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Don't overthink this! I've been driving for Lyft and Uber on weekends for 3 years while working my regular 9-5. Here's what I do: 1. Track ALL my miles when the app is on (I use Stride - it's free) 2. Save receipts for car washes, phone mounts, etc. 3. Put aside about 25% of what I make from driving 4. At tax time, I use the 1099 from Uber and fill out Schedule C and Schedule SE I've never done quarterly payments and never had an issue. My regular job withholding covers the extra tax. If you're really worried, just put some money aside in case you owe at tax time.
Do you think 25% is enough to set aside? I've heard people say to save 30-35% for self-employment stuff. Also does the mileage deduction really make that big a difference?
I find 25% is plenty for me, but it depends on your tax bracket and how much driving you're doing compared to your main job. If Uber is a small percentage of your total income, 25% should be more than enough. The mileage deduction is HUGE! Last year I drove about 4,200 miles for rideshare and got a deduction of nearly $2,460. That significantly reduced my taxable income from driving. In fact, after the mileage and other deductions, I only had to pay taxes on about 30% of what Uber/Lyft paid me. That's why I emphasize tracking every single mile you drive with the app on.
As a teacher who also drives for DoorDash during breaks, I recommend using the IRS withholding calculator on their website. Input both your teaching income AND estimated gig earnings, and it'll tell you if you need to adjust your W-4 at school to cover the extra income. I just had my school district withhold an extra $50 per paycheck, which covered my DoorDash earnings so I didn't need to bother with quarterly payments. Way simpler than figuring out estimated payments!
Quick question - if I amend my 2022 return for missed mileage, will that increase my chances of being audited? I've heard that filing amendments raises red flags.
Filing an amended return doesn't automatically trigger an audit, but significant changes that substantially reduce your tax liability might get more scrutiny. The key is having proper documentation for your mileage claims. If you have good records (or even reconstructed records based on actual evidence like your delivery history), you shouldn't worry too much. The IRS understands that people make mistakes or learn about deductions they missed.
For those amending multiple years of tax returns for mileage, be strategic about when you file them. Don't send them all at once because that can look suspicious to the IRS. Space them out a few weeks apart. Also, don't forget that if your self-employment net income (after deducting mileage) was over $400 for any of these years, you still owe self-employment tax even if you were below the standard filing threshold. When people say "I made less than the threshold," they're often thinking of income tax, not self-employment tax which kicks in at a much lower level.
I'll go against the grain here - I still use TurboTax and haven't had any issues. Yes, it's more expensive than some alternatives, but the interface is super intuitive and I know where everything is. For me, the time saved is worth the extra cost. If you've used it before and are comfortable with it, there's nothing wrong with sticking with TurboTax. Just be aware of the upselling and make sure you actually need the features they're trying to get you to pay for.
Do you use the online version or desktop? I've heard the desktop version is better for military situations because it gives you more control, but it's also more expensive.
I use the online version, but I've used both in the past. The desktop version does give you a bit more control and detailed forms, but honestly for most military situations the online version has worked fine for me. The key is to look carefully at whether you really need the "Deluxe" or "Premier" versions they try to upsell you to. Often the lower-tier version will handle everything you need, especially if you don't have complex investments or rental properties. The military-specific items like combat pay exclusion are actually handled in all versions, even the basic one.
One thing to consider is free options through Military OneSource. They offer free access to tax filing software (I think it's actually a version of H&R Block) for active duty, Guard, Reserve, and recently separated service members. I used it last year and it was pretty good.
I use Fidelity for my RSUs and they provide a specialized tax statement that shows the proper adjusted cost basis for RSU sales. Is your broker E*TRADE or Morgan Stanley by chance? I know they sometimes send separate supplemental info that's easy to miss. Check your online account for a document called "Supplemental Information" or "Adjusted Cost Basis Report" - it might have exactly what you need!
I'm using Schwab actually. They did send a supplemental document showing the cost basis, but it's not formatted in a way that makes it easy to match up with the 1099-B transactions. There are different dates and lot numbers that don't seem to correspond exactly to what's on the 1099. Did you have to do any manual matching or calculations with yours?
Ah Schwab can be tricky with RSUs. Their supplemental document requires some manual work unfortunately. The lot numbers on the supplemental document should correspond to specific grant dates, not necessarily the sale dates on your 1099-B. You'll need to match each sale on your 1099-B with the appropriate lot(s) on the supplemental document. Look for matching quantities and dates that are close together. Sometimes a single sale on the 1099-B might include shares from multiple lots on the supplemental document, which means you'll need to calculate a weighted average cost basis for that transaction.
Don't forget to check if you had any disqualifying dispositions if these were Incentive Stock Options (ISOs) rather than RSUs! Different tax treatment altogether. Also, if your company withheld shares for taxes at vesting (typically around 22%), make sure you're only calculating basis on the shares you actually received, not the full grant amount!
Not all RSUs have shares withheld for taxes. Some companies give you the full shares and expect you to pay the taxes separately. The OP should check their vesting statements to confirm whether shares were withheld or not before making adjustments.
Fatima Al-Qasimi
Something nobody mentioned yet - if you have a regular W-2 job AND self-employment income, you still need to report the self-employment income even if it's under $400. The $400 threshold is just for paying the self-employment tax (Social Security/Medicare), but you still pay income tax on all your earnings. I learned this the hard way when I got a letter from the IRS about unreported income from a small web design project I did.
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QuantumQuester
β’Wait seriously? So even if I only make like $200 from dog walking, I still need to report it? Does that mean I need all those complicated self employment forms too or just report it as extra income somewhere? This is exactly the kind of detail that confuses me.
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Fatima Al-Qasimi
β’Yes, you still need to report it, but it's not as complicated as it sounds. You'll need to fill out a Schedule C to report your business income and expenses, but it's pretty straightforward for a simple side gig like dog walking. You won't need to pay the self-employment tax (the Social Security and Medicare portion) if your net profit is under $400, but you'll still include that income on your regular 1040 form and potentially pay income tax on it depending on your overall tax situation. Many tax software programs will walk you through this pretty easily.
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Dylan Cooper
Jumping in to add something important - keep GOOD RECORDS of your self-employment income and expenses! I've been self-employed for 3 years and the biggest thing that saved me was creating a simple spreadsheet from day one. Log every payment you receive and every expense related to your work. Take photos of receipts. If you use your car for business, track miles. It's so much easier to do this as you go than to try reconstructing everything at tax time.
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Sofia Ramirez
β’What kind of expenses can I actually deduct? I do graphic design from my apartment. Can I deduct part of my rent? Internet? My computer? How do you calculate all that?
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