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Uber with a Tesla
- Thread starter Keith909man
- Start date
I’m not a tax accountant but I am a CPA and this is questionable on its face. If you receive payment for rendering services it is generally taxable income. Mileage costs can be used to offset income but I can’t imagine a scenario where this isn’t taxable income unless both the state and Fed have some kind of ride share program I don’t know about.
the irs mileage deduction is $0.58 / mile. so if waze is paying $0.58 / mi you'll end up with net $0 taxable income.
for uber the mileage deduction offsets about 75% of my earnings. so the amount left over to pay taxes on is pretty small. since model 3 is so efficient it doesn't actually cost us $0.58 / mi.
for uber the mileage deduction offsets about 75% of my earnings. so the amount left over to pay taxes on is pretty small. since model 3 is so efficient it doesn't actually cost us $0.58 / mi.
Don't use a car that is worth more than $10k to drive for Uber / Lyft. The depreciation will eat all of the income. A Tesla Model 3 loses about 2-5% for each 10-15k mi driven. If you had a 19' M3 sticker for $43k, after that 30k mi, it's worth about $34-36k. If you drive for Uber and say you made $1500 driving about 5k mi. At about 35-40k mi on your M3, it's gonna be worth only around $30k. The rule is the more miles you dump on the M3 in a short span the quicker the depreciation. Most people would rather buy a used 2019 M3 with 15k mi on it than a car M3 with 30k mi on it.
Now if you were using a beater such as a Prius which is a very popular car for Uber. The car can be bought for $5k for a 2010 model, after 50k mis on it. The Prius will be worth at worst $4k by the end of 2020 while your Model 3 will lose 25% of the value with 50k mi on it.
Whoever is foolish to use Model 3 as a full-time Uber is stupid. I've seen 2 M3 in NYC being used as full-time Uber. Uber profit is very miniscule after expenses. Even at $60/hr which is pretty common around NYC. It is not enough to pay for the wear/tear and cost of depreciation. The tires on Model 3s are very pricey they are technically $300/wheel rubber. Sure you can use something cheap but the point is the stock tires are not cheap.
If you take that $36k Model 3 and drive it full-time you'll rack up 5k mi per month and that's about 60k mi a year and I wouldn't pay more than $25k for a used model 3 with 60k mi.
Now if you were using a beater such as a Prius which is a very popular car for Uber. The car can be bought for $5k for a 2010 model, after 50k mis on it. The Prius will be worth at worst $4k by the end of 2020 while your Model 3 will lose 25% of the value with 50k mi on it.
Whoever is foolish to use Model 3 as a full-time Uber is stupid. I've seen 2 M3 in NYC being used as full-time Uber. Uber profit is very miniscule after expenses. Even at $60/hr which is pretty common around NYC. It is not enough to pay for the wear/tear and cost of depreciation. The tires on Model 3s are very pricey they are technically $300/wheel rubber. Sure you can use something cheap but the point is the stock tires are not cheap.
If you take that $36k Model 3 and drive it full-time you'll rack up 5k mi per month and that's about 60k mi a year and I wouldn't pay more than $25k for a used model 3 with 60k mi.
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That's how I understand it. A mileage reimbursement is not taxable as long as it does not exceed the IRS mileage rate. But I am not actually doing it, so I really don't have to look into this too hard.
I Lyft my M3 have been for the past six months - here are some takeaways from my experience:
1. As many ppl have said, you need to be aware of how the insurance works. When you're not in driver mode, you're on your own insurance obviously. When you're driving and have a rider, you're on the ride-share companies insurance. When you're in driver mode, but don't yet have a fare, you're in a gray zone. Some insurance companies have a special rider for this period. For me, it adds $16/mo, but it's worth it IMO. But I think if I'm ever in an accident with my M3 - that will be the end of ridesharing for me. I'm gambling for sure.
2. The ride-share companies insurance probably really really sucks...I hope I never have to find out. The Lyft deductible is $2500. This is obscene and IMO should be illegal. IMO the deductible should be matched to what you carry for your own insurance. For many people that drive their own car part time, a single minor accident will wipe out many months of "profit."
3. Lyft allows the M3 to be used for "Lux" rides, and I think "Lux Black" if your car is black. But only accepting Lux rides will drastically cut down on your income in most markets (I tried and only made 1/4 of what I made accepting any ride type).
4. It's great fun to "evangelize" for Tesla, but don't expect too much. The vast majority of riders don't care about your car one way or the other. Only maybe one out of 20 will actually be interested to learn about the car. From the rest you may get a compliment or or question and that's about it. Even this will decline once Tesla's become more prevalent obviously.
