Tax Tips for Uber, Lyft Or Other Ride Share Drivers

Lauri PaxtonBlog, Business, TaxesLeave a Comment

Tax-Tips-for-Uber-Drivers

If you are one of the thousands of people who started to drive for ride share companies such as Uber or Lyft, then this may be the first year that you are filing your taxes as self-employed. You have enjoyed the ability to make your own schedule, work when you want, and make decisions to help improve your income. But what does all of this mean for your taxes?

As far as the ride share companies are concerned you are an independent contractor who is not considered an employee, but rather a contractor who provides a service. This is why when you get your check from these companies they do not withhold any taxes like a typical employer would. This is the reason that you will receive a 1099 form rather than a W-2 for your taxes.

As a driver, you will receive two 1099s.

  • Form 1099-k. This gives you the total amount that passengers paid for rides that you have provided. This includes all money collected from passengers including Uber commission and other fees. This is why the amount shown in box 1A is more than the amount that you actually received. You can usually deduct these additional fees as business expenses so you are only required to pay taxes on what you have earned.
  • Form 1099-MISC. This form accounts for any other type of income you received form things such as referrals and non-driving-related bonuses.

You will most likely report your 1099 on Schedule C, profit or loss from business. You can also use Schedule C to list your business-related expenses.

  • You subtract your business expenses from your income, and then enter the difference on line 12 of the 1040.
  • This income amount is also used on Schedule SE, in calculating your self-employment taxes for Medicare and Social Security.

The ride share companies also will provide you with a tax summary that breaks down the totals for both your 1099 forms.

You are also required to have a smartphone for your business so keep in mind you can deduct its expenses. These expenses may include:

  • The cost of the phone.
  • Charges from your carrier.
  • Any accessories such as chargers mounts or phone holders.

Some other items that you may also be able to deduct are:

  • Bottled water, snacks other treats for customers.
  • Airport fees.
  • Freeway highway bridge and tunnel tolls.
  • Toll transponder.
  • A tool kit for your car.
  • First aid kit.
  • Garbage bags to keep your vehicle clean.

While all of this may seem a little overwhelming, talking to your bookkeeper or accountant can help to lower the stress that is often experienced when preparing your taxes. These professionals may also be able to help you find more deductions reducing the total amount that you owe the IRS when it comes tax time.

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