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How does the mileage deduction work?

Discussion in 'Taxes' started by GalinMcMahon, Sep 3, 2016.

  1. GalinMcMahon

    GalinMcMahon Active Member

    Location:
    Portland
    I'm using quickbooks with my Uber "business." I did my first quarterly and with expenses I was ahead by a couple hundred. Entering my mileage for the second quarter has been different. I notice that if I enter 100 miles which should be $54 (57?) then the deduction in taxes owed only changes by maybe $10 and not the full $54. Is 54 cents per mile the deduction or is 10 cents? There is no way to come out ahead if 10 cents a mile is all we actually get for car payment, gas, depreciation, etc.

    Please tell me I'm missing something here.
     
  2. Older Chauffeur

    Older Chauffeur Well-Known Member

    Location:
    Simi Valley Ca
    Just a guess, but could you have hit the $400 income threshold for self employment taxes (15.3%) to come into the figures? I don't know how that would affect the numbers Quickbooks is showing, but it seems like something has changed in the income area.
     
  3. GalinMcMahon

    GalinMcMahon Active Member

    Location:
    Portland
    Yes, it's possible I made it into a somewhat higher bracket. It still seems like I should be getting 57 cents back per mile. Ar only 10 cents it would be impossible to do business.
     
  4. Older Chauffeur

    Older Chauffeur Well-Known Member

    Location:
    Simi Valley Ca
    Yes, but what you are seeing is the end result, right? It would be like having your tax all figured and then seeing that you left off $5k in earnings, but with nothing further in deductions to offset it.
     
  5. Ubergirlz99

    Ubergirlz99 New Member

    Location:
    Los Angeles
    Driving:
    UberX
    Something is definitely wrong. I used to work in real estate, and the mileage deduction is the 2nd highest tax deduction behind a home mortgage. You should be getting the full .54 cents per mile.

    Just a heads up - if you claim mileage, especially a lot, it's a red flag for an audit. Make sure your log is audit proof. Most apps don't even come near the right amount of info. For instance, you have to have start and stop addresses, not just city. And you need a business purpose, which for us is easy. "Uber ride". I use a Mileage Ace (a designated GPS device), which is significantly more accurate than an app and logs a bigger deduction.
     
    GalinMcMahon likes this.

  6. uberfraud

    uberfraud Well-Known Member

    Location:
    Santa Monica
    Driving:
    UberSELECT
    I assume the mileage driven for uber passenger trips were included in annual 1099 supplied by uber? This isn't the case?
     
  7. Older Chauffeur

    Older Chauffeur Well-Known Member

    Location:
    Simi Valley Ca
    True, but that doesn't include "dead" miles, no pax but necessary to get to pick up point or back to area where you can get pinged after completing a paid trip.
     
  8. jester121

    jester121 Well-Known Member

    Location:
    Chicago
    You are.

    Revenue (Income)
    - Expenses (mileage deduction)
    = Profit (what you pay tax on)
    x Tax Rate
    = Tax Due (cash you mail to the IRS)

    Using some numbers as a better example:
    $300 Uber fares
    - $270 expenses (500 miles @ $0.54 per)
    = $30 Profit (or Net Income)
    x 25% tax rate (example only)
    = $7.50 in taxes due to IRS

    So the $0.54/mi isn't the amount by which your tax decreases, it's the amount used to offset your income/revenue, and that is what's used to calculate your taxes. Big differences with percentages in order of operations.
     
  9. SoiCowboy

    SoiCowboy Active Member

    Location:
    IE of SoCal
    Am I missing something here? The $.54 per mile is money off your Adjusted Gross Income. The way I see it described here is that the government is paying you $.54 to drive.

    Help me, please.
     
  10. Older Chauffeur

    Older Chauffeur Well-Known Member

    Location:
    Simi Valley Ca
    No, "the government" is allowing you to avoid paying tax on $.54 per business mile driven. The amount of tax you are saving depends on the bracket you are in.

