It’s the first time I started to use it a driver. After the expenses and deductions , it shows my net income is a little over $4000 ,but the federal tax due is $2400,then I look at the breakdown, it says I have to pay the blend tax rate at 60%. Does anyone have idea why it’s like that ?
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Our go-to tax guy here is @UberTaxPro. Maybe he will see your post, or you can pm him. In the meantime, did you use Schedules C and SE?
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Blended tax rate is for a corporation. You must have misclicked somewhere.
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I used T/T for years of self employment and have never seen a screen like this. Can you start over without penalty- are you using an online version with limits?
On Schedule C input the total gross from Uber/Lyft, then deduct their commissions and fees to get your gross, which should match your bank deposit. Then you deduct your mileage and other expenses to arrive at your net profit. If that figure is $400 or more, you will owe SECA taxes, figured on Schedule SE. Your tax rate will be determined by the total of your self employment income and any other earnings listed elsewhere on your tax return.
Owing $2400 in income tax on $4000 profit can't be right.
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I used the basic online package. Messed something up and was able to erase everything and start again.
I used the " File for free " T/T link in my Uber account page, otherwise it'd cost a fee. please see the attached screenshots showing the breakdown of my schedule C or so, and tell me what's wrong, because based on my net income , after the standard deduction of $12,200 in the Credit /deductions section, it shows how much I owe and why. I'm really confused.
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In your original post you said your federal income taxes were $2400 on $4000 income. I thought that sounded high, but I forgot to include SECA. Based on the figures I'm seeing, $2241 of that is SECA (Social Security and Medicare contribution) shown on Schedule SE and the worksheet that goes with it.) Then you have about $3735 in additional (taxable?) income on top of the Uber net profit of $14652 for a total of $18387. Subtract $14265 (including partial deduction of SECA) for net taxable income of $4122. Now subtract $2241 (SECA) from your tax due of $2483 which leaves you paying actual income tax of $242, an effective tax rate of 5.9%.
Bottom line, I'm thinking that the tax you owe is probably right, if your schedules and worksheets match the figures in T/T summarizations. The "blended" rate mentioned must mean combined with SECA. If you have had a regular job you and your employer split the Social Security and Medicare contributions (FICA).
Keep in mind that the IRS generally wants everyone to pay as you go. T/T will give you a schedule of quarterly estimated taxes and the dates and amounts you should pay, because you wound up owning more than $1000 this year. You could be penalized next year if you don't pay quarterly or don't have enough paid in.
Edit: SECA is 15.3% of net profit from self employment. $14652x15.3%=$2241
Disclosure: I'm not a tax professional like @UberTaxPro. Go by what he says. :wink:
Bottom line, I'm thinking that the tax you owe is probably right, if your schedules and worksheets match the figures in T/T summarizations. The "blended" rate mentioned must mean combined with SECA. If you have had a regular job you and your employer split the Social Security and Medicare contributions (FICA).
Keep in mind that the IRS generally wants everyone to pay as you go. T/T will give you a schedule of quarterly estimated taxes and the dates and amounts you should pay, because you wound up owning more than $1000 this year. You could be penalized next year if you don't pay quarterly or don't have enough paid in.
Edit: SECA is 15.3% of net profit from self employment. $14652x15.3%=$2241
Disclosure: I'm not a tax professional like @UberTaxPro. Go by what he says. :wink:
Thank you for explaining. $3535 is the canceled credit debt. In the original post, the screen shot off T/T shows the breakdown table of tax based on blended tax which sounds ridiculous. Today I checked it out again. It becomes like this. See screenshots, pls
I did deduct the under commission as expense in schedule c , plus other job/related expenses, that's how over$14000 Uber net income came out , then plus 1099 MIS n INT incomes., it comes out over $18000, then it should subtract the standard deduction of $12,200 before it goes into the taxable income, correct? Then it should be $4122( based on the number coming out of T/T calculation) x 14%, right ?
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Pls see my Uber statement , I did plug in those numbers (1099k ,1099 misc)in filing ,
Screen 1 shows how the number is put in the ceeen 2. I thought the calculation before my tax due comes out should be a simple math, but not in this case , can someone solve the puzzle , pls?
Wait, Just realized that I calculated inaccurately , it should be - $14652 + $3535+$200 = 18387, then subtracted by $12,200 ,the standard deduction as a qualified business credit ( last year it was $12,000) , then $18,387-12,200= $6187 , then times the SE rate , about 14%, the number still would be way different than what it shows in T/T. Did I sue the wrong method ? By the way, see the screenshots of my last yr's printed return from a tax service showing the net income after expenses, then subtracted by EIC , I ended up paying Tex less than $600. Although my uber earning increased by about $16,000, but it incurred more expenses I could use to deduct. But still, I shouldn't have this much tax due this yr.
Screen 1 shows how the number is put in the ceeen 2. I thought the calculation before my tax due comes out should be a simple math, but not in this case , can someone solve the puzzle , pls?
Wait, Just realized that I calculated inaccurately , it should be - $14652 + $3535+$200 = 18387, then subtracted by $12,200 ,the standard deduction as a qualified business credit ( last year it was $12,000) , then $18,387-12,200= $6187 , then times the SE rate , about 14%, the number still would be way different than what it shows in T/T. Did I sue the wrong method ? By the way, see the screenshots of my last yr's printed return from a tax service showing the net income after expenses, then subtracted by EIC , I ended up paying Tex less than $600. Although my uber earning increased by about $16,000, but it incurred more expenses I could use to deduct. But still, I shouldn't have this much tax due this yr.
