One of the issues numerous new drivers overlook once they’re simply getting began is taxes. Taxes as an unbiased contractor might sound scary, however they’re truly fairly easy. Today, we’re going to reply all of the questions you might have to ensure you maximize your deductions and reduce your taxes paid.
The information under is all related for submitting your 2017 taxes – this implies the GOP Tax Plan won’t have an effect on your taxes this yr, however they could subsequent yr. For extra info on the brand new tax plan (which takes impact for 2018 taxes), check out our article “How the New GOP Tax Bill Affects Rideshare Drivers” here.
Every yr by the top of January, Uber and Lyft ship out 1099s for the prior tax yr that element how a lot you made, what charges they took out and the miles you drove. And since drivers are unbiased contractors, all meaning in your taxes is that you simply’ll need to file a Schedule C along with your 1040. This yr they minimize it fairly shut and despatched out 1099 information on Jan. 31, 2017!
So let’s get began and see easy methods to file your taxes as a rideshare driver.
1099-Okay vs 1099-Misc
Uber and Lyft each contemplate themselves third celebration cost processors. I’m conversant in this time period as a result of I used to simply accept Paypal funds with one among my previous companies, and solely in years the place I remodeled $20,000 and did 200 transactions would I obtain a 1099-Okay.
A 3rd get together cost processor is actually an organization that facilitates funds between shoppers and enterprise house owners. So that’s why you see corporations like Paypal, Amazon Payments and Square label themselves as third social gathering cost processors.
Now clearly Lyft and Uber do an entire lot greater than facilitate funds, however that is the excellence they’ve determined to go together with. This gained’t have an effect on the quantity you pay in taxes, however it does imply they’ll report gross revenue and you’ll have to subtract out the charges/commissions they cost.
New for 2018:
You might obtain these tax paperwork from Uber:
- A tax abstract: an unofficial doc produced by Uber and offered to each driver/deliverer. This tax abstract may have a breakdown of your annual earnings and business-related bills that could be deductible.
- 1099-Okay: An official IRS tax doc that features all on-trip gross earnings. Only drivers who made greater than $20,000 in passenger/supply funds and offered a minimum of 200 rides/deliveries will obtain a 1099-Okay.
- 1099-MISC: An official IRS tax doc that exhibits a breakdown of promotion, referral and different funds for the yr. Only drivers/deliverers who acquired greater than $600 or extra of those funds will obtain a 1099-MISC.
New this yr is Uber’s tax abstract, which all drivers will obtain. Below is an instance of the tax abstract you’ll obtain, and you’ll discover that the tax abstract now exhibits your complete on-line miles. This means miles ready for a visit, miles in your option to decide up a passenger/UberEATS order, and on journey miles. This is totally different from final yr, when Uber’s assertion solely confirmed on journey miles.
In addition, the tax abstract additionally breaks down your bills, charges, and tax. This half will present you potential tax deductions.
Now the place it will get complicated is with the 1099-Okay, since Uber studies gross fares together with all of their charges/tolls/and so on. All you must do although is mix the quantity in your 1099-Okay and/or 1099-Misc, and that’s the complete that may go down as your revenue in your Schedule C.
Now I do know what you’re considering. That quantity is rather a lot greater than what you truly made, and you’re 100% proper. In order to get your true earnings, it would be best to subtract all the bills, charges and tax (you can find your tax summary here on the Partners Platform).
Also new in 2018, Uber is now providing a taxes FAQ page you can access here.
Lyft dealt with their 1099-MISC the very same means as Uber: drivers who earned over $600 in bonuses, mentor rides, and so forth acquired one. Unlike Uber, Lyft might be sending a 1099-Okay to all drivers who earned at the very least $600 in gross experience receipts. So in the event you didn’t meet that threshold, you’ll not obtain a 1099-Okay.
