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Discussion Starter · #1 ·
Hello,
I am new to the forum. I have been driving for Uber over 4 years now in Twin Cities Minnesota. 4 years of full time driving with uber, I decided go back to work for tax Accounting Firm. I really missed Uber(the crazy stories, night shift and the tax benefits).Recently, I met a Uber /Lyft driver who owes the Minnesota Revenue around $17,000 come to find out that this amount could have been avoided if he had asked the right questions and if he had informed his accountant about certain income and expenses,the taxes as well as all of the penalties could have been avoided. I realized that most accountants don't understand the Ride-Share business ,so they know the right questions to as the drivers.Our Accounting Office is group of CPA's and Enrolled Agents so i don't know answer i will definitely find out from some else and by the way, I have a Master's degree in Taxation Accounting.
 

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How the hell is that even possible? He hasn't paid taxes for 4 years or something? Took zero deductions and claimed the Uber fees as income?

Our household income is over 6 figures and we don't even pay 25% of that into the state.
 

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Discussion Starter · #3 ·
I was surprised too until i saw the notice. it is as a result of disallowed expenses, unreported income, Accrued Interests, under Statement of Income tax penalty those things can easily add up.
 

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Is my max SEP IRA contribution limit determined by my Gross Earnings or by my Net Payout? I can never seem to get a straight answer on that one.
 

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Discussion Starter · #5 ·
Gross Earning, Since it is the Employer that can contributed to SEP only . Most SEPs, including the IRS model Form 5305-SEP, require you to make allocations proportional to your employees' salary/wages. This means that everyone’s contribution is the same percentage of salary.
Employees have different net payout depending on the different adjustments to their salary including how much to be withhold? ,Health Plans,401k ,incentives and so on.
This is a good tax planning tool if you are self employed and u have income from your driving and you can put more money into your retirement.The contribution limits are different for Self -employed individuals.Typically,if you are self-employed, base your contribution on net profit - minus one-half of the self-employment tax - minus your SEP contribution.
 

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Ummmm if my inspection report included $900 in “repairs” to even be qualified to be drivable, this is an adjustment on my net, isn’t it?
 

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Thank you. This will be a real learning experience.👍
I just used the per mile deduction and then handle my own expenses. To me that's a lot simpler than trying to figure out how much of each repair goes to what. And if your total transportation expenses are greater than the 58 cent per mile deduction, then you really shouldn't be driving Rideshare because your vehicle is too expensive.
 

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Discussion Starter · #10 ·
Ummmm if my inspection report included $900 in "repairs" to even be qualified to be drivable, this is an adjustment on my net, isn't it?
Good points but it doesn't work that way,Irs wants you to choose between actual car expenses or mileage(58cents/mile). I usually add up my actual expenses and compare it to my mileage .Most times i end up using the mileage. If you use mileage,then you can pick up the inspection fees on your schedule C as part of your business expenses just like the uber fees.
 

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Good points but it doesn't work that way,Irs wants you to choose between actual car expenses or mileage(58cents/mile). I usually add up my actual expenses and compare it to my mileage .Most times i end up using the mileage. If you use mileage,then you can pick up the inspection fees on your schedule C as part of your business expenses just like the uber fees.
Isn't the rule such that once you switch to one of the two options, you cannot switch back?
 

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Discussion Starter · #12 ·
Every tax year you can choose whether you want to take actual car expense or mileage.
Isn't the rule such that once you switch to one of the two options, you cannot switch back?
Every tax year you can choose whether you want to take actual car expense or mileage. you can switch back and forth .Expenses are different from year to year. One thing i have come across is people leasing a car and also depreciating the car as an expense(that is double dipping)FYI, in the 58cents/miles about 23 cents is allocated to depreciation. You might be talking about your accounting method, year period,depreciation method, inventory method those ones is tough to switch from one to another.
 

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Every tax year you can choose whether you want to take actual car expense or mileage.
Clarification - as long as you chose standard mileage deduction in the first year. If you choose actual from the beginning you need to keep using it.

make sure your records are in good order if you choose actual. All receipts, log of all vehicle use, etc.

if you're full time, and the majority of your vehicle use is for ride share, it may be worth looking into. Part time, forget it... just use standard rate.
 

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Discussion Starter · #14 ·
Clarification - as long as you chose standard mileage deduction in the first year. If you choose actual from the beginning you need to keep using it.

make sure your records are in good order if you choose actual. All receipts, log of all vehicle use, etc.

if you're full time, and the majority of your vehicle use is for ride share, it may be worth looking into. Part time, forget it... just use standard rate.
Thanks RideshareCPA,
Your Clarification as long as you chose standard..." is not Accurate according Irs Publication 463 that talks about the Standard Mileage. There is no where it says you have to keep it for future year.It just says u have to chose the standard rate in the first year .
I have copied and paste what IRS publication 463 Chapter 4 says about the standard deduction.Hopefully this clarifies it.

Choosing the standard mileage rate. If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then, in later years, you can choose to use either the standard mileage rate or actual expenses.
 

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Hello,
I am new to the forum. I have been driving for Uber over 4 years now in Twin Cities Minnesota. 4 years of full time driving with uber, I decided go back to work for tax Accounting Firm. I really missed Uber(the crazy stories, night shift and the tax benefits).Recently, I met a Uber /Lyft driver who owes the Minnesota Revenue around $17,000 come to find out that this amount could have been avoided if he had asked the right questions and if he had informed his accountant about certain income and expenses,the taxes as well as all of the penalties could have been avoided. I realized that most accountants don't understand the Ride-Share business ,so they know the right questions to as the drivers.Our Accounting Office is group of CPA's and Enrolled Agents so i don't know answer i will definitely find out from some else and by the way, I have a Master's degree in Taxation Accounting.
Do it as an LLC otherwise all the money will pass through to you personally and then good luck with your write offs. If he grossed $170k and Mn tax is 10% there is your. $17k owed.

Yes. But my point was if you choose actual in the first year your car is in service, you cannot switch to standard later.
My CPA said I could switch back and forth after stupidly choosing actual expenses the first year. Held up with a audit of my "real" business by IRS. 3 actually. I don't think they will ever go away now 😟
 

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Discussion Starter · #17 ·
Do it as an LLC otherwise all the money will pass through to you personally and then good luck with your write offs. If he grossed $170k and Mn tax is 10% there is your. $17k owed.


My CPA said I could switch back and forth after stupidly choosing actual expenses the first year. Held up with a audit of my "real" business by IRS. 3 actually. I don't think they will ever go away now 😟
Thanks for the clarification, I agree when u choose the actual expense in the first year . You are stuck with it for rest of vehicle's life.
 
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