Lyft and Uber Taxes: Documents, 1099, Write-offs

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understanding lyft uber taxes

Starting a side hustle and becoming your own boss can be exciting until it’s the time to pay taxes. With this guide we will help you understand some of the major to-dos in managing your taxes, we will give you information about documents and provide for you the best tips to boost your income with deductions.

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What Is An Independent Contractor?

According to the IRS, you are an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.

Lyft and Uber are considered self employment jobs.

Now you have determined that you are self-employed.

As self-employed it is important that you understand the basic concepts of filing taxes.

Filing Taxes Self Employed (Step By Step Guide)

One of the major concerns of rideshare drivers is: does Uber take out taxes? The answer is that neither Uber or Lyft automatically withhold taxes.

This means that no matter if you drive part time, full time or as a temporary job, you have to report your income to the IRS and pay taxes to all your earnings including:

  • Tips
  • Referrals
  • Bonuses and incentives

The self-employment tax you must pay refers to:

  • Medicare: You'll pay the 2.9 percent Medicare tax.
  • Social Security: For 2020 it was 12.4% for Social Security and applied to the first $137,700 of earnings.

Self Employed Taxes For Dummies

The next thing to do is figure out how to file self-employment taxes step by step.

Basically there are 3 steps and we will describe them below:

  1. Track your tax deductions
  2. Pay Quarterly estimated
  3. Collect the documents and file the taxes

Tax Documents

If you earn a minimum of $600 or more as a self-employed worker driving for Uber or Lyft, the payer of that income will issue you a Form 1099 detailing exactly the amount of your earnings.

All tax documents are generally available on your driver dashboard no later than January 31st. However, you should always be able to track your own income. If you can always find documentation of your earnings either in the Uber driver app or in your bank account statements.

Let’s take a look at the details for every company.

Uber

First of all, to help you streamline the filing of your tax return, you will get a tax summary.

The Uber tax summary in an unofficial document, it includes the following information:

  • The total number of completed trips
  • The online miles
  • Your gross earnings
  • Expenses, fees and taxes (Uber’s platform fees, instant pay fees, rental fees, tolls)
  • Your net earnings

The list of uber official tax documents you may receive include three different types of Uber 1099 form:

  • 1099-K
  • 1099-NEC
  • 1099-MISC

Depending on the amount of your earnings with rides and deliveries, and other state requirements, you will qualify for a form 1099-nec instead of a 1099-MISC.

💡 PRO TIP: since you are a self employed individual, you will not get an Uber W2 form.

Lyft

Very similar to Uber, tax return documents for Lyft include an unofficial tax summary and the Lyft 1099.

Once again, you can receive different types of 1099. This is not really an important point. You don’t have to attach 1099s to your tax return and the IRS just wants to know the income and tax information.

How to access your Lyft tax document?

You will find all the Lyft Tax information on the tax info in the Dashboard.

What Are Uber Tax Documents?

Get ready for the tax season. Here is our guide to all the Uber tax documents: 1099, tax summary.... #uberTaxDocuments #uber1099 #uber1099Form

Self Employment Tax Deductions (For Rideshare Drivers)

There are lots of ways to reduce your tax bill legally, and right now we want to help you find out how to pay less tax.

The good news for small business owners is that they can maximize their earnings with deductions.

You can also take a look at our guide with tips to earn more and learn how to increase your driver income during surge pricing.

These are operating expenses and are necessary to run your rideshare business and of course with driving jobs you cannot apply home office deductions.

You will include the tax deductions on your Schedule C.

Here is an overview of the most common Lyft and Uber driver tax deductions:

Phone Bills

As an Uber or Lyft driver you'll need to use a smartphone with a data plan to accept and provide rides.

You can deduct it in the portion you use for your driving job.

Additionally, you will be able to deduct other phone related expenses including:

  • Charger to use in your car for work
  • Phone mount holder

Fees And Commissions

Using the Uber driver app you have to pay fees to Uber. Uber charges partners 25% fee on all fares.

Softwares

Here is a list of common softwares used by rideshare driver that are deductible:

  • Mileage tracker apps
  • Online tax software (Turbo Tax…)

Car Washes

Uber and Lyft are running during the covid pandemic. To ensure safety of the passengers you will have to wash and clean your car regularly. A clean car smelling great is also one of the ways to increase your earnings with customer'stips.

DashCams

As a rideshare driver, you have to undergo continuous background checks to ensure the safety on the platform. Your safety is really important too.

