Tax attorney Mark Kohler explains how rideshare and delivery drivers can save money by treating their work as a business. He breaks down two vehicle deduction methods, standard mileage versus actual depreciation, and recommends setting aside 20% of net income for quarterly tax payments to avoid penalties.
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Hi, Mark Kohler here with another tax and legal tip. Let's talk about driving for Uber. What a great opportunity, right? Everybody can make a few extra bucks driving for Uber. That's awesome. But we've got to make sure we report our taxes and do it in a strategic way. You can actually save a lot. Number one, this is a business. Embrace it. Be excited about this. This, this is a great opportunity to take tax write offs as a business owner. Now, I know some of you that have been W2 wage earners for years. This is maybe going to freak you out. You're not going to get a W2. We're going to talk about some of those issues later here in a moment. But you've got to remember this is a business. And as you collect your revenue, that's awesome. You're going to have to report taxes on it, but you also get tax deductions as a business owner. So we're going to be going over that. But keep in mind, it's a business. Number two, as I said, you need to track something, and that's expenses. Track all your expenses related to this business. As an Uber driver, we talk about writing off the vehicle itself, but I also want you writing off cell phones and dining meetings with your other Uber drivers as you strategize and any training meetings you may go to, or anything related to your car, little apps or the cleaning of your car and the different things you're doing to maybe give water to your patrons. And you may even need a home office and a computer and smart watch to get better faster to your fares that you're going to be driving around. So this is a great opportunity to track all those expenses at cell phone, travel, dining, entertainment, laptops, computers. Track it all. Now, when you meet with your accountant at the end of the year, you can bring all these expenses out and you might trim some of them down. I don't want you to get too aggressive, but if you don't write down these expenses, you're going to miss them. So maybe having a separate business bank account or at least tracking a certain credit card you use for business expenses, or just your regular checkbook and debit card. Track everything and do your best to put it on an Excel spreadsheet if you have to. And the bigger you get, the other businesses you might start in the future, you'll get more organized with your bookkeeping, but do your best to track all your expenses. Number three, writing off your auto. Now, this is a big topic. And on my YouTube channel you can see other Videos about writing off your car. Whether you're leasing or doing mileage or actual. There's lots of options, but let me just give you the two main ones so that you can start thinking about it. One, you can do mileage. Mileage is a great way to take write offs for in a very simple way, you're going to track your miles as you drove for Uber. There's going to be easy reports to track how many times you drove for Uber and maybe there's some extra driving around there that you'll put into your tax return, but you're going to track personal miles separate from your business miles. Get a good app, take a good, you know, little record, keeping a notebook along with you and keep it in the glove box when you fill up with gas, something. But mileage is your first option and typically going to be your best, especially with a car. Your other option is going actual where you depreciate the car. Now if you're buying a brand new car, there's some bonus depreciation and if you use the car more than 50% for Uber driving or any other business you have, then it makes depreciation a much better write off as well, where you actually depreciate the car and then you write off gas and repairs and fuel maintenance, all those little things. So when you go with mileage, I don't care who pays for the gas, you're just going to do mileage. But when you go actual, you have to track all those expenses that you're paying for when you're driving the car. Could even be a lease payment. So study up on that. I've got other videos on my YouTube channel, my blog articles, videos on my website. Hopefully you'll start to follow me as your business tax consultant, my team as we help you through this process. But the auto deduction is a powerful one as an Uber driver. Finally, number four, we've got to talk about withholdings. We've got to think about paying the tax on the net income we're making. Remember, you're not an employee anymore. No one's withholding from your paycheck. You got to withhold from yourself. Now you just need to do some basic estimates and maybe you're going to make quarterly deposits or annual deposit with your extension or with your tax return. But you got to come up with something because you don't want to get blindsided. At the end of the year. I usually recommend to clients to set up a separate savings account just to put some tax money away and then do quarterly deposits as you work with your accountant to get on a good system. Now, the estimate can vary dramatically from person to person, but I generally recommend that you look at your sales, look at your expenses, and kind of estimate how much you're netting on paper every month and then take 20% of that and set it aside. Now, your tax rate could be a little higher or a little lower than that, but at least you're setting aside 20% as a ballpark figure to just kind of get rolling. So don't forget about quarterly deposits. It's an important part of the piece. Bottom line, Being an Uber driver is a great opportunity to make extra money, save taxes, and better live that American dream. I'm so excited with opportunities like this for people to dip their toe into entrepreneurship and start a small business like this. Use this as an opportunity as you're driving around an Uber to think about other businesses you might want to start. Keep living the dream people. It's real. Being an Uber driver is a gateway drug to living the entrepreneurship dream. Thanks for watching and if you love that video, I've got a lot more. Please subscribe to my channel and I shoot weekly videos that can help you in your business, personal life and better live your American dream. Also, check out my newsletter free newsletter every week with blog articles, tips, strategies, tax deadlines. You'd love it. Also, if you like social media, please follow me on social media with some daily tips and if you like to connect that way, it can be a lot of fun. But finally, please check out my tax and legal Library. I have 50 plus videos on these topics and more where I pull out a whiteboard and break them down. Hours and hours of helpful information that can better help you live the American dream.
