What can an UBER driver deduct?

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.

Is an uber driver allowed to deduct the mileage used for driving to and from the riders' locations?

Yes. You can deduct mileage from the second you go available until you're done. The only mileage that you can't deduct is if you were available and giving rides, stopped for a couple of hours for personal stuff and then started again. You couldn't claim the miles you drove during the personal time when you weren't in available status.

This article may be of interest:
<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/</a>

The trip from your home to the first pick-up, and from the last drop-off to your home, is quite questionable if it is deductible.  Generally, unless you have a qualified home office, that driving is not deductible because it is "commuting".  However, driving for Uber is a bit of a gray area when the first 'business location' starts.

If you don't go available right away, then yes, it's commuting. However if you go available the minute you're out of your driveway and are off to get the rider, then those are deductible miles. Otherwise you'd only deduct the actual miles Uber tracks and not your miles from rider A dropoff to rider B pickup and that's just not the way it works. From the time you go available until you are no longer available... those are business miles. There are some drivers that drive to a better area before "clocking in" and going available and in that instance, yes, those are commuting miles and not deductible.

I agree that the Rider A drop-off to Rider B pick-up is deductible, but I still think the trip to and from your home is questionable.  The IRS clearly says that merely doing business at home (such as logging into Uber) does not make it a business location for deductible miles.

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").

TaxGuyBill,
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.

I would love it if that were right.  However, can you show me anything that supports your thoughts?

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.

Interesting discussion, and I suspect this area is still evolving.  And, a lawsuit was filed recently re Uber drivers actually being employees.

I just looked up the lawsuit; hadn't heard about it so thanks for the heads up. Since Uber doesn't tell drivers when to work I'd be surprised if they win their lawsuit. It would be a shame if they did win because, in my opinion, classification as a employee would hurt most drivers on their tax returns....not help them.

If I am "Available" on my drive home, is that mileage I can claim? I'm noticing that I always end up about 25-30 miles from my home. I would hate to not be able to claim those miles.

Anytime you are in available status and could get a call you are considered to be working and can deduct the mileage. To be clear, if you choose to drive to a location 30 minutes from home before going available then you wouldn't start your mileage until you've gone to available on your phone. If you would remain in available status during your drive home then you can deduct that mileage. The key here is... can you get a call?.. Are you available? If the answer is yes, then the mileage is deductible.

I became an Uber driver in June of this year. I have not been tracking my mileage while in Available status and am without a passenger. Short our going thru the ride history of nearly 400 rides to capture this mileage, is there an easier and reasonable way to do this?

Would Uber have a record?

Uber has a record of my trip mileage with passengers, but not the in-between time, while I am on-line and driving to pickup my next passenger. At least I think so, I will check with them. If they don't have a record, is there a Plan B I can do?

Uber doesn't know your non-trip mileage, they only track the mileage from when you pick up the rider until you drop them off.  You may read about plugging in an average amount of miles using a day, week or month where you have tracked the mileage accurately. Unfortunately, the average method won't work for Uber driving since the number of trips and therefore miles can vary greatly from day to day. If you don't have odometer readings annotated in a notebook or on gas receipts, you will need to go thru each ride and record the mileage reported by Uber. For the future, the easiest way to track mileage is to note your odometer reading when you go available and again when you've stopped for the day; the difference between the numbers would be your daily mileage. If you stop driving to do personal errands and then resume driving, the in between mileage while running errands cannot be included in your mileage for the day.

Hi
I'm from New Jersey
Dead miles are business expenses ?
I don't think we can deduct 0.57 cent legally ?
If I file dead miles
How can I prove ?

If you are dropping somebody off, and on your way to another pick up (or intentionally going to busy area), yes, those miles are deductible.

Yes, you can use the Standard Mileage Rate.  

You should be keeping a daily log of your miles.  Your Uber log probably shows the time you drop somebody off and pick up the next person.  If there is only a short period of time between them, the IRS shouldn't have any problem with understanding that those 'extra' miles are for business.

You should be able to deduct 75% of the lease payment based upon business use on Line 20A Schedule C.

How did you arrive at 75%?

If I leave my "day job" office and immediately go online as available as I drive home, are you stating the mileage to my home from my office to home is deductible even if I do not catch a rider along the way?

I am using Revdapp (<a rel="nofollow" target="_blank" href="http://www.revdapp.com">www.revdapp.com</a>) to track my miles and car expenses - this app is free and it gives you a report at the end of the month or year that's acceptable from IRS. Yep - using miles is the best way about deductions for your taxes!

I use an app called MileIQ.  It tracks all your driving and very easily allows you (with a simple swipe) to categorize each drive as business or personal.  I have found this method to be very simple and straightforward for tracking all miles driven, and it works even if you do not have the app open.