More and more drivers are installing dash cams in their cars. Dashcams are deductible.

Passenger Goodies

You can deduct all the complimentary goodies that you offer your passengers. The top 5 items riders love to find in the car are:

  • Phone chargers
  • Water bottles
  • AUX cord
  • Gum
  • Candies

Vehicle Inspections

Uber does not provide any more free vehicle inspections . However to be able to work on the platform, you are required to pass an yearly vehicle screening. Since the inspection is an essential part to run your business, it is deductible.

Roadside Assistance

There are a lot of reasons to have roadside assistance. First of all we suggest you consult your insurance company and check if they offer a road assistance program as an add ons of their insurance. Finally, if you opt out to pay for a road assistance program, fees for AAA or other roadside assistance programs are tax deductible.

Health Insurance

Uber and Lyft drivers are eligible to deduct premiums paid for medical, dental and qualifying long-term care insurance coverage.

Car And Mileage Expenses

This is one of the most commun 1099 tax deductions for Uber, Lyft drivers.

You use your car for business and you will not get paid for car maintenance, wear and tear or gas expenses.

Basically you can choose between two methods and for either method you have to keep a log of the mileage or expenses:

  • standard mileage
  • actual expenses

Standard Mileage

By using the standard mileage rate method, you can only deduct the mileage at a standard rate. You can only deduct the miles driven for business purposes. According to the IRS, the rate for 2021 is $0.56.

With this method, you cannot deduct self-employed vehicle expenses, including:

  • Actual vehicle expenses
  • Depreciation
  • Lease payments
  • Maintenance
  • Repairs
  • Gasoline
  • Oil
  • Insurance
  • Vehicle registration fees

Even if your annual tax summary shows your total online miles, we suggest you be rigorous and keep a mileage log or use a mileage tracker app.

Actual Expenses

By using the actual vehicle expenses method, you can’t deduct mileage. Here is a list of expenses you can deduct:

Our suggestion is to track both mileage and actual vehicle expenses during the year to help maximize drivers' potential deductions when you file the taxes.

💡 PRO TIP: You can use the turbotax estimator to evaluate see how much you may get back, or what you may owe, before you file your tax return.

Make The IRS Estimated Tax Payments

So, how to file self employment taxes? As a small-business owner, if you expect to owe at least $1,000 in taxes from your self-employed income, you’ll have to pay estimated taxes on a quarterly basis.

If you end up paying more than you owed by the end of the year, you’ll get your money back.

There are different ways to make the estimated payments. Basically, you can choose between the following options:

  • Pay online
  • Pay by phone
  • Pay from your mobile device using the IRS2Go app available for android and ios devices

When Are Estimated Taxes Due 2021

It is important to know the quarterly tax dates because with missing the payments you hit penalties with interests.

The past year due to the pandemic the dates were changed.

The quarterly deadlines for 2021 are:
Earning Period Estimated tax payment deadline
Jan. 1 – Mar. 31, 2021 April 15
April 1 – May 31, 2021 June 15
June 1 – Aug. 31, 2021 September 15
Sept. 1 – Dec. 31, 2021 January 18, 2022

How To Calculate Estimated Taxes

The first step is to calculate your gross income and deducting any eligible expenses. Once you get an estimation of your net income, you can then apply the self-employment tax rate of 15.3% to this.

​​Free TurboTax Self-Employed

Uber and Lyft partner with TurboTax. Rideshare drivers can get free TurboTax Self-Employed or 50% savings on TurboTax Live Self-Employed, which includes unlimited advice from real tax experts.

Frequently Asked Questions

How To File Uber Taxes Without 1099?

If you didn’t get your Uber tax form, you can ask for a duplicata by contacting the Uber driver support. Keep in mind that even if your account has been disabled, you can always have access to your dashboard.

What Are The Best Tax Sites And Softwares?

We compiled below the list of the best tax softwares and programs you can find:

We suggest you download the Turbotax free app and connect with tax experts. With Turbotax services you can get help, advice from tax professionals.

Are Uber Rides Tax Deductibles?

Uber is really appreciated for the wide choice of rides. From carpool rides to long distance rides, the voice is wide. Unfortunately Uber rides are a nondeductible commuting expense.

Now You Know How To File Your Lyft and Uber Taxes

At Bestreferraldriver we love to share our knowledge with you. Now you know everything you have to know about Uber and Lyft driver taxes, how to meet the tax return deadline and boost your take-home earnings with tax deductions.

** Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties **

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