Tax experts: a helping hand?

I am in need of some very general tax advice. Mainly, I want to know what I can expect at the end of this year.

I’ve recently started a job as a driver to earn some extra cash. It involves me driving some 300 to 400 miles per day on my own car. At the end of a week I might have driven close to 1500 miles, spent over a hundred dollars in gas, and sometimes close to a hundred dollars in tolls.

As part of the job I had to register as my own buisness, essentially an independant contractor.

So my questions are: Should I expect to pay uncle Sam a lot, even after all the miles and tolls?

What information should I be keeping. So far I have toll receipts and gas receipts. Anything else I should be keeping?

I am not a tax expert, but you’ll want a log book. A notebook will do. Date each trip, number of miles and its business purpose. Write down each toll you pay for the trip. You’ll have a hard time proving to the IRS that the $20 you spent to fill up the tank of your own car went for business purposes without good records.
You should expect to pay Uncle Sam your marginal tax rate after expenses, plus self employment tax (i.e. social security and FICA). If your day job pays you a lot of money, that might be 40% or more of your profit. But you probably aren’t doing this if your day job pays you $150,000 a year.

Thanks Dangerousa, so it’s going to be social security, FICA and whatever tax bracket I fall under minus expenses, right?

I did start a log book stating the mileage, tolls, and gas for the day, as well as the number of the particular job orders for the day.

I hope that + the pay stubs + the receipts will be enough ::crosses fingers::

Another follow up question, what exactly does ‘expenses’ cover? The exact amount of gas? A certain amount per mile? Does it include ALL tolls, or only some?

Anywhere I could get my hands on this info, in case it varies form state to state?

IANATax Expert, but “expenses” can include all expenses for the car – fuel, mileage, repairs, tolls, plus depreciation. Do keep that logbook up; contemporaneous records are the key not only to filing accurate tax returns but in case you get audited.

Usually the IRS does a deduction per mile thing that is inclusive of wear and tear (depreciation), insurance, gas, etc. If you keep a seperate car for your business, you’d have more luck tracking each expense, depreciating the car, etc. At this point however, you need someone who does taxes to answer the question for sure.

Another thing is that if the income is significant, you’ll need to file quarterly. Its probably worth talking to a real tax accountant.