Tax Deductions for Rideshare Drivers

Tax Deductions for Rideshare Drivers
February 13, 2018 Ryan Goodman
In Article, Drivers, Tips & Tricks

It’s that time of year again! April 18 is right around the corner, so its time to pull together paperwork and prepare your annual taxes. As a rideshare driver, you are a 1099 contractor, meaning you are not an employee of your rideshare operator like Uber or Lyft.

Rideshare Sellers is not qualified to give tax advice, so I enlisted the help of our CPA and tax advisor Michael Hasan, who’s organization, NumberRunners, handles federal and state taxes for organizations spread across all 50 states.

When you are a 1099 contractor, you’re responsible for paying state and federal income tax as estimated tax payments throughout the year, or as one lump sum at when you file your annual return in April.

Here is the good news.. Because you are a 1099 contractor, you may write off any legitimate business expense related to your rideshare service.

Tax Forms from Rideshare Companies

Here is a summary of what you do get from rideshare companies like Uber and Lyft.

A 1099 MISC is provided to a contractor who earns more than $600

Form 1099-K

A 1099-K is provided to a contractor who earns more than $20K or 200 transactions

Tax summary document

The Uber tax summary document is not an official tax document but does show you the 1099-K and 1099-MISC, along with some expenses that you can deduct from your Schedule C (located on your annual tax return).

Some of these include but are not limited to 

  • Tolls
  • Split fares
  • Safe ride fees
  • Airport and city fees
  • Black car fund
  • Sales tax
  • Booking fees

Additional Deductions you Should be Tracking

Deductions are very important to ensure you are not paying taxes on legitimate business expenses. You drive rideshare to make money, but your time resources, wear and tear on your car also cost money.

For example, in addition to mileage that you travel while on the clock with passengers, there is additional mileage you can deduct which include driving to pick up a passenger and milage while working and waiting for the next ride request. Technically mileage to and from your place of business are not deductible.

There are other business expenses that you incur while driving, also deductible:

  • Mobile phone service bills and accessories
  • Any other electronics used in your vehicle in connection with your business. Even an iPad could be deductible if you use it for Rideshare driving.
  • Headrest or seat covers including the ones we provide at Rideshare Sellers
  • Floor mats
  • Roadside assistance
  • Vehicle maintenence including tires and oil changes – This is where milage tracking becomes extremely important because you will need to prove that vehicle maintenance is connected to your business. You should consider your rideshare mileage relative to personal use of your vehicle and seek guidance by your tax advisor.
  • Food and water for your passengers – This does not cover food that you consume. Meals and entertainment are not fully deductible and can be scrutinized if it is not connected to your business.
  • Car washes and cleaning materials
  • Auto insurance –  Most auto insurers require you to notify them you are driving for a rideshare service so any additional limits or fees you have to pay can be deducted.

Stay Organized

If you were not organized in 2017, 2018 is a great opportunity to start fresh and ensure that when 2018 tax time comes around you have all of your deductions lined up to squeeze as much profit as possible out of your driving efforts.

Here is an official document to pull all of these deductions together for your tax professional. DOWNLOAD: Organizer Blank Forms- Business

There are plenty of commercial services for taxes. If you would like to work with someone reputable who can handle your business and Rideshare taxes, we recommend NumberRunners.