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Uber/Lyft/Grubhub/etc.
For-Hire Drivers Uber/Lyft/Grubhub/etc. This is not a lesson in how to prepare Schedule C or the details of all the pertinent tax laws
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Transportation Network Company (TNC)
TNC is a new term being used by government entities to refer to rideshare companies such as Uber and Lyft
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For-Hire Drivers Uber/Lyft and such view themselves as a third-party payment processor that facilitates payments between consumers (passengers) and business owners (the driver). As such, the driver is the contractor of the passenger, not of Uber/Lyft. Therefore, they issue a 1099-K, not a 1099-MISC to represent the payments processed on behalf of the driver (similar to Paypal) and these payments may include monies that the driver never sees. 1099-Misc may be issued for incentive payments, driver referral payments
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For-Hire Drivers – Income
For-Hire Drivers report earnings on Schedule C Uber/Lyft/etc. business code: All other transit and ground passenger transportation Grubhub/DoorDash/etc. business code: Couriers and messengers Loss on Schedule C is out of scope Review documents during interview for all Schedule C scope criteria Taxpayers determine their income, mileage and other expenses Changed business code for Uber/Lyft/etc. Third party network transaction means any transaction that is settled through a third party payment network, but only after the total amount of such transactions exceeds $20,000 and the aggregate number of such transactions exceeds 200. However ... Minimum thresholds of greater than $20,000 and more than 200 transactions do not apply to payment card transactions Taxpayer should give you the total income earned, deductible miles and business expenses. We can assist and advise but we should not be the bookkeeper/accountant.
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For-Hire Drivers - Income
Driving for multiple TNC’s (Transportation Network Company) If the taxpayer drives for both Uber and Lyft only one Schedule C is needed Combine the income and expenses from Uber and Lyft on Schedule C. Use a scratch pad for each entry HOWEVER……..
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For-Hire Drivers - Income
If the Taxpayer drives for Uber and/or Lyft and drives for Grubhub/DoorDash/etc one Schedule C is needed for Uber/Lyft and another Schedule C is needed for Grubhub/DoorDash/etc Business Code Couriers and messengers - Uber/Lyft Business Code Couriers and messengers- Grubhub/DoorDash
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For-Hire Drivers – Income
Income reporting documents Statement from the payer showing income, commissions and fees, mileage, etc. Taxpayer needs to print from his/her online account Form 1099-MISC Form 1099-K common with Uber/Lyft Payment Card and Third Party Network Transactions May also receive cash (tips for example) Third party network transaction means any transaction that is settled through a third party payment network, but only after the total amount of such transactions exceeds $20,000 and the aggregate number of such transactions exceeds 200. However ... Minimum thresholds of greater than $20,000 and more than 200 transactions do not apply to payment card transactions
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Form 1099-MISC Enter amount on 1099-MISC and attach to Schedule C
Tax form may or may not be received. Enter amount on 1099-MISC and attach to Schedule C 5,605
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Form 1099-K Tax form may or may not be received.
Enter box 1a amount on Schedule C as gross payment Form 1099-K Enter tax withheld in Payments and Estimates section Boxes 1b and all 5 boxes are subsets of box 1a. No need to enter these.
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Form 1099-K or If No Tax Form (TaxSlayer)
Select Schedule C and enter in first Income field Selecting 1099-K simply takes you to Schedule C entry page anyway Total of Form(s) 1099-K plus cash income, but not Form(s) 1099-MISC income.
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For-Hire Drivers – Expenses
Standard mileage rate (58¢/mile for 2019) in scope for For- Hire Drivers Must use standard mileage rate in first year vehicle used for business or otherwise forever foreclosed from using that method for that vehicle Out of scope if actual vehicle expenses claimed First and last ride of day to and from home are nondeductible commuting miles unless taxpayer claims home office deduction (which is out of scope)
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For-Hire Drivers – Expenses
Detailed records essential Total mileage – business, commuting and other Business expenses Business use and purpose All expenses must be reported – even if result is a net loss (which is out of scope)
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For-Hire Drivers – Expenses
Add to standard mileage business portion of Tolls: 100% business use when incurred as For-Hire Driver Parking: 100% business use when incurred as For-Hire Driver Auto loan interest Auto personal property taxes Taxpayer to determine business portion based on miles driven or other reasonable method when property not 100% business Example: Business miles 4,500 ÷ Total miles 45,000 = 10% business use $1,000 interest paid on auto loan in 2019 $1,000 X 0.10 = $100 deductible auto loan interest on Schedule C
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For Hire Drivers – Expenses
Examples of potentially 100% business use expenses Uber/Lyft/Grubhub/etc. fees Device subscription fees Snacks and water for passengers Passenger cell phone accessories, such as chargers and cables Mileage tracking software Airport fees Business license Ride sharing insurance Dash camera List of additional expenses are examples and not intended to limit only these expenses Note Dash Camera may be 100% business use or ratable
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For Hire Drivers – Expenses
Examples of ratable business-use expenses Cell phone and mount Flashlights and flares First aid kit Road-side assistance plans Dash camera List of additional expenses are examples and not intended to limit only these expenses Note Dash Camera may be 100% business use or ratable
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For Hire Drivers – Expenses
Examples of expenses included in standard mileage rate that are not deductible as business-use expenses Maintenance and repairs Oil changes Car washes Fuel Normal insurance Vehicle registration fees
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UBER Driver Tax Preparation
Each driver has an on-line account with Uber. There is a folder for tax information. This folder may contain a K, a 1099-MISC and a document of supplemental information. This last document is critical.
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Sample UBER Statement
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Sample UBER Statement
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Sample UBER Statement Total gross receipts is reported on the 1099-K. This is entered as Income on a scratch pad on Schedule C. Uber drivers also earn money for referrals. This pay shows up on the supplemental document and only shows up on a 1099-MISC if the total exceeds $600. If less than $600, add to the scratch pad.
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Sample UBER Statement-Supplemental Info
The supplemental info shows a break down of the 1099-K payments processed. It represents fares charged, special supplemental fares charged (share rides etc.) AND charges to clients for tolls. The supplemental fares were paid by the rider to Uber and therefore should be deducted as expenses. Tolls are also an expense to be deducted. HOWEVER, Uber calculates tolls based on EZPass rates and only for the passenger trip, not for the driver's "return to base". The driver may not save EZPass billing records or segregate personal from business use so use judgment as some bridges/tunnels charge tolls both ways and some one way (sometimes the return trip only) and non-EZPass drivers pay extra.
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For-Hire Drivers – Quality Review
Review payer statement and tax forms (1099-K and MISC) Verify amount of cash income (tips) added to Schedule C Confirm only business portion of expenses claimed Remind taxpayer to maintain accurate written documentation of mileage and expenses
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For Hire Drivers
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