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I've gone about as far as I can go with this. I don't know where you are getting 14%. I trust T/T to plug in the numbers you give it, but if you're still unsure, it might be worth it to your peace of mind to upgrade with them to have one of their people go over it with you. Also, @UberTaxPro does returns for members here. You can pm him for details.
I did notice that you're listing about 2500 miles more than Uber shows for online mileage. Do you have a contemporaneous log to support your claim? If not for the taxable debt cancellation, you probably wouldn't be paying income tax, but rather just the SECA contributions.
I'm no expert, but some of the things you've claimed as expenses for ride share might raise a red flag, such as "assets" "supplies," and communications." The latter is probably your cellphone bill. Are you aware that you need to prorate those bills if you use the phone for both business and personal calls, data, gps, etc? Similar to how the SMR deduction is only for business mileage when you use the car for personal travel. Do you have receipts for the supplies? Just saying, be prepared to support and defend the expenses you claim.
Good luck.
Just saw your edit to your post. The "SE" 14%, if you're ta about self employment, is the 15.3% SECA contributions I mentioned earlier. You can't avoid SECA, based on your profits, and aside from that, your income tax is nominal.
These extra screenshots don't look like they match your situation or numbers. ???
I did notice that you're listing about 2500 miles more than Uber shows for online mileage. Do you have a contemporaneous log to support your claim? If not for the taxable debt cancellation, you probably wouldn't be paying income tax, but rather just the SECA contributions.
I'm no expert, but some of the things you've claimed as expenses for ride share might raise a red flag, such as "assets" "supplies," and communications." The latter is probably your cellphone bill. Are you aware that you need to prorate those bills if you use the phone for both business and personal calls, data, gps, etc? Similar to how the SMR deduction is only for business mileage when you use the car for personal travel. Do you have receipts for the supplies? Just saying, be prepared to support and defend the expenses you claim.
Good luck.
Just saw your edit to your post. The "SE" 14%, if you're ta about self employment, is the 15.3% SECA contributions I mentioned earlier. You can't avoid SECA, based on your profits, and aside from that, your income tax is nominal.
These extra screenshots don't look like they match your situation or numbers. ???
"I did notice that you're listing about 2500 miles more than Uber shows for online mileage."
Where did you see it? Pls show me. I have a second car for personal use. Ok, it's 15.3%, and maybe my assets were overstated ,still my question remains- I made only over 15k on Uber more comparing to 2018, plus $3535 canceled debt, why am I seeing tax due 3 times more than last yr? All my entries are listed here. The blended rate thing appeared once and now T/T doesn't use it for my calculation anymore. How do we apply standard deduction ( $12,200 2018)? UberTaxPro doesn't reply my message anymore
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You're showing $37736 in vehicle expenses, which would be 65062 miles @ $0.58 per mile. Uber said you had
62555 online miles, $36281 @ $0.58 per mile. 2507 additional miles.
Listen, like I said in a previous post, if you don't trust T/T, take your information to a tax preparer and spend even more money to probably find out you owe the same amount. @UberTaxPro is indeed a professional and is very busy this tax season, so he doesn't have time to be repeatedly answering basically the same questions.
I can only guess why you owe more this year. But consider that you are paying tax on that debt canceling that you didn't have last year. Look at your return from last year and see what you paid in SECA contributions. Did you pay 15.3% of your net profit? If not, sooner or later the IRS will catch the error and collect it. You got a refund, so had you paid in from a regular job, or was it all EIC, or did it increase your refund, making it look like you paid less? Maybe the extra earnings disqualified you this year for the EIC.
T/T automatically takes the standard deduction once all the computation is done on your Schedules C and SE and the worksheet for your vehicle, etc. As I said earlier, I have used T/T for years. Back when I used a CPA to prepare my returns, I would do them myself on T/T, just to see how close I could come to his figures. They always came out very close. One year T/T picked up on something his more expensive professional tax preparation software missed, and he had to redo my returns.
My advice is to pay the money T/T says you owe and set up quarterly estimated payments, which should come up when your returns are finished. In the event, however unlikely, that a mistake has been made, the IRS will find it, whether in your favor or theirs.
62555 online miles, $36281 @ $0.58 per mile. 2507 additional miles.
Listen, like I said in a previous post, if you don't trust T/T, take your information to a tax preparer and spend even more money to probably find out you owe the same amount. @UberTaxPro is indeed a professional and is very busy this tax season, so he doesn't have time to be repeatedly answering basically the same questions.
I can only guess why you owe more this year. But consider that you are paying tax on that debt canceling that you didn't have last year. Look at your return from last year and see what you paid in SECA contributions. Did you pay 15.3% of your net profit? If not, sooner or later the IRS will catch the error and collect it. You got a refund, so had you paid in from a regular job, or was it all EIC, or did it increase your refund, making it look like you paid less? Maybe the extra earnings disqualified you this year for the EIC.
T/T automatically takes the standard deduction once all the computation is done on your Schedules C and SE and the worksheet for your vehicle, etc. As I said earlier, I have used T/T for years. Back when I used a CPA to prepare my returns, I would do them myself on T/T, just to see how close I could come to his figures. They always came out very close. One year T/T picked up on something his more expensive professional tax preparation software missed, and he had to redo my returns.
My advice is to pay the money T/T says you owe and set up quarterly estimated payments, which should come up when your returns are finished. In the event, however unlikely, that a mistake has been made, the IRS will find it, whether in your favor or theirs.
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