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mbotticello
New Member

Uber Mileage Deduction

Do I have to add TurboTax Self-Employed for $94.99 in order to claim my Uber Mileage deduction?  I would only get about $100 or so back from mileage deduction so paying $95 doesn't make sense?
1 Best answer

Accepted Solutions
NancyG
New Member

Uber Mileage Deduction

If your mileage is your only deduction, you may be right.  However, there are other deductions you may be entitled to that you may not be considering.   I have included some information for your review prior to making your decision.

Being an independent contractor means that you're self-employed . As far as the ride-share company is concerned, you're the owner of a separate business that it uses to provide driving services. So when you receive a payment, understand that it's not a traditional "paycheck," and likely no taxes have been taken out.

It's up to you to take care of federal and state income taxes, as well as Social Security and Medicare. Combined, these taxes can easily reach 30% to 50% of your income, so make sure to set aside money to pay them.

If you're accepting ride-sharing fares more than occasionally, you may be required to file quarterly estimated income taxes. At tax-filing season each spring, you'll be reporting your self-employment income and expenses on Schedule C, as well as filling out Schedule SE for self-employment tax if your net income from the work is greater than $400.

 Tax deductions for your car

Since you're an independent business owner, just about any money you spend on your gig as a ride-share driver will be a tax-deductible business expense. The first thing that probably comes to mind is your car. There are two ways to take a deduction for the business use of your car:

  • Deduct the actual expenses of operating the vehicle for business, including gas, oil, repairs, insurance, maintenance and depreciation or lease payments.
  • Take the standard IRS mileage deduction. As of 2016, the rate is 54 cents per mile driven for business use.

If you use your car for both ride-sharing and personal transportation, you can deduct only the portion of your expenses that apply to the business use. And whichever type of deduction you claim, it's critical that you keep thorough records. The IRS could disallow any tax deductions you can't support with:

  • Receipts
  • Mileage logs
  • Any other documentation

Other tax deductions for ride-share drivers

Commissions you pay to the ride-share company are a business expense, as is any cost you may have to pay for technology installed in your car. Other tax deductions include:

  • Water, gum or snacks for passengers
  • Tolls and parking fees

In addition, ride-sharing companies typically require use of a smartphone.

  • The portion of your mobile phone expenses attributable to your ride-share work can be used to reduce your self-employment income.
  • For simplicity's sake, it may make sense to have a dedicated phone for work.

Making sense of your 1099 forms

As a contractor, you won't get a W-2 form from your ride-share operator, but you likely will receive one or more 1099 forms. Ride-share companies generally distribute these forms according to the same criteria:

  • Payments for processing you customers' payments are reported on Form 1099-K. The amount shown in Box 1a of this form is all the money that the ride-share operator collected from customers for rides that you provided.
    • This will be more than you actually received in payment, since it includes the ride-share company's commissions and other expenses. Your ride-share operator will provide you a tax summary you can use to translate the 1099-K information into some of the income and expenses to report on Schedule C.
  • Payments for other activities, such as referrals or non-driving-related bonuses, are reported on Form 1099-MISC. This money is income to report on Schedule C.

View solution in original post

6 Replies
NancyG
New Member

Uber Mileage Deduction

If your mileage is your only deduction, you may be right.  However, there are other deductions you may be entitled to that you may not be considering.   I have included some information for your review prior to making your decision.

Being an independent contractor means that you're self-employed . As far as the ride-share company is concerned, you're the owner of a separate business that it uses to provide driving services. So when you receive a payment, understand that it's not a traditional "paycheck," and likely no taxes have been taken out.

It's up to you to take care of federal and state income taxes, as well as Social Security and Medicare. Combined, these taxes can easily reach 30% to 50% of your income, so make sure to set aside money to pay them.

If you're accepting ride-sharing fares more than occasionally, you may be required to file quarterly estimated income taxes. At tax-filing season each spring, you'll be reporting your self-employment income and expenses on Schedule C, as well as filling out Schedule SE for self-employment tax if your net income from the work is greater than $400.

