uber driver, home office

[HOPE2]

Uber drivers, first is the taxpayer running this like a business and not just a hobby (look at the 9 factor test).  Is there a space in their home that they use regularly and exclusively for their business (scheduling their drives, working on their books, scanning receipts, etc) Once you have established a home office, the miles leaving their home to their first drive = business miles

Nadia Rodrigues on Intuit webinar said:  

Uber drivers, first is the taxpayer running this like a business and not just a hobby (look at the 9 factor test).  Is there a space in their home that they use regularly and exclusively for their business (scheduling their drives, working on their books, scanning receipts, etc) Once you have established a home office, the miles leaving their home to their first drive = business miles

Uber handles all administration and bookkeeping. The Uber tax summary includes everything. Uber drivers never actually schedule their drives from home. These statements may make a tax preparer more cautious and could increase the risk of an audit challenge. What do you think?

[sjrcpa]

Did you ask the client what he does in his home office?

And is it used regularly and exclusively for this business? Lots of people fail this.

[qbteachmt]

Is it a dedicated space, or does any part of it or equipment overlap with personal use?

Example: A corner desk, file cabinet, printer stand, office supplies cabinet, and computer, which is not used for personal, and the footprint doesn't include setting up the iron board in that space.

[HOPE2]

I personally do not consider a home office for Uber drivers, but Nadia, who was presenting a webinar today at Intuit, said

[HOPE2]

My question is not about how a home office should be. My question is about Uber drivers. In the Intuit presentation meeting, the presenter said that Uber drivers can have a home office. Do you agree with this? Personally, I don’t agree, and I have not done it so far

[BobKamman]

The rules about "home to first work place" don't apply to self-employed drivers.  They apply to people who don't need to use their vehicle once they get to work.  If a passenger is five miles away and wants to pay for temporary use of your car with a driver, you have to get the car to him.  That's deductible.  Enough of this "home office" nonsense.  

IRS admits this when it says, "If you operate a car pool for a profit, you must include payments from passengers in your income. You can then deduct your car expenses."

[BobKamman]

Of course, if you want to play that game, the first question is whether the taxpayer has a "regular or main job," in which case his travel to and from a temporary work location is deductible regardless of whether it requires a home office.  

[qbteachmt]

“said that Uber drivers can have a home office. Do you agree with this?”

Of course they can. Unless they are using only their car as their office, to keep track of costs, to handle the non-app communication and banking, to schedule appointments (such as tire purchase shopping and changeover, maintenance appointments), they might need to do online registration, deal with insurance agents.

The income tax business issue is: Does this taxpayer have a home office which meets the requirements? Or not?

[HOPE2]

In my opinion, the issue for Uber drivers is that the IRS usually considers the car and the driving activity itself to be the “main place of business,” not the home. That is why the home office discussion becomes important. That lady, Nadia Rodriguez, CPA, CTC, who came to the Intuit meeting a few days ago — I think even she, as an Uber driver, didn’t claim a home office deduction on their taxes. I don’t understand why she said that.

[BobKamman]

Quick, without looking, do you know what CTC stands for?  No?  I didn't think so.  I had to look it up myself.  It's "Certified Tax Coach."  Just what the world needs, and you can get it (for a price) from an organization in San Diego that calls itself the "American Institute of Certified Tax Planners."  They're a 501(c)(6) that has been around since 2023, when they filed a 990EZ, not required to report income and expenses, and showing an address that is described as a "shared workspace."

Bob Kamman, CTC*

*(Certified Tax Curmudgeon)

[Accountant-Man]

Has anyone here considered a cost/benefit analysis of claiming a home office? If you use even 10% of the house, what are the deductions and tax savings?

A $300,000 house (after subtracting land) depreciated over 39 years at 10% business use equals $769;

RE taxes of $8,000 claiming 10% equals $800;

Mortgage interest of $12,000 claiming 10% equals $1,200.

That is a total of $2,769 annual deductions. At a federal income tax rate of 12% that equals $332 annual federal tax savings.

Add in utilities, and whatever else. And remember, most ride-share drivers don't own million dollar homes.

ps You will also save S/E tax of $415, so the total savings are $747. Don't forget the time spent gathering the data. Add up all those utility bills!

And don't forget the recapture of depreciation taken, plus the 10% of the rest of the gain upon sale of the house because you claimed 10% of the house as a business property. The Sec. 121 exclusion doesn't apply to the office.

Is it really worth it? My house cost $87,000, and I sold it for $360,000.

[qbteachmt]

$5 per square foot up to $1,500.

My spouse is a musician and we had a music studio with piano, drums, recording equipment, sound deadening material on the ceiling. Probably about 600 sf. 27 years of ownership. Started using the simplified method when it came out in 2013. Nothing to recapture.