Taxation Deductions for Rideshare (Uber and Lyft) Drivers and Food Couriers

As a self-employed worker, tax deductions for business expenses are the best way to set up an accurate tax return and lower your taxes.

Past

Every bit a self-employed worker, tax deductions for business expenses are the all-time way to prepare an accurate tax return and lower your taxes. Yous tin deduct common driving expenses, including fees and tolls that Uber and Lyft accept out of your pay. Your biggest tax deductions will be costs related to your motorcar . Yous may also want to deduct other expenses like snacks for passengers, USB chargers/cables, or separate cell phones for driving. If you lot don't take these deductions, more of your income volition exist subject to both income and self-employment taxes.

Due to the COVID-19, yous may besides accept Personal Protective Equipment (PPE) expenses similar face masks, hand sanitizer, shields, etc.

If y'all are a food courier, you might have unlike deductions, similar nutrient courier numberless, backpacks, and blankets. For example, if you bicycle you can deduct the cost of bike repairs and equipment.

Preparing to file taxes and tracking tax deductions

Make certain to track tax deductions as you go—information technology is much harder to recreate records later! Compile a listing of these taxation deductions (with receipts) and a mileage log so you're prepared to file. Tracking business concern expenses can also help yous determine whether your driving is profitable.

Here are some tips to aid you lot prepare your tax deductions for filing:

  1. Create a system to rail your tax deductions. Brand sure you empathize which expenses tin can be deducted and track whenever an expense occurs. It doesn't matter if you lot use an expense-tracking spreadsheet (printable spreadsheet) or an expense-tracking app, just exist consequent.
  2. Go on a split depository financial institution account or credit card for business. This can be a great style to continue personal and driving expenses separated. You will besides exist able to wait back to your bank and credit statements for records as yous're filing your taxes.
  3. Use apps to help you. Apps can brand tracking revenue enhancement deductions much simpler, specially when tracking mileage. Ii popular apps are Stride Tax (free) and MileIQ ($v.99 billed monthly for unlimited trips, costless for the first xl trips).
  4. Pay special attending to tracking mileage. If you lot bulldoze, the mileage deduction will likely be your largest tax deduction. It'due south important to carefully rail your miles considering the IRS requires a mileage log. Read the Mileage Deduction Guide for more data.
  5. Review your driver dashboard. The dashboard contains of import information that is generally not available elsewhere. Your annual income will be included here, equally well equally some of the tax deductions you lot qualify for. Yous'll find the tolls and commissions that Uber and Lyft accept out of your pay.

What tin be deducted?

There are two categories of deductions that y'all can take, "operating expenses" and "vehicle expenses." Vehicle expenses are those related to driving your car, including mileage, parking and tolls. Operating expenses are all other expenses, including Uber and Lyft fees and commissions, snacks for passengers, and cost of cell telephone plans.

Tax deductions must be expenses made purely for business reasons. If an expense likewise benefits you personally, only the portion attributed to your business organization is deductible. For example, you lot may take a cell phone that you lot use for driving about 25 per centum of the time. In that case, you can deduct 25 percent of the phone bill equally a tax deduction.

There are ii ways to deduct mileage. That will bear upon which expenses you tin can include.

  1. Standard mileage. Multiply your business miles driven past the standard rate (56 cents in 2022). This rate includes driving costs, gas, repairs/maintenance, and depreciation. Do Not deduct these costs separately. This is the more than common and easiest option.
  2. Bodily car expenses. Track all of your driving expenses yourself. Actual car expenses are difficult to runway, and then seek professional tax help. With this method, you lot tin deducta percent of your bodily costs for gas, repairs, vehicle depreciation, insurance, and other vehicle-related costs. This number is based on the per centum of time you use the vehicle for driving. Keep in listen that yous volition need to accept receipts to back up these expenses.

The following graphic covers the diverse tax deductions that you can have.

How to merits business organisation expense tax deductions on your taxes

You volition file Schedule C to study your profit to the IRS. On this form, y'all record all your income and tax deductions. You pay taxes on your cyberspace income, which is your total income minus whatsoever concern revenue enhancement deductions.

You'll detect your income information on the Uber or Lyft commuter dashboard . Y'all may likewise receive two tax forms, Course 1099-K and Form 1099-NEC. The dashboard and forms volition record your income and some of the tax deductions you qualify for.

Click on the sample 1099-K and 1099-NEC below for total images:

Including tax deductions on your Schedule C

Your revenue enhancement deductions related to vehicle expenses volition become on Line nine, Automobile and Truck expenses. Y'all'll find this section under Function Ii of IRS Form Schedule C. For those who use standard mileage , this will include the standard mileage rate and tolls and parking. For those who utilise bodily expenses , include all vehicle-related expenses here.

The balance of your revenue enhancement deductions volition go on Line 27a, Other expenses. You lot'll too find this section under Part II. Y'all'll list out these expenses on Function Five, Other expenses (Line 48). This can include Uber and Lyft fees and commissions, Lyft's Express Drive Rental fees, snacks for passengers, the portion of your telephone bill that you utilise for your task, etc.

Yous'll tape additional mileage information on Part IV of the Schedule C. Part Iv asks questions most your vehicle. Record your total number of business miles, commuting miles, and all other personal miles. Do this separately for each car you drove that agenda year.

Sample Schedule C expenses:

All information on this site is provided for educational purposes only and does not constitute legal or tax communication. The Eye on Budget & Policy Priorities and the CASH Entrada of Maryland are not liable for how you utilise this information. Delight seek a taxation professional for personal tax advice.

Recommended for you

The latest