5. The doors on the M3 are a pain for riders - the back doors especially. With the front doors, if you press and release the button, the door can still be opened...it has "popped". Not the case with the back doors - you have to HOLD the button and open the door. And then there's the tricky pop-out handle. All-in-all a manageable pain, but a pain none the less.
6. Don't expect higher tips when driving the M3. I saw no difference going from an old beater 328i to the M3.
7. The inexpensive "fuel" changed the way I feel about ride-share diving significantly. Inevitably you will end up far from home at the end of a day. Nothing is a beating like having a sh!tty day with little profit, and then having to waste another gallon or two getting home - further eroding your meager earnings. The M3 changes that equation completely...I know that long drive is only taking a few pennies of "fuel" and is not putting me closer to an oil change. It's liberating.
8. It's baaaaarely enough $ to be worth doing. Someone else on this thread said that people that drive their own cars are basically extracting value from their car, not really making money. That's exactly correct IMO. But the M3, with the lower fuel and maintenance costs (knock on wood) might move that need juuuuuust barely over the profitability line. We will see.
(8a. As an aside, I'm certain ride-share companies are aware of #8 - their business model is based on people who are willing to 'donate' the largest asset of their business - the vehicles - essentially for free in exchange for returns well below minimum wage.)
9. It's a fun hobby (if you're not anal)! Don't ever quit a day job to drive for Uber or Lyft. But if you're easy going and looking for a (mostly) entertaining way to spend some time and make some "walking around money" - then I recommend it!
1. As many ppl have said, you need to be aware of how the insurance works. When you're not in driver mode, you're on your own insurance obviously. When you're driving and have a rider, you're on the ride-share companies insurance. When you're in driver mode, but don't yet have a fare, you're in a gray zone. Some insurance companies have a special rider for this period. For me, it adds $16/mo, but it's worth it IMO. But I think if I'm ever in an accident with my M3 - that will be the end of ridesharing for me. I'm gambling for sure.
2. The ride-share companies insurance probably really really sucks...I hope I never have to find out. The Lyft deductible is $2500. This is obscene and IMO should be illegal. IMO the deductible should be matched to what you carry for your own insurance. For many people that drive their own car part time, a single minor accident will wipe out many months of "profit."
3. Lyft allows the M3 to be used for "Lux" rides, and I think "Lux Black" if your car is black. But only accepting Lux rides will drastically cut down on your income in most markets (I tried and only made 1/4 of what I made accepting any ride type).
4. It's great fun to "evangelize" for Tesla, but don't expect too much. The vast majority of riders don't care about your car one way or the other. Only maybe one out of 20 will actually be interested to learn about the car. From the rest you may get a compliment or or question and that's about it. Even this will decline once Tesla's become more prevalent obviously.
5. The doors on the M3 are a pain for riders - the back doors especially. With the front doors, if you press and release the button, the door can still be opened...it has "popped". Not the case with the back doors - you have to HOLD the button and open the door. And then there's the tricky pop-out handle. All-in-all a manageable pain, but a pain none the less.
6. Don't expect higher tips when driving the M3. I saw no difference going from an old beater 328i to the M3.
7. The inexpensive "fuel" changed the way I feel about ride-share diving significantly. Inevitably you will end up far from home at the end of a day. Nothing is a beating like having a sh!tty day with little profit, and then having to waste another gallon or two getting home - further eroding your meager earnings. The M3 changes that equation completely...I know that long drive is only taking a few pennies of "fuel" and is not putting me closer to an oil change. It's liberating.
8. It's baaaaarely enough $ to be worth doing. Someone else on this thread said that people that drive their own cars are basically extracting value from their car, not really making money. That's exactly correct IMO. But the M3, with the lower fuel and maintenance costs (knock on wood) might move that need juuuuuust barely over the profitability line. We will see.
(8a. As an aside, I'm certain ride-share companies are aware of #8 - their business model is based on people who are willing to 'donate' the largest asset of their business - the vehicles - essentially for free in exchange for returns well below minimum wage.)
9. It's a fun hobby (if you're not anal)! Don't ever quit a day job to drive for Uber or Lyft. But if you're easy going and looking for a (mostly) entertaining way to spend some time and make some "walking around money" - then I recommend it!
