There are many ways to maximize your Uber and Lyft profits and one of the most important is through your tax deductions. When it comes to rideshare taxes things can get a little complicated. Fully understanding what expenses you can deduct can save you thousands.
I created this list of 25 rideshare tax deductions for Uber and Lyft drivers so you can make the most of your deductions and save as much money as possible.
Before we get into the specific tax deductions, lets begin with what you need to know about your taxes and how to file them.
Rideshare Tax Forms: 1099-K and 1099-Misc
Unlike the traditional workforce, Uber and Lyft drivers file their taxes as self-employment income and will receive 1099s tax forms from Uber and Lyft. Rideshare drivers will pay their taxes via 1099-K for their driving services and 1099-Misc for other payments such as referral fees, incentives bonuses, etc. On the Uber and Lyft website you will be provided with up to three forms. Under Tax Information, you will find your 1099-K, 1099-Misc, and a yearly summary. Uber’s 1099-K and 1099-Misc A 1099-K will be provided if you earned at least $20,000 in gross payments and provided at least 200 trips. If you do not meet both of these criteria, you will not receive a 1099-K. A 1099-Misc will be provided if you received at least $600 in non-rider payments such as referrals and on-trip promotions/incentives.
Online Miles refer not to just your on-trip miles but to all the miles you drove while having your Uber application online. For the majority of drivers that own their vehicle your rideshare mileage will amount to your largest deduction.
Gross trip earnings will match line 1a on your 1099-K.
Total Additional Earnings will match line 7 on you 1099-Misc.
Expenses, fees, and taxes are important information on your yearly summary. Since you must report the exact number your receive for your gross trip earnings (1099-K) in your taxes, you must later on remember to deduct your expenses, fees, and taxes as commissions/fees. Many individuals forget to deduct these when completing their taxes (See Deduction #9).
Lyft’s 1099-K and 1099-Misc
A 1099-K will be provided given you earned at least $600 in gross ride receipts from passengers in the past year. A 1099-Misc will be provided if you made at least $600 from non-driving activities such as referral bonuses and other bonuses.
Your in ride miles and out of ride miles will need to be combined and that will give you your total mileage eligible for deductions.
Gross trip payments will match line 1a on your 1099-K.
Total non-ride payments will match line 7 on you 1099-Misc.
Lyft commissions mimic Uber’s expenses, taxes, and fees section. Make sure to deduct these as commissions in your taxes as well. (See Deduction #9).
Three Divisions of Rideshare Tax Deductions
When you do your rideshare tax deductions you will be able to categorize the majority of your deductions into the following three components:
- Standard Mileage
- Actual Expenses
- Business Expenses
Deduction #1: Standard Mileage
Tax Category: Standard Mileage
For every mile driven for rideshare purposes equals a deduction of 54.5 cents. That means if you drove 10,000 miles you can deduct $5,450 from your taxes! You can only use this deduction if you own or lease your vehicle.
What miles count as deductible miles?
Any time you rideshare your miles are deductible. This includes all miles while your Uber or Lyft applications are online. You can deduct miles it takes to drive to your rideshare location you work in and miles you drive home after ridesharing. You can even deduct trips to the gas station or to gather supplies for ridesharing.
I recommend using Quickbooks Self Employed to track your miles.
Deduction #2: Gas Expenses
Tax Category: Actual Expenses
Anytime you buy gas related to ridesharing it becomes a deductible expense.
Deduction #3: Mechanical Repairs
Tax Category: Actual Expenses
Did you replace your brakes or have to repair your car due to Uber and Lyft. Write it off!
Deduction #4: Car Payments
Tax Category: Actual Expenses
If you are leasing or renting your car, you can deduct a percentage of your payments. The percentage you pay correlates between your business use of your car vs the personal use of your car.
Deduction #5: Insurance
Tax Category: Actual Expenses
You need car insurance to be a rideshare driver so make sure you deduct it. The write off amount is determined by the percentage of business use versus personal use. You can also choose to deduct all of your rideshare insurance instead.