    But I'm not a tax pro, let's see what they say.
     
  11. SoiCowboy

    SoiCowboy Active Member

    Location:
    IE of SoCal
    So then, we are in agreement.

    I pity the drivers that haven't done their due diligence in investigating the tax implications. I haven't been with one Uber/Lyft yet that knew how to keep track of miles/expenses.
     
  12. jester121

    jester121 Well-Known Member

    Location:
    Chicago
    There's little point in keeping meticulous records in between or during rides all night, unless you're completely anal and want to verify Uber's numbers.

    Odometer returning home at night's end
    (minus)
    odometer leaving home earlier
    =
    business mileage for the night.

    Add on dead-head tolls, and whatever other misc. expenses may apply, but not gas or anything that's included in the $0.54.

    Honestly, it's not complicated.
     
  13. Fuzzyelvis

    Fuzzyelvis Well-Known Member

    Location:
    houston
    Driving:
    UberX
    Your change in taxes you pay is not going to be the $54 for driving 100 miles, it will be the difference you would pay after deducting it from your income.

    So if for example you made $100 driving that 100 miles and for the sake of argument paid 20% taxes, you'd pay $20 in tax. After the deduction you'd pay taxes on $46, or $9.20 (20% of $46). So you save $11.80 in taxes paid.

    It's a deduction, not a credit. You are not GIVEN .54 a mile.

    Once your income gets too low to pay taxes it won't do anything.
     
    UTX1, jester121 and Older Chauffeur like this.
  14. Older Chauffeur

    Older Chauffeur Well-Known Member

    Location:
    Simi Valley Ca
    I don't think we are in agreement. You said the government is "paying you $.54 to drive." That would only be true if you were in a 100% tax bracket.

    Now this I agree with. I would just clarify by saying you need to record those actual odometer readings, along with the total business miles, the date and the purpose.
     
    Fireguy50 likes this.
  15. Older Chauffeur

    Older Chauffeur Well-Known Member

    Location:
    Simi Valley Ca
    Well said; better example than I gave.
     
  16. 5 Star Guy

    5 Star Guy Well-Known Member

    Location:
    Boston
    If you drove 15,000 for Travass in a year the mileage deduction would be $8,100. You do need to watch your deductions so you don't get audited like some people. :D
     
  17. UTX1

    UTX1 Well-Known Member

    Location:
    somewhere else
    This sounds right and appears to illustrate the point well, UNLESS one has been drinking alcohol.
    Then, we want to know where that $11.80 cents is right now, before the liquor store closes.
    My math then says that a cheap bottle of booze at $10.99, plus tax equals about $11.80
    To hell with everything else until tomorrow.... if the sun even rises again, who knows..
     
    5 Star Guy and Fireguy50 like this.
  18. Fireguy50

    Fireguy50 Well-Known Member

    Location:
    Usolye-Sibirskoye
    Driving:
    UberBLACK
    No, you'll be WAY off. Uber only adds miles of you with a passenger. Not the entire work shift.
    I like my TripLog app that sends a CSV file of each days mileage to me I can add up in excel. Part time driving I'm at 4,660 miles = $2,516.40 deduction.
    It has start & stop times, odometer readings and locations, average MPH, and other features I don't use.
     
    Last edited: Oct 5, 2016
  19. Fireguy50

    Fireguy50 Well-Known Member

    Location:
    Usolye-Sibirskoye
    Driving:
    UberBLACK
    Not if we drink enough, cheers mate! :)
     
    UTX1 and uberfraud like this.
  20. Vavvav

    Vavvav Active Member

    Location:
    Niagara Falls
    Shouldn't Uber be giving us the yearly km or mile count? Not worth declaring or paying taxes in my opinion or having Insurance outside of Uber, it will just complicate things. Let Uber work out the kinks first and then I will jump onboard.
     

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