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Helping with tax questions

2K views 25 replies 10 participants last post by  ninfiction 
#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.
 
#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.
 
#13 · (Edited)
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.
 
#14 ·
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.
 
#16 · (Edited)
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 😟
 
#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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