 Tax deductions for your car

Since you're an independent business owner, just about any money you spend on your gig as a ride-share driver will be a tax-deductible business expense. The first thing that probably comes to mind is your car. There are two ways to take a deduction for the business use of your car:

  • Deduct the actual expenses of operating the vehicle for business, including gas, oil, repairs, insurance, maintenance and depreciation or lease payments.
  • Take the standard IRS mileage deduction. As of 2016, the rate is 54 cents per mile driven for business use.

If you use your car for both ride-sharing and personal transportation, you can deduct only the portion of your expenses that apply to the business use. And whichever type of deduction you claim, it's critical that you keep thorough records. The IRS could disallow any tax deductions you can't support with:

  • Receipts
  • Mileage logs
  • Any other documentation

Other tax deductions for ride-share drivers

Commissions you pay to the ride-share company are a business expense, as is any cost you may have to pay for technology installed in your car. Other tax deductions include:

  • Water, gum or snacks for passengers
  • Tolls and parking fees

In addition, ride-sharing companies typically require use of a smartphone.

  • The portion of your mobile phone expenses attributable to your ride-share work can be used to reduce your self-employment income.
  • For simplicity's sake, it may make sense to have a dedicated phone for work.

Making sense of your 1099 forms

As a contractor, you won't get a W-2 form from your ride-share operator, but you likely will receive one or more 1099 forms. Ride-share companies generally distribute these forms according to the same criteria:

  • Payments for processing you customers' payments are reported on Form 1099-K. The amount shown in Box 1a of this form is all the money that the ride-share operator collected from customers for rides that you provided.
    • This will be more than you actually received in payment, since it includes the ride-share company's commissions and other expenses. Your ride-share operator will provide you a tax summary you can use to translate the 1099-K information into some of the income and expenses to report on Schedule C.
  • Payments for other activities, such as referrals or non-driving-related bonuses, are reported on Form 1099-MISC. This money is income to report on Schedule C.

View solution in original post

Rschaupp
New Member

Uber Mileage Deduction

I am married and generally take the standard deduction on my taxes so I’m confused about writing off mileage and expenses for business expenses. Can I still write it off and also take the standard deduction? Or do I have to choose one or the other? 

VolvoGirl
Level 15

Uber Mileage Deduction

You get BOTH!

You get to take your personal itemized deductions or the Standard Deduction, whichever is larger.  Don't confuse Itemized Deductions on Schedule A with Business expenses on Schedule C.  You get to take both.

Rschaupp
New Member

Uber Mileage Deduction

Thank you lol. I’m normally pretty good at figuring out this kind of stuff with a quick google search but my wife and I are new to the extra income from Uber and other independent income jobs we have been taking on. 

VolvoGirl
Level 15

Uber Mileage Deduction

Here is some general info on self employment.   If you and your wife each have self employment income you need to file 2 Schedule Cs, one for each of you.

 

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax.  Here's a Schedule C  https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

 

You can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version.  How to enter self employment income

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

 

For the future, you should use a program like Quicken or QuickBooks to track your income and expenses.  There is a QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed  return....

http://quickbooks.intuit.com/self-employed

 

You will need to keep good records.  You may get a 1099NEC at the end of the year if someone pays you more than $600 but you need to report all your income no matter how small and if you don't get the 1099NEC.

 

You use your own records.  You are considered self employed and have to fill out a schedule C for business income.   You use your own name, address and ssn or business name and EIN if you have one.   You should say you use the Cash Accounting Method and all income is At Risk.   

 

After it asks if you received any 1099Misc or 1099NEC it will ask if you had any income not reported on a 1099Misc. You should be keeping your own records.  Just go through the interview and answer the questions.   Then you will enter your expenses.

 

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  

 

The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 Schedule 2 line 4 which goes to 1040 line 15.  The SE tax is in addition to your regular income tax on the net profit.  You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040 Schedule 1 line 14 which flows to 1040 line 8a.  Turbo Tax automatically calculates the SE Tax and Adjustment.

 

Here is some IRS reading material……

 

IRS information on Self Employment

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

 

Pulication 334, Tax Guide for Small Business

http://www.irs.gov/pub/irs-pdf/p334.pdf

 

Publication 535 Business Expenses

http://www.irs.gov/pub/irs-pdf/p535.pdf

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