# Best Tax Deduction Approach for UBER/Lyft drivers

 Most drivers choose the standard mileage approach for tax deduction. However, it would save you thousands of dollars if you opt the actual expenses approach. (refer to IRS publication for detailed guidance) Approach 1 – Standard Mileage: Mileage * Standard deduct rate (\$0.545 in 2018) Approach 2 – Actual Expenses: Depreciation + Insurance + Lease + Registration + Gas + Tolls + Garage rent + Parking fees + Miscellaneous Under the Actual Expenses Approach, the big items are “Depreciation”, “Gas”, and “Insurance” Item 1: Depreciation (Section 179 deduction) Make sure that you check out the conditions: more than 50% business use: total business mileage / total mileage purchased the new car on or after 2008 For 2017, the first-year limit on the total depreciation deduction for cars remains at \$11,160 (\$3,160 if you elect not to claim the special depreciation allowance – 5 y depreciation). Item 2: Gas Limited to 50% of the total gas expense Item 3: Insurance Insurance for the business: total rideshare insurance amount * (total business mileage / total mileage) Case study: Sam purchased a new car in 2017 for 25K and drove full-time his car for UBER. The total mileage is 25,000 miles, with 20,000 miles for business use and 5000 miles for personal use. The total gas expense is \$15,000. The annual rideshare insurance expense is \$2000. Other applicable expenses (tolls, garage rents, parketing fees…) are \$2000 1. Standard Mileage Approach 20,000 miles * \$0.545 = \$10,900 2. Actual Expenses Approach Depreciation under Special Allowance: \$11,160 * (20,000/25,000) = \$8,928 Gas: \$15000*50% = \$7,500 Insurance: \$2000 * (20,000/25,000) = \$1,600 Others: \$2,000 Total tax deduction = \$8,928+\$7,500+\$1,600+\$2,000 = \$ 20,028 Choosing the Actual Expenses Approach will almost double the tax deduction and save you a ton! Disclaimer: The case study is simplified for illustration. Please check IRS publication or your tax accountant for specific criteria or conditions. About us: Inpooling units rideshare drivers as one strong community, so we can provide cheaper and better GROUP insurance solutions. Each solution is specially designed to protect our drivers and help saving money! Our mission is to protect our community via technologies and innovations.