But keep in mind, no matter whether or not you get a 1099 or not, you continue to need to pay taxes on all the cash you earned. In order to appropriately report your revenue, you’ll want to go over to log in to your Driver Dashboard and click on “Tax Information”. There you’ll see your gross experience earnings, Lyft fee and in experience miles/out of experience miles. You can add the 2 mileage numbers collectively to get your complete ‘online mileage’ which might be just like the quantity Uber supplies.
To print out your Lyft 1099 varieties, visit your driver dashboard here and click on to “Tax Information”.
Driving For Lyft And Uber
If you’ve been following my recommendation over the previous yr, you in all probability drove for multiple TNC final yr. If that’s the case, you continue to solely need to file one Schedule C, however you’ll need to mix the revenue from Lyft and Uber in your Schedule C and mix the fee and charges from Lyft and Uber too. Just ensure you account for the right bills as detailed above.
Since Uber and Lyft are all thought-about the identical ‘rideshare driving business’, you solely have to fill out one Schedule C. If you additionally did supply, technically you’re presupposed to do a separate Schedule C however I’d speak to a CPA about that. You might in all probability argue that since Uber now presents UberEats for instance, your enterprise is actually extra offering ‘logistic services’ than rideshare or supply sort providers.
Standard Mileage Rate
We’ve talked about normal mileage price vs precise expense technique before however for many of you, the usual mileage price will possible make extra monetary sense (and will probably be quite a bit simpler). Just notice that if you go for the usual mileage price, you have to select to make use of that within the first yr the automotive is used as a enterprise. In later years, you’ll be able to then select both technique.
For 2017, the usual mileage fee is 53.5 cents per mile and that principally consists of all the prices to function your car: fuel, depreciation, oil modifications, upkeep, repairs, and so forth.
Remember, the precise value to personal and function your car is just not 53.5 cents per mile although. That is the deduction quantity that you’ll get from the IRS. Your precise value must be an entire lot much less, particularly if you wish to be worthwhile as a rideshare driver.
Uber offers the entire variety of miles you drove whereas on-line in your tax abstract and Lyft supplies the entire variety of on journey and off journey miles whereas (which you’ll be able to mix to get your complete miles pushed whereas on-line). You can use this quantity however it might not embrace your whole deductible miles.
Documentation and data are extraordinarily necessary in relation to submitting your taxes. If you discover it troublesome to maintain data, I recommend using one of these mileage trackers (a number of the mileage trackers right here additionally assist you monitor automotive washes, well being care, and extra!)
If you’re solely going to trace one factor, be sure to are monitoring your miles! A full-time rideshare driver will simply put 1,000 miles every week on their automotive which interprets right into a $535 deduction every week or $27,820 by way of the yr (which is fairly large).
There’s some confusion round which miles you’ll be able to deduct as a driver, however personally, I deduct all of the miles from the second I depart my home till I arrive residence. Especially now which you could activate the vacation spot filter in the event you commute in/out of the town.
Remember, Uber solely offers on-trip miles so that you’ll need to use a 3rd social gathering mileage monitoring app like Stride Drive or QuickBooks Self-Employed. You can discover a full record of mileage monitoring apps here.
- Other bills like automotive washes, cellphone use, sweet/water/and so forth, Spotify membership, Bluetooth, Trunk Organizers, and so forth could also be deductible too so long as they’re ‘ordinary and necessary‘.
- The solely factor you’ll have to be careful for with deductions is a cellphone that could be used for private and enterprise use. Generally, you’ll need to allocate between private/enterprise use, so for those who use the telephone 50% of the time for enterprise and 50% of the time for private, you then would solely have the ability to deduct half of the price of the telephone and month-to-month subscription.
- Here’s an excellent useful resource from Starzyk CPA if you wish to study some extra tax deductible bills: Everything You Need To Know About Rideshare Taxes. And for those who’d like to rent Joe, please click here to fill out an inquiry type.
How Do Most Drivers File Their Taxes?
