When you’re a driver for a ride-sharing company such as Uber, Lyft, Juno, or other car sharing service, the most important thing to understand about your taxes is that you are probably not an employee of Uber, Lyft or Juno. Drivers for these companies are usually independent contractors, a fact that has tax implications, both at filing time and year-round.
You’re the boss AND the employee
Tax deductions for your carSince you’re an independent business owner, just about any money you spend on your gig as a ride-share driver will be a tax-deductible business expense. The first thing that probably comes to mind is your car. There are two ways to take a deduction for the business use of your car:
- Deduct the actual expenses of operating the vehicle for business, including gas, oil, repairs, insurance, maintenance and depreciation or lease payments.
- Take the standard IRS mileage deduction. As of 2018, the rate is 54.5 cents per mile driven for business use.
- Mileage logs
- Any other documentation
Other tax deductions for ride-share driversCommissions you pay to the ride-share company are a business expense, as is any cost you may have to pay for technology installed in your car. Other tax deductions include:
- Water, gum or snacks for passengers
- Tolls and parking fees
- The portion of your mobile phone expenses attributable to your ride-share work can be used to reduce your self-employment income.
- For simplicity’s sake, it may make sense to have a dedicated phone for work.
Making sense of your 1099 formsAs a contractor, you won’t get a W-2 form from your ride-share operator, but you likely will receive one or more 1099 forms. Ride-share companies generally distribute these forms according to the same criteria:
- Payments for processing you customers’ payments are reported on Form 1099-K. The amount shown in Box 1a of this form is all the money that the ride-share operator collected from customers for rides that you provided.
- This likely will be more than you actually received in payment, since it includes the ride-share company’s commissions and other expenses. Your ride-share operator will provide you a tax summary you can use to translate the 1099-K information into some of the income and expenses to report on Schedule C.
- Payments for other activities, such as referrals or non-driving-related bonuses, are reported on Form 1099-MISC. This money is income to report on Schedule C.