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An Information and Tax Guide for Uber and Lyft Drivers
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An Information and Tax Guide for Uber and Lyft Drivers
Working for Uber or Lyft means you're helping people get from one place to another. It also means you're a self-employed person, and the IRS treats you as a business, which means you're responsible for making sure your taxes get paid, unlike when you work for a company or corporation.
It's up to you to understand all the tax implications of your gig, so that you can avoid any tax penalties and save the most possible on your taxes.
Table of contents
Do Uber and Lyft drivers file taxes?...Read more
What taxes do you pay as an Uber or Lyft driver?...Read more
How do you report income as an Uber or Lyft driver?...Read more
Does Uber withhold taxes?...Read more
How much do Uber drivers pay in taxes?...Read more
How to file Uber taxes without 1099?...Read more
How to get 1099 from Lyft?...Read more
Do Uber and Lyft drivers pay estimated taxes?...Read more
Mileage and car-related deductions...Read more
Cell phone deduction...Read more
Do Uber and Lyft drivers file taxes?
If you make more than $400 driving for Uber or Lyft, you are required to report this income to the IRS, and it's eligible to be taxed. Usually, as an Uber or Lyft driver, you'll report your income as a sole proprietor, which gives you the freedom to report any income earned from Lyft or Uber on your personal tax return.
Even if you make less than $400 from Uber or Lyft, you still need to report any income you earn on your tax return and any Uber tax information.
What taxes do you pay as an Uber or Lyft driver?
You are responsible for paying SE tax as an independent contractor or self-employed person. This tax is paid to the federal government to cover your contribution toward Social Security and Medicare. Typically, when you work for an employer and are under their payroll, your employer will withhold some of these contributions from your pay, and the other part is paid by your employer.
But now that you're self-employed, you're both the "employer" and the "employee" and are responsible for paying all of the 15.3% tax. The self-employment tax is paid in addition to any other tax you might owe on your income. And you make quarterly tax payments to the IRS to cover this tax.
How do you report income as an Uber or Lyft driver?
Uber or Lyft will file Form 1099-MISC and/or Form 1099-K with the IRS to report how much money they paid you, as long as it's over $400. Next, it's up to you to report this information on your tax return and pay income tax on this income, no matter how small the amount or infrequent the payment. Plus, you will need to pay the self-employment tax. You can also make deductions from business-related expenses to help lower your tax bill.
You'll use Schedule C to calculate profits from your business and deduct business expenses. Schedule SE is where you will calculate self-employment tax if you earn more than $400.
Does Uber withhold taxes?
According to Uber, the company considers its drivers to be independent contractors who are providing a service. If you drive for them, you're not considered an employee of Uber, so Uber won't be withholding any of your taxes or reporting your earnings on a W-2 tax form. Instead, you'll receive your earnings on a Uber 1099 form.
How much do Uber drivers pay in taxes?
Uber and Lyft drivers pay two types of taxes: self-employment and income taxes. You will need to pay 15.3% in self-employment tax. The amount you will owe in income tax depends on the amount of money you make, the type of income you earn, your tax bracket and your filing status. Any deductions you claim will be subtracted from your gross income, and any tax credits you receive will be subtracted from the tax you owe.
How to file Uber taxes without 1099?
If any Uber tax forms weren't sent to you, such as the 1099, it's still your responsibility to report this income to the IRS. Using your online account with Uber, you can find your yearly summary and calculate your 1099 tax percentage amount, along with any Uber tax documents.
Then you will report the income on Schedule C as self-employment income using your yearly summary and receipts if you're claiming any deductions. This includes your gross payment from rides minus any deductions, including mileage, fees or commission Uber may have changed.
Remember your yearly summary may only have the miles driven with riders. It's up to you to keep track of any other business-related miles.
How to get 1099 from Lyft?
You should automatically receive a Lyft 1099 in the mail. According to the IRS, the company needs to send you one if you make $600 or more from third-party payment processors like credit and debit card companies. Before 2022, you would probably only receive Lyft tax documents if you had more than 200 transactions and processed at least $20,000. But the IRS made some changes with the American Rescue Plan and now you only need to make $600 in third-party payments for the IRS to send a 1099 in your mailbox.
The 1099 Lyft driver tax documents include two types of Form 1099s.
Form 1099-K reports all of the payments made by your riders, including any fees or commissions.
Form 1099-NEC reports any payments you’ve made including referrals or bonuses for any non-driving-related expenses.
Do Uber and Lyft drivers pay estimated taxes?
When you work as a driver for Uber or Lyft, you are considered a self-employed person. Self-employed individuals must pay estimated quarterly taxes four times a year. If you expect to owe at least $1,000 in federal taxes for the year from your driving gig, or a profit of around $5,000, you’ll most likely need to pay estimated quarterly taxes.
Mileage and car-related deductions
There's no denying that your car gets a lot of wear and tear working as an Uber or Lyft driver. The good news is that you can claim deductions for the miles you drove and the upkeep of your car. But not every mile is tax deductible. Tax deductible miles include:
- Miles driven with riders
- Miles driven to pick up riders
- Miles driven after dropping off a rider on the way to wait in a set location for another rider
You have two options when it comes to claiming mileage deductions for delivery drivers:
- Standard deduction: The standard deduction is the most common and simplest option. For this deduction, multiply the standard rate by the number of business miles driven. The rate for the 2022 tax year is 62.5 cents per mile for business use starting from July 1. The rate from January 1 to June 30, 2022 is 58.5 cents per mile. With this deduction, you can’t deduct any other expenses separately like car repairs, oil changes, car washes, license fees or gas, but you can deduct parking fees and tolls. You can use a car mileage tax calculator for help calculating your standard deduction.
- Actual car expenses: With this option, you can deduct the actual cost of maintaining your vehicle. This option is a bit more complicated, so if you prefer to take this route, it’s best to seek advice from a tax specialist.
Cell phone deduction
It’s basically impossible to drive for Uber or Lyft without a cell phone. Since your cell phone is being used as part of a business expense, it’s eligible for a tax deduction. You can deduct the cost of the cell phone, accessories and your monthly cell phone bill.
But remember, you’re only allowed to deduct the amount that’s used for business, so it might be a good idea to get a brand new phone and dedicate it solely to your ridesharing gig.
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