How do I decide between itemizing and claiming the standard deduction as a single filer with two jobs, where one has deductible expenses?

by James G. McGrory, CPA, and Stephanie K. Otake, CPA | Aug 09, 2018

I have no idea how to file my taxes since I am an independent employee for a delivery company, and they don’t automatically take taxes out of my earnings. Would someone be able to give me some pointers?

For the job as a driver for Uber, you are considered a self-employed independent contractor, and not an employee of Uber. Uber should provide you with a Form 1099-MISC that reports the income you earned working for them, how much in fees Uber received, and how many miles you drove while on the app. You will need to report the income you earned from Uber and the related expenses you incurred to earn this income on Form 1040, Schedule C, Profit or Loss from Business, of your individual tax return.   

You must do the calculations and decide whether you want to use the standard deduction expense method which, for 2018, is 54.5 cents for business miles driven (this includes mileage reported to you by Uber as well as those miles from the moment you leave your parking spot until you drop off your last passenger and return home) or the actual expense method. The actual expense method takes into account all the expenses necessary to operate your vehicle used to drive for Uber, including car insurance, auto repairs and maintenance, gasoline, oil changes, etc., but you can only deduct the business portion of these expenses based on an allocation of business miles driven divided by total miles driven. This method requires a lot of record keeping and tracking of expenses. The standard deduction method is easiest to compute, but it may not give you the largest deduction. Regardless of which method you use, you can still deduct additional expenses necessary to operate your Uber driving business. Some examples are mobile phone, snacks and refreshments for passengers, car washes, tolls, etc. The business expenses you report on Schedule C will reduce the income reported to you on Form 1099-Misc from Uber.

Once you compute your Schedule C net income from your Uber driving business, you will then add this amount to the wage income you receive as a teacher, as well as any other income you receive (bank interest, etc.) to determine your adjusted gross income for the year. From your adjusted gross income, you are then permitted to take the higher amount of your standard deduction (which, for 2018, is $12,000) or your itemized deductions (state and local income taxes, real estate taxes, home mortgage interest, charitable contributions, etc.) to arrive at your taxable income.

A CPA can provide more detailed advice and help you do the calculations to arrive at the best tax result.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: James G. McGrory, CPA, and Stephanie K. Otake, CPA, are with Drucker & Scaccetti in Philadelphia.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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