partnership) requires its own unique EIN for federal tax purposes. If you own multiple businesses, and they are structured as distinct legal entities, each needs a separate EIN. 

Some of this was helpful,  some of this was general. Can you provide an illustrated example of what entries should look like.  If I'm entering for the day, is it OK to have my home as the starting and ending locations?

Your small business can be filed with your personal tax return in most cases. If you are operating your business as a Sole Proprietor or Single-Member LLC, you may file your Income (i.e. Form1099-NEC) and expenses on a  Schedule C as part of your personal tax return.  There is no separate business return required unless your business structure is different than the two mentioned.    The IRS does not require quarterly business taxes. With the additional income you are earning through your business, you may be required to make estimated quarterly tax payments. This is to be sure you are paying the taxes due on the business income you are earning during the year.  For more information on quarterly tax payments, please see Estimated Taxes and When to Pay Estimated taxes.

No, since being a nail tech and a content creator are two separate businesses, you should not use the same EIN. You can either be a sole proprietor for the content creator or register a new LLC.  An LLC can also be an S corp for tax purposes, by filing Form 2553. Assuming you do not have any partners, report each business on a separate Schedule C (self-employment) on your Form 1040 personal tax return, whether it is a sole proprietorship or an LLC.

First thing you need to look at is the type of entity you have formed for your business: 1) if it a single member LLC or just a sole-proprietor business, then the business income and expenses would be reported in your personal return as a self-employed income. This business is shown on Sch C of your personal tax return. There is no separate tax return to be filed 2) if it a Corporation, an S-Corporation or a partnership, then the income and expenses for it would get reported on a Form1120, Form 1120S or Form 1065, respectively. These are separate business tax returns. If you are required to file the Schedule C, or Form 1120S or Form 1065, then you would need to pay quarterly estimated taxes to the IRS under your Social Security number on the bottom line profit that you will be receiving from this business. If you do not make estimated tax payments and then owe money to the IRS, they will collect penalty and interest on this income from Jan1 of the tax year you are reporting this income for. If this is a regular C Corporation, then the business will need to make estimated tax payments to the IRS under the entity's EIN.

For your single-member LLC in Michigan, you generally don't need a separate LLC for each new business. You have two main choices: Run Everything Under Your Current LLC  Use your existing LLC for all your businesses. You can even use different "Doing Business As" (DBA) names for each one. Benefits: Cheaper (fewer fees), less paperwork overall. Considerations: If all your businesses share the same risk. If one business gets sued, the assets of all businesses, under that single LLC could be affected. You' will also want  to keep separate financial records for each business, even though they would legally be one, Create a Separate LLC for Each Business Start a brand-new LLC for each new consulting business. Benefits: Each business has its own protection. If one faces a problem, your other businesses' assets are usually safe. It also makes finances very clear and easier to sell a single business later. Considerations: This can be more expensive as there will be more filing fees, and more paperwork to keep track of for each separate LLC. Helpful Links for more information: Michigan Business Taxes Page  Tax Tips for LLC Tax Filings  Business Tax Return Filing    Please feel free to reach backout with any additional questions or concerns you might have! Thank you for joining us today and have an amazing rest of your day!   **Say "Thanks" by clicking the thumb icon in a post **Mark the post that answers your question by clicking on "Mark as Best Answer.”

You're absolutely right – the idea of meticulously logging every single stop for a rideshare or delivery driver sounds incredibly time-consuming and almost impossible to maintain consistently. Record-keeping is crucial for anyone claiming a mileage deduction. The IRS urges you to maintain “comprehensive and contemporaneous records” in case they are requested. Contemporaneous record-keeping is particularly important to the IRS. This means recording your trips as they happen, not reconstructing them later. The IRS is more likely to challenge reconstructed records during an audit.   While the IRS does require adequate records to substantiate your mileage deduction, "every stop" doesn't necessarily mean a separate line item for each individual delivery or passenger drop-off if you're continuously driving for business. Your mileage log should include: Date of the trip: When the trip occurred. Purpose of the trip: Why you were driving (e.g., "Rideshare driving," "Food delivery for DoorDash," "Picking up supplies for Uber Eats"). Destination(s): The general location of the business activity. Total miles driven: The actual distance driven. Using a mileage tracking app is highly recommended for accuracy and ease. Recording the total mileage for the day can be acceptable if you ensure that your log includes the necessary details for each trip. Using a digital mileage tracker can help you capture all required information without needing to manually log every stop.   What is NOT Acceptable: Estimating: Simply guessing your mileage at the end of the month or year. Rounding: Don't round up or down significantly. "Just recording the mileage for the day" without other details: While you do need the daily mileage, the IRS also wants to know the purpose and general locations to confirm it was business-related. A single number without context is weak for an audit. Reconstructing records months later: The IRS prefers "contemporaneous records," meaning records kept at or near the time of the expense. Weekly updates are generally considered acceptable, but daily is best. @AdamD1 Thanks for the question!! Hope this answers your question!