I have been doing the waze carpool thing for a little while. It's not for making money but I made maybe $100/month for just driving to work and back. I have a long commute and it's enjoyable meeting different people. Some riders are more chatty than others. The car itself doesn't generally interest most riders. I have found many riders have been driven by Tesla drivers. Apparently Tesla drivers in LA are worried about using autopilot and falling asleep at the wheel so invite other riders to keep them away! I had one rider who swore by his Cadlilac CTS-V until he experienced Tesla acceleration.. hahaha I never heard anything from Google re: waze and taxes. Waze pays the mileage allowance but then they add a bonus amount on top of a couple of bucks.
DJVoorhees
Member
Dont forget - you dont get to keep all that money, you have to pay taxes on it.
A nasty year end surprise for those who arent expecting it.
A nasty year end surprise for those who arent expecting it.
Blucenturion
Member
Wholeheartedly agree with each item. And if dog carrying wouldn't be mandatory, I may still be racking up miles. Your post came closest to what Id've written
Thank you!
Here are a couple more things that came to mind.
10. Taxes. Chill on the tax concerns. Lyft doesn't even send a 1099 of any kind until one of two thresholds are crossed: 1. You make more than $20k in ride payments. 2. You receive more than $600 in bonuses (ie, a new driver cashing in on a referral bonus is the easiest way to pass this mark.) Note that's the NEW driver, not the referrer that gets the big bonus (~$650) IF they also give something like 85 rides in the first 30 days. That's actually a pretty high mark - in most markets you'd have to drive more than 20 hrs a week to hit that.
So the bottom line is most people who drive casually (like part-time - say 15-20 hours/week) will never receive a 1099. Of course you are supposed to report the income to the IRS, so why aren't the ride-share companies required to 1099 at lower amounts? Because - as others have said here - with the $0.58 per mile IRS allowance, most people would pay LESS taxes! Yes that's correct - if you actually account for ALL miles driven and expenses while ride-sharing - which you should if you intend to report the income on your taxes - you will probably pay LESS income tax! But is it worth all that trouble for the scratch you make? Heck no. Will the IRS audit when the most likely result is a LOWER tax bill? Heck no. So bottom line - unless you intend to Lyft/Uber full time, IMHO you don't need to worry about the taxes. (Disclaimer: I am not a tax adviser, but I play one on the internet.)
11. Don't get your hopes up about handing out your referral code. (See #4). Chances are the few people that show interest in the car already have a friend of family member that owns a Tesla. So they'll certainly use that code over some random Lyft driver's. And you don't want to be pushy - unless it comes up organically I'd never offer my code. I actually printed out little slips with my referral code for this purpose - I've never handed one out.
12. For the most part people are pretty cool. It's easy to imagine all these crazy scenarios - dirty people in your car, ppl doing weird things in the back seat, crazy cat ladies, etc. These things do happen, but they're rare. You will meet far more people that are cool or make you laugh or are fascinating than are a pain.
13. The nightmare - people vomiting in your car. This is a real possibility, and oddly enough I think the other-wordly smoothness of the M3 might actually make motion sickness worse. But there is an almost fool-proof way to prevent it: Don't drive late-night. But if you do (and even if you don't), carry kitchen-size garbage bags in your door pockets. At the first sign of nausea - make sure they have it in their hand. Trust me - they will appreciate it. Vomiting in someone else's car is as much embarrassing for them as it is trouble for you (almost).
I think if you're near a major airport then essentially running just as an airport shuttle probably would avoid most that crap. Even more so if you just run FROM the airport back to home/hotel. Most these people are probably going to be business travelers, or single personal travelers. They'll have been screened by TSA and will be sober. You probably won't make a huge amount (I assume this is one of the longer pickups and probably has a lot of "off the clock" wasted time) but you might be able to fit a few rides in on your days off or weekends or maybe a ride after work if you notice a decent amount or 6 pm or 7pm arrivals or something. I doubt it would hugely be worth it, but if you're struggling to pay something maybe that would help offset it some.
This is something that always bugs me, same with the "I worked 95 hours this week!" Are you getting below minimum wage when you count up JUST the active hours of having a fare? I know that's "unfair" and it shouldn't work that way, and I totally agree with you, but you're not an employee of the company. You are contracted for one thing, transporting a person from Point A to Point B and your contract is for that single task. Then you go back on a passive mode (in the eyes of the company) and are looking for your next contract. Trucking companies and everyone else in those kinds of jobs largely work on the same system, they're not paid when they don't have a load.