If you’re questioning what your fellow drivers do once they file their taxes, listed here are the responses from a survey I despatched out originally of the yr:
Hiring a Rideshare CPA
If you’re going to go the CPA route, I like to recommend you discover somebody who’s educated in small enterprise and/or rideshare drivers. There are tons of of hundreds of rideshare drivers lately, so it shouldn’t be too onerous to discover a CPA who’s accustomed to Uber.
A number of you will have requested for my suggestions for a rideshare CPA, and I’ve partnered with Starzyk CPA to supply a particular deal for RSG readers. If you’re inquisitive about utilizing Joe’s providers, please fill out this form.
Using Tax Software
TurboTax/QuickBooks Self-Employed Bundle
I’ve all the time been a fan of TurboTax software program, and since Uber and Lyft drivers have 1099 revenue, you’ll have to go together with the TurboTax Self-Employed version. They’re additionally providing a deal the place you will get the QuickBooks Self-Employed (QBSE) Tax Bundle, which mixes QBSE with TurboTax Self-Employed. That method, you possibly can simply export your whole ridesharing deductions from QBSE immediately into TurboTax vs. ranging from scratch.
If you don’t need the bundle and simply need to get TurboTax, please think about using my affiliate link and I’ll get a small reduce out of any buy you make.
H&R Block Online Software
I haven’t ever used H&R Block for my taxes, however I do have a number of associates who use the software program and discover that it’s similar to TurboTax however at a lower cost level. H&R Block additionally has all the similar auto-import options and each providers can truly import one another’s returns from prior years so switching shouldn’t be a lot of a problem.
If you find yourself utilizing H&R Block in your taxes, please think about using my affiliate link and I’ll get a small reduce out of any buy you make.
Frequently Asked Questions
Why is the quantity on my 1099-Okay from Uber greater than what I earned final yr?
Since Uber considers themselves a 3rd social gathering cost processor, the quantity proven in your 1099-Okay goes to incorporate the quantity you earned plus Uber’s fee, tolls, and so on. Uber will present you an quantity for “expenses, fees, and taxes” however double verify with your personal data to ensure that’s the right amount.
Why didn’t Uber or Lyft ship me a 1099? How can I do my taxes and not using a 1099?
If you made lower than $20,000 and 200 rides, you gained’t obtain a 1099-Okay from Lyft or Uber. You nonetheless have to pay taxes on the cash you made although, so head to your Uber or Lyft abstract web page and get the data you want there to do your taxes.
Uber may even ship all drivers a tax abstract, and that may allow you to if you file your taxes.
What is the enterprise code for Uber and Lyft for my Schedule C?
For Uber & Lyft use: 485300 Taxi & Limousine Service
Business codes are utilized by the IRS to categorize what you are promoting for statistical functions solely. The code you enter won’t have an effect on the result of your tax return.
What if I’m renting a automotive to drive for Uber or Lyft?
If you’re renting a automotive from a program like Lyft’s Express Drive, then you can’t take the usual mileage deduction. Instead, you’ll have to deduct your weekly rental funds and allocate your proportion of private and enterprise use (you’ll have to track your miles so as to have the ability to do that although).
Why did I get two 1099-Okay’s from Uber?
Some drivers acquired two 1099-Okay’s this yr and if that’s the case, you’ll want to mix the revenue from each and add it to your Schedule C.
Readers, do you now have every little thing that you must exit and do your personal taxes? Are there any tax questions you continue to have or issues I missed?
Disclaimer: This article is supposed for informational functions solely! You ought to speak to a CPA about your personal particular person tax state of affairs or pay a licensed skilled.
-Harry @ RSG
Make Every Mile Count
Did you already know that each 1,000 enterprise miles can generate $535 in tax deductions? Never miss one other mile with the brand new QuickBooks Self-Employed automated mileage tracker.
I am Harry, the proprietor and founding father of The Rideshare Guy Blog and Podcast. I was a full-time engineer however now I am a rideshare blogger! I write about my expertise driving for Uber, Lyft, and different providers and my aim is to assist drivers earn extra money by working smarter, not more durable.