Tax Tips for Uber, Lyft and Other Ride Sharing Drivers

When you're a driver for a ride-sharing company such as Uber or Lyft, the most important thing to understand about your taxes is that you are probably not an employee of Uber or Lyft. Drivers for these companies are usually independent contractors, a fact that has tax implications, both at filing time and year-round.  

Being an independent contractor means that you're self-employed.  So, when you receive a payment, understand that it's not a traditional "paycheck," and likely no taxes have been taken out.  It's up to you to take care of federal and state income taxes, as well as Social Security and Medicare. Combined, these taxes can easily reach 30% to 50% of your income, so make sure to set aside money to pay them.  If you're accepting ride-sharing fares more than occasionally, you may be required to file quarterly estimated income taxes. At tax-filing season each spring, you'll be reporting your self-employment income and expenses on Schedule C, as well as filling out Schedule SE for self-employment tax if your net income from the work is $400 or more.

Tax Deductions for Your Car

Since 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.

Other Tax Deductions for Ride-Share Drivers

Commissions 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
• Smartphone - the portion of your mobile phone expenses linked to your ride-share work can be used to reduce your self-employment income

Don’t Worry, TurboTax Has You Covered

TurboTax Self-Employed will help you uncover industry-specific deductions and searches for unique deductions personalized to you and your line of work. As a credit union member you can save $15 on the TurboTax Self-Employed product, plus you get a one-year complimentary subscription to QuickBooks Self-Employed* to effortlessly track expenses, jobs and mileage throughout the year. When you are ready to file, click here to access TurboTax and your savings!