If you drive for 2 hours a day, but sat "ready" for 10 with the app open, you did NOT work 10 hours, you worked 2 hours. If you made $25 in those 2 hours you did NOT make $2.50/hr, you make $12.50/hr. Yes it's a horrible system and abuses the contractors, but get wise and just go "active" when you're going out doing something. Have to run to the bank, on the way home go "active" and only accept rides somewhat near you. Drive by the airport on the way home from work, go "active" then and see if you get a fare from the airport. It's ride SHARE, not on demand taxi service. Obviously it's being run as an on demand taxi service now, but the whole idea was originally sharing rides and monetizing that system.
I don't think people will ever get paid enough to cover their passive time and average out a decent wage across all those hours. A trucking company can demand high enough fees because they're relatively in demand and there isn't a flood of them on the market...
Knightshade
Well-Known Member
..wait, what?
The .58 cents a mile only applies to deducting from income earned by that driving. It's a deduction not a credit.
On top of that- The $20,000 threshold has nothing to do with the .58 deduction.
It's the same threshold under which nobody has to issue a 1099-K per IRS rules.
1099-K Tax Basics
And sure enough what are Lyfts thresholds for issuing one?
lyft said:
There's nothing specific to ride sharing going on there at all.
Last year I earned about $5,000 with 11,500 miles of deductions so I turned out OK. When accepting rides I do about $1.05 take home per total mile before expenses. My acceptance rate is only about 10% so I only pick the close rides that are profitable.
Why do I do it? Well it's fun and being in Nebraska only 3 out of my 530 riders last year had even been in a Tesla. One of three people was a very well know person with Tesla that has had single digits VINs. That alone makes it worth it.
Why do I do it? Well it's fun and being in Nebraska only 3 out of my 530 riders last year had even been in a Tesla. One of three people was a very well know person with Tesla that has had single digits VINs. That alone makes it worth it.
Ah ok. So if you have income from other sources, and your ride-sharing expenses (calculated from the $.58/mile plus related purchases) exceeds your ride-share income, you can't deduct more than the ride-share income? In other words, you can't declare a 'loss' from the business expenses? Good to know.
And yes, I wasn't saying the thresholds on the 1099 forms were set by the ride-share companies. But in the case of most people who drive for Lyft/Uber, the income will not trigger a 1099 and it's not profitable for the IRS to pursue (audit) non-reported ride-share income because in most cases the per-mile deduction will offset most if not all the profits.
Yes, in most markets (including mine) if you calculate ONLY "active hours of having a fare" - minus expenses, the per-hour wage is below minimum wage. For example, on a recent Sunday, I had an active fare for just over two hours (in driver mode for 3 hours) and drove for 106 miles. My GROSS for the day was $48. My expenses @$0.58/mile were $61.48. Do the math.
I just don’t understand that. I don’t look at using Uber very often, but the few times I have priced it out, a 45 to 50 minute airport transfer (about 15 to 20 miles) was like $65 to $80! Doing a round trip I wasn’t far off rental car prices, so I just rented a car instead.
Here's how your ride would be priced and paid in my market - a typical large suburban-mix city (ie, not NY, Chicago, or LA. Think Denver, Houston, or Phoenix)
Opening the rider app and picking a point 20 miles from the local airport, Lyft would charge $32 to get you there.
Assuming the ride took 40 minutes (about right) here's how the driver gets paid:
Base Fare: $0.75
Time ($0.12/min): $4.80
Mileage ($0.60/mile): $12
Tolls: $2
Bonuses: (Not very common in this market) $0
Tip: (~1 out of 4 riders tip)
Time ($0.12/min): $4.80
Mileage ($0.60/mile): $12
Tolls: $2
Bonuses: (Not very common in this market) $0
Tip: (~1 out of 4 riders tip)
Total: $19.55 (So the rule of thumb is - whatever the fare is, the driver gets a little more than half. Remember that if you tip.)
Driver cost @ $0.58/mile: $11.60 + $2 Tolls
Driver profit after costs: $5.95
Driver hourly rate: $8.93/hr
Ok, so in this isolated example we actually got pretty close to minimum wage. But there are some factors that push it lower. You always have to drive TO the pickup - typically a couple miles, but sometimes up to 7 or 8. That's time and mileage you're not being paid for. And this ride example actually is a pretty "good" fare. Most rides are well under 10 miles. My average pay for a ride is closer to $6. That means that the unpaid mileage getting TO the fare increases proportionately. It's not uncommon to have only 3 rides in an hour (which is pretty close to the max possible here) and make less that $10 gross. And I know you don't want to include time or distance while waiting for the fare, but those do factor into the equation.
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