I have to say, when I travel, I love to pop my iPhone out and pull up UBER or LYFT. They work so cool! From the picture of the car and Driver to the real-time map showing their progress coming to you. The drivers are friendly, and they get you to your destination quickly. All paid from the app. I don’t have to dig for cash. I can even rate the driver on the app. In this “VID” year, I’ve become a regular user of GRUB-HUB. And I used to think the only home delivery service had to be pizza! Wow, now I can go online to my favorite local restaurant, order the same food I would normally get when there and have it delivered to my home. I Love it! If you are one of those folks who provide these wonderful services, I want to thank you!
Problem is, Congress just passed a law tightening up the reporting process of your income. You will now be receiving a form 1099 at the end of the year. No big deal. Most of us self-employed folks have been getting these for years. It means you must report all your income. That’s always been the case. Perhaps a few “bad apples” out there were not reporting all their income and spoiled it for the rest of you? In either case, you should most likely be reporting your activity on a Schedule C on your personal tax return.
The key is to keep tract of all your expenses. For driving related activities, keep a good mileage log. You will be deducting a large number of miles. IRS loves to audit and challenge such deductions. Best way to defeat the IRS, keep a good detailed daily log of miles driven. You don’t need every job, just total miles driven and how many were business.
There is a catch to deducting miles. It’s called commuting verses business. Non-deductible commuting are miles driven from your home to your first work site. Thus, try to get your first pickup to be as close to home as possible. For the rest of the day, it’s all business miles (unless you do personal stuff during the day). The drive from the last place of business to home is also non-deductible commuting miles, so try to make your last drop off as close to home as possible.
Other expenses might be meals, special clothing (if it has a business logo on it, you should be able to deduct the cost), etc.
One final thought. The “net” income is subject to Self-Employment Tax as well as Federal Income Tax. Be prepared by saving about 30% of your “net” profit for tax. Don’t make the mistake of spending all your gross earnings and then have nothing left to pay the hefty tax.
Have you heard? Prov 25:4 says, “Take away the dross from the silver, and material comes out for the refiner.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com Also on Facebook.