Deduction #6: Tires
Tax Category: Actual Expenses
Did you replace your tires due to rideshare driving? Make sure to write them off.
Deduction #7: Oil Changes
Tax Category: Actual Expenses
If you drive for Uber or Lyft, I guarantee you have had to get an oil change.
Deduction #8: Car Depreciation
Tax Category: Actual Expenses
Every year your car is losing value. If you own your car, you can deduct your annual car depreciation. There are several different ways to calculate your car depreciation. How you determine your car depreciation depends on how you use it between personal use and business use.
Deduction #9: Commissions/Fees
Tax Category: Business Expenses
This is where your yearly summaries for Lyft and Uber come into play. Find your Lyft commissions section and your Uber expenses, fees, and taxes section on your yearly summaries. These are what you will deduct as commissions/fees. Any commission or fee Uber or Lyft took from your earnings is deductible.
Deduction #10: Dashboard Camera
Tax Category: Business Expenses
Not only is it smart to have a dashboard camera, but its also deductible. Deduction amounts relies on personal/business use percentage.
Deduction #11: Butt/Back Pad
Tax Category: Business Expenses
Did you buy any tailbone/support products for ridesharing? First off, they make driving long hours far more bearable. Second, you can deduct them.
Deduction #12: Cell Phone and Data Plan
Tax Category: Business Expenses
If you bought a cell phone just for rideshare purposes you can deduct the whole phone. If you are using a new phone that you use for personal and business purposes you can deduct a percentage of your cell phone that you use for business. Also, you can deduct a portion of your of cellular data plan as well.
Deduction #13: Roadside Assistance Plans
Tax Category: Business Expenses
Did you buy AAA or other roadside assistance plans for ridesharing? If so you can deduct all costs of these plans from your taxes. If you bought it before find the percentage between personal and business use of the plans.
Deduction #14: Music Subscriptions
Tax Category: Business Expenses
Did you purchase any music subscription programs like Apple Music, Spotify Premium or Soundcloud Go for rideshare? If so deduct the cost. If its personal/business deduct the appropriate business use percentage.
Deduction #15: Phone Mount
Tax Category: Business Expenses
Unless you had one provided for you, you bought a phone mount. Deduct it.
Deduction #16: Phone Chargers
Tax Category: Business Expenses
Did you buy additional cell phone chargers for yourself and your passengers? Deduct them!
Deduction #17: Snacks/Drinks
Tax Category: Business Expenses
Candies, water, or any snacks/drinks are all deductible if bought for your rideshare passengers.
Deduction #18: Parking Fees
Tax Category: Business Expenses
Did you pay for any parking while driving for Uber and Lyft. Guess what deduct those parking fees!
Deduction #19: Tolls
Tax Category: Business Expenses
If you paid for tolls to get anywhere for ridesharing they are deductible. You can also deduct tolls that occurred during your rideshare trips. You can find tolls that you occurred during your rideshare trips under your Uber and Lyft yearly summaries.
Deduction #20: Car Washes
Tax Category: Business Expenses
Did ridesharing up your amount of car washes? Write those extra car washes off.
Deduction #21: Cleaning Materials
Tax Category: Business Expenses
Did you buy a portable vacuum, lint rollers, or anything that you use to clean your car? Deduct it.
Deduction #22: Seat Covers
Tax Category: Business Expenses
Seat covers protect your car from unwanted stains. They also give your car a fresher look. Deduct these.
Deduction #23: Car Mats
Tax Category: Business Expenses
Buying all weather car mats not only protects your car, but it also keeps it looking cleaner. Don’t forget to deduct these mats.
Deduction #24: Air Fresheners
Tax Category: Business Expenses
Did you buy febreeze, essential oils, or a diffuser to make your car smell wonderful for your passengers? Deduct those.
Deduction #25: Massages
Tax Category: Business Expenses
Getting a massage a great way to loosen up your tense driving muscles and as long as your doctor prescribes them as medically necessary they are deductible. Go get yourself a tax deductible massage!
Thanks for this. Good information here.
Thank you! Wonderful help.